In a retail landscape that is seeing long-established brands closing locations if not shuttering entirely, digitally-native brands are more and more frequently venturing beyond their familiar digital waters and opening their own brick-and-mortar stores.

Short-Term Versus Long-Term Gains

According to Glossy, the driving force behind this shift is what some are calling the “digital growth ceiling”, a seemingly inevitable revenue plateau that occurs with many online-only brands. Some of these brands are diverting marketing budgets to opening physical retail stores, which generates a long-term revenue stream as opposed to the short-term spikes that typically follow a marketing campaign.

Brands that were “born digital”, such as mattress delivery startup Casper, fashion rental marketplace Rent the Runway and prescription eyewear seller Warby Parker, do have some inherent advantages in making the leap to retail stores. Since their entire business model was built digitally from the ground-up, the quality and quantity of customer data these brands have amassed is enormous, and they know how to use it effectively.

This well-developed store of data gives digital brands a leg-up when it comes to customer insight, and helps them plan their retail locations based on the kinds of experience their customers want, helping them recreate those X-factors in brick-and-mortar form. Digital brands also have the inherent advantage of nimbleness, enabling them to more easily plan and open pop-up shops and rapidly change store interiors or inventory.

Experience is the Best Marketing Money Can Buy

As we’ve written about before, in-store experience has become a top-of-mind concern for retailers looking to draw customers into their stores and keep them coming back. Opening physical locations gives digital brands the opportunity to market to their customer in the real world, outside the digital confines of e-commerce platforms. An e-commerce shop can have the best interface and the most attractive graphical elements imaginable, but so far they can’t replicate the emotional connection brick-and-mortar brands are creating with customers through innovative in-store experiences and personalized service.

It’s an interesting turn of events to see young, once digital-only brands moving into physical retail stores, and it serves as evidence that although the traditional retail model has struggled to keep up with e-commerce competitors in recent years, the store model still has enough cachet to attract new players. There’s value in the ability to offer unique experiences and personalised service to customers in person, and that’s exactly what digital brands are striving for.

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