If brick-and-mortar retail is dying — as some recent press report so insistently informs us — someone should probably tell Amazon (the largest Internet seller in the U.S. is opening physical stores) or Under Armour (which plans to more than double its number of stores by adding 200 more in 2016 alone).
Though it’s true that companies such as Wal-Mart, Sears and Sports Authority are each closing more than 100 stores this year, the fact is — to paraphrase Mark Twain — the rumors of brick-and-mortar stores’ death has been greatly exaggerated. The truth is not that retail is dying. It’s that retail is changing, and many brands that were previously online-only are moving to Main Street.
Apple was the first major player to make the leap into opening its own physical stores, way back in 2001. It’s hard to remember now, but a lot of people questioned the wisdom of creating a retail infrastructure instead of selling through stores like Best Buy. Apple stores succeeded because the company understood “experiential shopping” long before it became a buzzword. Its stores were the antithesis of computer stores of the time. Rather than the dark warehouses filled with shelves of black and beige computers and signage boasting sales prices and technical specifications that were the norm, Apple stores were bright, open and uncluttered. It took years before others successfully followed its lead.
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Fast-forward to 2016: Samsung announced it will open “a first-of-its kind cultural destination, digital playground and Marketing Center of Excellence.” It will provide demos, classes and a dedicated space for customers to “experience Samsung technology and signature services in a smart-home environment.” This sounds like the tech equivalent of a “lifestyle brand” strategy — and a step beyond the Apple showroom concept.
Meanwhile, Amazon opened its first store, in Seattle, at the end of last year. A second store is opening soon, in San Diego, with plans for more on the way. A lot of people were shocked by this news — but it actually makes sense. For instance, Amazon has more than 20 years of data on book buying and can thus curate inventory by regional trends that traditional booksellers might not notice. It could even make personalized recommendations for impulse purchases — based on what’s in your “basket” or wish list on Amazon.com. The stores can be locations to “click-and-collect” online purchases or return items purchased online. And Amazon will be able to get an even more comprehensive understanding of its customers by combining online data with in-store behavior to further increase conversion rates and purchases across all customer touch-points. It seems Amazon is taking the best aspects of online shopping to create an in-store experience.
Along with the unique take on book-selling Amazon can offer, the Seattle store prominently displays Amazon’s own entries into personal technology — the Kindle e-reader, Fire tablets, Fire TV and its new Echo voice-controlled home technology hub. Perhaps part of Amazon Book’s motivation is to follow Apple’s lead, getting customers to become more excited and comfortable with their (bigger ticket) technologies firsthand.
It’s not just personal technology companies that are making the move to Main Street. Many online sellers of apparel, accessories and personal care/cosmetics are also establishing physical stores.
Andy Dunn, founder and chief executive officer of Bonobos men’s clothing store, gave a speech in 2010 called “The End of Apparel as We Know It,” in which he stated his belief that physical stores were unnecessary. Only a year later, Bonobos opened a physical store, and today it has 20. Similar to Samsung’s new “digital playground,” you can’t actually leave the store with Bonobos products; its “guide shops” are showrooms with highly personalized attention, where you can try on products and order them to be shipped for free.
Designer eyewear seller Warby Parker started out as the Zappos of prescription eyeglasses, overnighting up to five frames at a time for customers to try on at home and return free of charge. Once they found frames they loved, customers placed their orders and the frames were fit with prescription lenses. Starting in 2013, the brand began to open retail locations; today it has 27. These locations allow customers to try on dozens of frames instead of just five, but more important, the locations create brand awareness, encourage casual browsing and — due to small touches throughout the stores — position the eyewear company as a lifestyle brand.
Even Etsy, the online merchandiser that originally advertised itself as a peer-to-peer site for handcrafted goods, has gotten into the off-line game. In 2014, it launched Etsy Wholesale, where brick-and-mortar retailers can make bulk purchases from “wholesale-ready independent designers” selling unique, hard-to-find products. Just last month, Etsy opened its first physical location — a store-within-a-store concept at Macy’s in New York.
This trend may represent the future of growing a retail brand — entrepreneurs will start a company online with the intention of building their product line and customer base before expanding to retail locations that allow them to develop the brand beyond product. If so, this is great news for retail real estate. It will ensure a steady stream of vibrant new businesses that have an established customer base and tested leadership team.
So the next time you hear that retail is dying, remember Amazon, Apple, Samsung, Bonobos, Warby Parker, et al. We may be seeing the decline of retail as we know it, but that might just be because we’re witnessing the rise of retail as it should be.
Anjee Solanki is national director of retail services at Colliers International | USA.