Research firm JLL released its latest report detailing the growth of the “clicks-to-bricks” retail segment, revealing that many online-only retailers are expanding by adding numerous physical locations “off the back of their e-commerce success.” Several major online retailers are looking to open up 850 physical stores in the next five years, according to the firm.
By analyzing the histories and expansion plans of the top 100 digital retailers, JLL found that New York is the top city for pop-ups and first permanent locations. “Marquee markets,” such as Los Angeles or San Francisco, are also contenders. More than 59 percent of clicks-to-bricks retailers have opened pop-up locations in New York, with SoHo noted as a prime retail location for e-retailers to test new concepts and gauge potential interest from consumers; more than a third of that percentage opened their first permanent location there, the report said. Online-only retailers such as Casper, Allbirds and Adore Me are among many businesses that are part of the shift, with online glasses retailer Warby Parker being one of the first to open a retail location in SoHo, circa 2013. Today, the brand has 75 brick-and-mortar stores in the U.S., according to the report.
James Cook, Americas director of research, retail, said, “This is a very interesting time in retail real estate, especially when it comes to the types of firms filling the vacancies. It seems that many retailers that started online are looking to move into the brick-and-mortar space once their brands become established.”
JLL’s findings also reveal that 74 percent of clicks-to-bricks retailers are apparel and accessory brands, with houseware brands such as Casper making up the second largest segment at 11 percent of the market, the firm said, as well as a sizable number of showroom retailers, which enable consumers to try and test products that are later shipped to their homes post-purchase. The report noted that several major e-commerce brands operate showroom locations, with a mere 15 percent of clicks-to-bricks stores having physical locations that don’t actually carry any inventory: 69.2 percent are apparel and accessory retailers and houseware and furniture retailers make up the remaining 30.8 percent, authors of the report noted.
Cook added that, “It makes sense that e-commerce retailers that sell apparel and home goods are looking to move into physical stores, since their products are the type consumers like to inspect in person. As these e-commerce brands mature we believe based on our research that those in the apparel and home good segments will continue making the transition to a clicks-to-bricks retail format.”
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