From Clicks to Bricks: e-Commerce Companies Setting Up Shop
For a while it seemed that online retail was not only changing the face of commerce, but also slowly killing brick and mortar retail shops.
Malls were shuttering their doors. Strips were emptied, with one vacancy after another.
But like a phoenix rising from the ashes, physical retail has resurged with gusto.
Certainly, part of the revival has been courtesy of a consistently strong economy, but a deeper dive finds that successful retailers have stemmed the downward slide by thinking outside the box.
Allowing customers to use their phones to order, or purchase items and then pick them up outside the shop without ever going in counts as in-person retail. Additionally, items can be returned in the same fashion – drop the item in a box outside the store and then finalize the transaction with a refund or a credit electronically via smartphone.
Personal shoppers have been a boom for the retail industry, employing individuals to shop for items ordered online or via mobile and leaving packages to be picked up curbside, or even delivering them to someone’s home.
These concepts have spurred companies who were or are online-only to consider new ways to be omnichannel – meaning offering consumers a variety of options to purchase their products.
The best retailers span multiple mediums to sell their products – whether in person, via social media or through someone’s mobile device.
This is also important because it indicates that this kind of retail can be successful with younger generations, who will be the target audience for the next few decades.
According to the Wall Street Journal, another strategy that physical retailers are staking claim to are shorter-term leases. Some companies are renting space on a month-to-month basis, and most are limiting their leases to three years or less, which allows them to really get a feel for a location without an expensive, long-term commitment. The report indicated that since 2016, there has been a significant increase in temporary leases, which is a win-win situation for both store owners as well as landlords. The store owners get to test a market, while the landlords benefit from extended leases if their location thrives commercially.
But the biggest boon to physical retail is likely to come from previously online-only retailers moving into actual storefronts to diversify their brand.
A study conducted by JLL, a commercial brokerage and property management firm, indicated that e-commerce companies plan to open 850 store locations in the next five years.
The notion is that a lot of these companies have products that consumers would like to see or inspect in person. As such, opening a “showroom” where patrons can actually touch the product rather than just run their mouse over it for a close-up view could lead to an even greater boost in sales.
The study indicated that nearly three-fourths of these e-commerce companies that are moving into physical locations are apparel or accessory brands.
These showrooms allow consumers to try on or inspect a product in person, make a purchase and then have the product shipped to their homes.
JLL highlighted online companies such as Casper, Bonobos and M. Gemi as leaders of this “click-to-brick” revolution, but they are far from the only company pursuing this concept.
Even a giant online retailer like Amazon has dipped its toe into the brick and mortar waters having opened 30 shops in 13 states and District of Columbia.
Some are pop-up shops. Others are more permanent. The strategy for a company like Amazon is location-based.
New York remains the No. 1 location for both pop-ups and first permanent locations for online retailers, but California markets like Los Angeles and San Francisco are also popular.
According to JLL, nearly 60 percent of pop-ups are located in New York City, far and away the leader. Los Angeles ranks second at a distant 15%.
It’s no different with permanent locations either as New York tops the list with these too garnering roughly 41 percent of the e-commerce companies setting up shop there.
The SoHo area of New York City is where most online retailers are testing their newest products and trying to attract new customers.
Warby Parker, an online retailer of prescription glasses and sunglasses, opened a shop in SoHo back in 2013 and since has opened 75 more stores at locations nationwide.
JLL cites other online retailers like Untuckit, BaubleBar, Indochino and Glossier have also opened shops in SoHo.
Casper, which sells luxury mattresses online opened its first physical location in SoHo in 2018 and has since exploded nationwide, now operating 16 “experience stores,” where customers can test their products.
This notion is likely to become even more trendy and begin to expand outside of the major metropolitan areas of the country into more suburban communities.
And in the end, more businesses moving into a community is good for the economy, creates jobs, and enhances the value of property, which is a major benefit for homeowners.
So, it won’t be long until what is old in your community is new again, only this time, retrofitted for a whole new generation of consumers.