LONDON, United Kingdom — Over the course of the last decade, traditional brick-and-mortar retailers, from Neiman Marcus to Macy’s, have seized the digital opportunity and built impressive online businesses, with web sales of apparel and accessories currently growing faster than any other e-commerce product category and expected to reach $40.9 billion in 2012, up from $34.16 billion in 2011, in the US alone, according to eMarketer. But now, things appear to be coming full circle.
Net-a-Porter has launched pop-up shops. Warby Parker runs real-world showrooms. And last April, Bonobos, announced a partnership with the 111-year-old department store Nordstrom. Indeed, a number of pioneering pure-play e-tailers, who once sold exclusively online, are now dipping their toes into the physical world.
Some are embracing traditional physical retailing, while others are simply organising real-world events or using a physical presence to enhance their online service. But while e-commerce has clear business advantages, from dramatically lower overheads to global reach, what do e-tailers have to gain from establishing a physical world presence?
TRY BEFORE YOU BUY
In fashion, seeing, touching and trying on products before buying is important to consumers. And while better online merchandising and product visualisations have undoubtedly enhanced the e-commerce experience in recent years, it’s still very far from replicating the feeling of interacting with products in a physical store. Online, finding the right fit also remains a significant problem.
“People will always want to touch, feel and try on certain items and it is impossible to replicate that online,” Dave Gilboa, co-founder of online prescription eyeglasses brand Warby Parker, told BoF. “When we launched Warby Parker, we intended to be a purely online business but we realised the biggest challenge to selling glasses online is getting the fit right,” he continued.
The company has since launched a number of “showroom” spaces, first in a portion of their New York offices and later within existing retail spaces in nine US cities including Los Angeles, Philadelphia, Boston and Chicago. “It is a very capital efficient way for us to have a physical presence where people can try on glasses. Customers still order online so we keep minimal inventory in our showrooms and can maintain the efficiencies of running a centralised operation,” Gilboa added, revealing that “we do not intend to have a chain of brick-and-mortar stores but we are exploring creating a unique offline flagship store that would feel very different from any other optical shop in the world.”
“The aim was to produce an innovative shopping and browsing experience that bridges the divide between traditional and online retail,” managing director of Net-a-Porter, Alison Loehnis, told BoF, when asked about the physical world experiences the luxury fashion e-tailer staged for the launch of its exclusive partnership with Karl Lagerfeld on the designer’s new affordable womenswear line collection, KARL.
Net-a-Porter built five pop-up “window shops” in Paris, London, New York, Berlin and Sydney, which let consumers shop the collection by scanning products with iPads or iPhones, in addition to a 650-square-foot temporary store in New York’s West Village featuring mannequins and iPad kiosks where customers could view and purchase items via the site. “We were aiming for a thoroughly modern, cross-platform initiative and were delighted with the results,” continued Loehnis, citing strong traffic and sell-throughs.
REACHING NEW CUSTOMERS AND DRIVING SALES
“The Bonobos Guideshop gives men the opportunity to shop the previously online-only brand in-person with a complimentary Bonobos Guide, an expert trained in fit and style,” said Brad Andrews, vice president of merchandising at Bonobos — the largest clothing brand launched on the web — on the company’s decision to build its first offline, brick-and-mortar shop in Boston, a concept that was modelled after a pilot “Guideshop” based in the Bonobos offices in New York.
But Bonobos has gone one further, striking a major multi-channel partnership with department store Nordstrom that will give Bonobos access to more than 100 stores across the United States. “The ability to introduce brand awareness to a range of new clients in different areas across the country was exciting and we felt like it was time to take the plunge,” commented Andrews.
For e-tailers like Bonobos, however, establishing an offline presence isn’t only about experience, reach and awareness. Even though e-commerce is growing swiftly, approximately 80 percent of transactions still occur offline and building a robust physical world presence can be a powerful driver of sales.
“We believe that the future of all commerce will have an online and offline component,” said Warby Parker’s Gilboa. To wit, e-commerce titan Amazon is thought to be exploring “a trial brick-and-mortar store in Seattle,” according to reports that surfaced earlier this year, while internet giant eBay has already experimented with a number of offline pop-ups in New York and London.
As the online and offline worlds continue to blur, it seems clear that pure-play e-tailers will increasingly need to embrace multi-channel strategies. And while Ms. Loehnis of Net-a-Porter insists that “brick-and-mortar is not in the pipeline,” it’s worth asking the question: will major e-tailers like Amazon and ASOS have a strong presence on the high street by the end of the decade?