A new white paper from Placer.ai examined several direct-to-consumer retailers and brands that are expanding their offline presence in key markets and found that, in some cases, the growth of physical stores also triggered higher e-commerce sales.
This trend follows the robust growth of online sales by direct-to-consumer and digitally native brands during the pandemic. E-commerce sales soared as shoppers stayed put at home. As lockdowns and mandates lifted, online sales subsided. That left e-commerce brands looking to physical stores for growth.
The report’s authors said while some “doomsayers predicted — and not for the first time — the collapse of brick-and-mortar retail, foot traffic data continues to demonstrate the vital role physical stores play in the modern world. Brick-and-mortar locations can offer an immersive experience that is nearly impossible to replicate online while providing significant support to almost every aspect of a retailer’s operational cycle — from customer acquisition to fulfillment to reverse logistics.”
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The report went on to note that as “the dust settles on a post-pandemic retail landscape, it’s becoming increasingly clear that even brands that were born, or primarily operate, in the digital sphere can benefit from an offline presence.”
For example, the report’s author said Madison Reed’s recent spurt of growth “shows how a robust brick-and-mortar campaign can drive visits up both on and offline.”
“The hair color company, which sells products for at-home application, significantly increased its online sales during COVID-19,” the report stated. “At the same time, the company more than tripled its physical footprint in a little over a year, going from 12 locations in March 2020 to 38 venues in May 2021 — and then more than doubled its store count again to hit 75 Hair Color Bars in November 2022.”
Placer.ai studied the foot traffic data of the brand and found that the physical store expansion directly influenced online sales. “Interestingly, the offline visit peaks of the past two years closely followed online peaks, reflecting, in part, the growing role of Madison Reed’s locations as fulfillment centers for customers picking up their online orders,” the report stated. “Without a pick-up option, Madison Reed would have been forced to compete with other brands on delivery times, and shoppers may have turned to other retailers that could have potentially delivered sooner.”
In the analysis of Allbirds, researchers at Placer.ai concluded that the footwear and apparel brand’s growing physical store presence and its wholesale partnerships “show how brick-and-mortar expansion can be a path to efficient customer acquisition for a well-established [digitally native brand].”
Placer.ai’s analysis of the data showed a 53 percent gain in physical stores sales in the third quarter of 2022 versus the same period in 2019, while “foot traffic data shows the brand nearly quadrupled its weekly foot traffic between the first week of 2022 and the mid-December 2022,” the report noted.
“Even more impressive is that Allbirds’ expansion not only increased its overall offline traffic — which is to be expected since more stores mean more opportunities for people to visit the brand — but the number of average monthly visits per store also increased,” Placer.ai said. “Foot traffic data indicates that average visits per venue for the chain were up every month of 2022 relative to the equivalent month in 2021, perhaps due to the increased brand recognition and awareness generated by the company’s brick-and-mortar expansion.”
In conclusion, the research shows that expanding physical stores can drive online sales while also servicing online shoppers with fulfillment options. Physical stores also serve as a way for customers to experience a brand and for that brand to expand its recognition in a market.