A growing trend among online retailers is the expansion into brick and mortar stores. Google, Amazon, Rent the Runway, Warby Parker, Bonobos, Birchbox, and Honest Beauty have all complemented their online businesses with offline retail concepts in the form of showrooms, pop-up stores or traditional retail formats. This expansion offline is allowing retailers capture greater growth and more effectively convert today’s highly informed consumers. This trend, coupled with the increasingly blurred line between the online and offline retail channels, is leading to the emergence of the omni-channel retail concept of the future.

amazon

Amazon Store in Manhattan

 

 

 

 

 

Unlocking Meaningful Growth

Online retail has experienced significant growth over the past decade but, while still attractive, e-commerce growth rates have declined from ~30% per year in the early 2000s to ~10% today. Approximately half of today’s growth is generated by those online retailers that also have a physical retail presence, a distribution channel that still generates between 94% to 97% of total retail sales. Retailers that have both an online and physical retail presence report an average annual growth rate of 23%, relative to the 9% experienced by online only retailers. With the online retail space experiencing declining growth rates, brick and mortar stores offer online retailers with an additional channel through which they can broaden their customer reach and extract meaningful growth.

Enhanced Customer Conversion

The customer conversion process is becoming longer as consumers are increasingly inundated with information and becoming smarter as a result. While the online retail channel is undeniably valuable, the addition of a physical presence allows retailers to directly interact with the customer and to tell the story of their brand through a differentiated shopping experience. Touching and feeling a tangible product and creating a physical and human experience with the brand is a powerful way to convert increasingly smarter consumers.

Those consumers acquired through the offline channel have the potential to be of higher long-term value to the retailer by means of relatively larger purchase sizes and greater loyalty to the brand.

Bonobos has reported that customers buy ~75% more if they buy in the fashion retailer’s brick and mortar stores. In this setting, the customers’ experience of the Bonobos brand is enhanced by their ability to touch and try on the Bonobos products as well as the one-on-one human experience, which the company believes leads to greater customer loyalty.

Warby Parker Co-Founder and Co-CEO, Dave Gilboa, notes that “selling offline is a key way to interact with customers” and “the offline sales component is part of a long-term customer acquisition strategy which can fuel more sales online.”

bonobos

One-on-one shopping experience at a Bonobos Guide Shop

The Omni-Channel Concept of the Future

As the divide between online and offline retail concepts is becoming increasingly blurred, we are seeing the emergence of the omni-channel retail strategy of the future.

To build a valuable brand, meaningful customer base and to stay relevant, retailers must combine the best of the online and offline retail concepts into a reimagined, new and innovative retail experience for customers.

Bonobos and Warby Parker were early movers with their launch of small-scale concept stores that serve as showrooms (inventory is for display and trying on only). This retail concept allows consumers to physically experience a brand, while also being introduced to the company’s online store. Retailers also benefit from higher customer conversion rates, generally larger order sizes and the lower costs associated with significantly lower in-store inventory volumes.

Rebecca Minkoff and eBay have joined forces and are also paving the way to the omni-channel experience of the future with the launch of an interactive store in New York City’s SoHo. The store combines the best aspects of the online and offline shopping experience. Shoppers can browse through the entire Rebecca Minkoff catalogue on the “Connected Glass” interactive shopping wall. At the touch of a button on the wall, the customer can have their selected products sent to a dressing room. The dressing room mirrors are also interactive and allow the customer to request additional items as well as a stylist at the touch of a button. The interactive system also allows the customer to link any products that they have tried on to their personal profile, which they can access online or during future visits to the interactive store.

As demonstrated by Bonobos, Warby Parker and Rebecca Minkoff, the possibilities are endless and the race is on to develop the ultimate omni-channel retail experience of the future.

minkoff

Rebecca Minkoff’s Interactive Shopping Wall

 

Sources:

https://hbr.org/2014/08/e-commerce-is-not-eating-retail/

http://www.wwwmetrics.com/shopping.htm

http://www.emarketer.com/Article/Customers-Spend-More-Ecommerce-Site-They-Buy-After-Visiting-Bonobos-Offline-Shops/1011874

https://gigaom.com/2012/11/05/the-future-of-e-commerce-is-both-online-and-offline

http://www.retailcustomerexperience.com/videos/rebecca-minkoff-debuts-first-interactive-store/

http://www.megatechnews.com/amazon-store-coming-to-nyc/

http://www.retail-week.com/retail-week-live-2013-a-glimpse-of-the-future/5046698.article

By: Jessica Reed


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