It’s 2018 and we’re seeing more e-commerce retailers opening physical stories than ever before. Companies doing this include Indochino, Warby Parker, Bonobos, Boll & Branch, Untuckit, Tictail, Amazon and many more. At first the decision to transition from “clicks to bricks” might seem counterintuitive, especially considering the shuttering of malls and the closure of nearly 7,000 retail stores in the US in 2017. But companies that are going against conventional wisdom and opening physical stores are doing so with great deliberation and after-thought. This leads me to believe that this is the evolution of retail rather than a devolution.
In our PUB802 class on February 19, Juan asked us to think about why Amazon has opened two physical stores: Amazon Books and Amazon Go. And Rachel Taylor guessed it was to get consumer “data”. As Juan said, e-commerce retailers like Amazon are opening physical stores to collect data and track consumer behaviour that they may not necessarily be able to do as well online. The 21st century digital “arms race” (figuratively speaking) is about gathering data on consumers that can then be monetized, either by advertising or by creating greater brand recognition that can help the company earn more revenue. Amazon’s decision to have a physical bookstore, to me appears to be counterintuitive, but I understand that it aligns with their agenda to introduce a new kind of concept-bookstore, where things are curated for customers based on certain algorithms and the store helps the company to mine user-behaviour for information.
Many e-commerce retailers who are also opening physical stores sometimes to do so because they feel that in an increasingly saturated online space, it’s difficult for companies to stand out and be noticed. Online a customer’s attention is dispersed and interrupted. Whereas by entering a store, for those few minutes, the brand has that customer’s undivided attention. In an article on Forbes, the founder of a DIY e-commerce platform named Tictail, Carl Waldekranz, talks about how for his company, opening a physical store is not even about making money. After successfully being online, Tictail opened a physical store in Manhattan’s Lower East Side and they did so “to understand, promote, and bring together our community… For any data driven organization, the benefits of capturing consumer insights from an in-store experience are endless.” For a brand like Tictail, their store helps them take “a potential shopper on a journey through [their] brand’s world.” And interestingly, stores help the brand formulate a “brand story”. When Shannon Emmerson and Lauren Cheal from Echo Storytelling came to our PUB600 class last term, they spoke about how important “content advertising” is for brands these days. After having researched on the reasons why e-commerce retailers prefer to also have a physical presence, I do believe it’s because having a store aligns with their content marketing efforts. Waldekranz talks about the opportunity a store provides to “witness [the customer’s] entire shopping journey”. Noticing customer behavior and engaging with their customers helps brands build their brand personas and brand stories and think of ways in which the brand can evolve. It doesn’t hurt that having a store also helps a brand have in-person events, social media activity, press briefings and coverage in local media.
To sum up, I’d like to quote Brian Cornell, the CEO of Target, who—while talking about the need for brands to have great stores besides an online presence—said, “The winning retailers of the future are going to combine great physical assets with the ease that comes along with that digital interaction.” The marketplace today isn’t what it used to be. There was a time when brands could just have a store or just an e-commerce portal. But today, people’s attention online is scattered across various entertainment, social media, news and retail sites. So just having a digital presence is no longer going to cut the mustard. To compete and sustain in a complex retail environment, companies have realized that their brands need to diversify. And a physical store that’s a manifestation of their online avatar helps brands study their customers better and devise ways to improve and sustain their brand loyalty.