A broader reach: Physical stores serve as a billboard for digitally native brands, enable shoppers to touch merchandise, and provide an opportunity for in-store staff to build connections with customers.
- Those that offer in-store services add to those benefits by providing more reasons for consumers to visit. And customers who visit those retailers’ stores for a facial treatment or an eye exam typically spend more on products than other customers, per the Business of Fashion.
- For example, Warby Parker stores that employ an eye doctor have a higher conversion rate than other stores, and they also sell a larger share of progressive and anti-fatigue lenses, said Steve Miller, chief financial officer, during the retailer’s Q2 earnings call.
- Meanwhile, those selling wholesale are doing so to expand their reach in ways that aren’t feasible on their own. While Allbirds operates 55 brick-and-mortar stores, its wholesale relationships with retailers such as Dick’s Sporting Goods-owned Public Lands and REI are helping it build brand awareness and reach new customers, co-CEO Joey Zwillinger told Retail Dive.
The big takeaway: Building out an offline presence is expensive and success is far from guaranteed. That presents a particular challenge at a time when rising interest rates and slowing economic growth are causing many retailers to focus on their bottom lines.
- There are also fewer available locations to place a store as the US retail vacancy rate fell to its lowest level in at least 15 years, per Cushman & Wakefield data reported in The Wall Street Journal. That’s pushed up rent prices. For example, asking rents for US shopping centers in Q2 were 16% higher than five years ago.
- As a result, retailers should take a conservative or collaborative approach as they look to expand offline.
Go further: For more on D2C strategies, read our report here.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.