Do Digital Brands Need Physical Stores?


Author: Anna Jones

The landscape of ecommerce is an ever-changing one. We are living in the digital age, in which 79% of Americans now shop online, according to a 2016 TechCrunch report. It would make sense for brands to focus their primary marketing efforts on user interface (UI); however, popular digital brands are now going against the grain and opening brick-and-mortar stores. Why the sudden shift? It makes sense, if you think about it – just like music records and those braided 90s chokers from Claire’s have come back into style, so too has having a user experience (UX) that is a part of a true 360-degree marketing plan.

Despite how convenient online shopping is, customers still like to experience products for themselves in-real-life – especially before making an important, expensive purchasing decision. Plus, there are in-store experiences that online retailers simply cannot replicate; for example, at Modcloth’s Austin-based store, customers can get measured by “ModStylists;” Modcloth has intelligently integrated the user experience, by allowing consumers to enter their measurements that they receive in-store into the company’s “Fit For Me” app. It makes buying Modcloth’s clothes online easy and stress-free, if the customer can’t make it into the store. The convenience of online shopping is made more convenient by having a store to go into as another option. The digital and the physical marry one another to complement rather than compete.

Bonobos CFO Antonio Nieves thinks of his stores as “permanent billboards” or “Guideshops,” that are better at driving brand awareness – more so than even online advertising, citing higher conversion rates and increased average purchase values, as opposed to online sales. Chief Executive of Rent the Runway, Jennifer Hyman, notes that all RtR needs is one store in every major metropolitan U.S. city – so, approximately 15 in total. Hyman does state, however, “There is no way that the sheer quantity of physical stores that exist today — multi-branded retail and single brand retail — is going to exist five years from now, let alone 15 years from now. It’s not needed.”

Another important point is that these brands’ inventory is tied directly to online inventory, i.e., all inventory is housed in one off-site location. There is no need to house inventory on-site, eliminating “one of the most difficult parts of inventory management,” according to Nieves.

These brands are intelligent – they have their finger on the digital pulse of what tech-savvy, younger generations within their demographics love. Their branded marketing campaigns for their brick-and-mortar stores include cross-promotions, influencer marketing, events, and strategized content. Even if the stores do eventually close, they will certainly not go quietly into the night.

This brings us back to the question we started with, and adds on a follow-up: should online brands invest in physical stores, if the trend is that more and more stores will be closing in such a relatively short period of time? The answer seems to be, if you have capacity and growth potential – why not? As long as brands recognize what their ceiling is, physical stores seem to be marketing campaigns that may ultimately pay for themselves – what more could a retailer ask for?