Experiential retail, dreamed up and delivered on a brand-by-brand basis, is vital to Walmart’s growing direct-to-consumer portfolio.
Exactly how off-line shopping experiences will be customized for digitally native vertical brands Bonobos and Eloquii, among others, is still being worked out by the retailer as various concepts are tested. What’s certain is that physical stores are integral to their success, according to Andy Dunn, senior vice president, digital consumer brands, Walmart U.S. e-commerce.
“It doesn’t really work without brick-and-mortar. The math doesn’t work,” he said during a presentation at the IRCE conference in Chicago last week. Dunn cofounded Bonobos and served as chief executive officer prior to Walmart’s 2017 acquisition of the men’s wear brand.
Dunn, who said he once believed online retailing would displace traditional stores, said his outlook has since evolved, with stores playing an essential role for direct-to-consumer brands that must be both product- and service-centric. “Over time, it will become less about delivering inventory and more about delivering experiences that historically weren’t possible before the technology enablement of retail,” he said.
As an example, he pointed to Bonobos Guideshops, showroom stores carrying little inventory where shoppers receive one-on-one service, often by-appointment, and purchases are shipped rather than carried out for a stress-free shopping experience.
But while that experiential concept works for the men’s brand, the plus-sized women’s label Eloquii has different customer preferences.
“At Eloquii, we are experimenting,” Dunn told WWD in an interview following his presentation. “It’s interesting. For that consumer, there is a desire to walk out in real time with a product. So we are trying to think of the right way to do experiential retail because what works for the Bonobos customer is going to be different than what the Eloquii customer needs.”
What premiered as a holiday pop-up test in New York’s SoHo just months after Walmart acquired Eloquii last year reopened in May as a full-stock store, with in-store styling and fit advisers providing personalized service. Eloquii now has five stores — in Washington, D.C.; Chicago; Detroit; Houston, and New York — with more locations likely to open this fall, a company representative told WWD.
“I think many of the digital brands, including Eloquii, launched with the premise that their businesses would transact only online,” Eloquii founder and ceo Mariah Chase told WWD. “For us, that direction shifted as we received specific feedback that our customers’ shopping preferences included a strong desire for physical stores in order to try on our products as well as talk directly to our stylists and sales associates”
Chase said the industry is undergoing a “rediscovery” of the experiential power of off-line retail at the same time customer spend continues to increase online. “I think this reflects how customer shopping behavior continues to evolve as they build relationships with a brand how, when and where they choose as the differences between the online and off-line channels become more evident,” she added.
As a third example of an experiential approach, Dunn pointed to Allswell, Walmart’s internally developed digital mattress brand unveiled in 2018. Inspired by the “tiny home” movement, Walmart built a tiny home “pop-up on wheels” furnished with Allswell mattresses, bedding and other home decor to tour around the country so consumers could interact with the new brand in a home-like setting.
“That could turn into a brick-and-mortar experience at some point,” Dunn told WWD. “That’s the fun part of these DTC brands: Because the core engine of how you built the brand to sell product is through the web, it opens up the aperture on what the brick-and-mortar experience could be. It could become a Neighborhood thing, which is what we are talking about now.” Neighborhood Markets are Walmart’s small-format stores.
Dunn said Walmart’s strategy for its digitally native vertical brands is similar to Netflix, which went from streaming film and TV programs produced by others to investing aggressively in its own original award-winning content.
“Ultimately,” Dunn said during his talk, “if you want to both win from an economic perspective and delight customers with stuff they can’t get anywhere else, you’ve got to make your own ‘shows.’ For us, that was: Let’s make our own brands. That’s a combination of building and buying.”