Article

Online retailers shift from clicks to mortar

By Chris Beanland

Many online retailers are now creating ‘showrooms’ to showcase their products – then feeding buyers through to their website. Or, as with Amazon Go, customers are given the chance to leave with their products without any cash physically changing hands. Items are scanned automatically as you place them in your basket and your Amazon Prime account charged as you leave the store.

These are just two examples of how online-only retailers are creating different kinds of footprints in the real world and catering to customers who increasingly expect more interaction and deeper relationships with retailers and brands.

Mini showrooms

With Amazon also opening a bookshop in Seattle, the irony hasn’t been lost on many traditional retailers whose business model has been undercut by online giants. Yet this so-called move from clicks to bricks is the way innovative online retailers are moving.

American spectacles retailer Warby Parker and men’s fashion site Bonobos have embraced the trend, as have UK furniture manufacturer Loaf and global handicrafts outlet Etsy, the latter partnering with Nordstrom in the US and Selfridges in the UK.

For Warby Parker, it began when Co-founder and Co-Chief Executive Neil Blumenthal invited customers to his apartment to try on pairs of glasses. Customers then used fellow Co-founder and Co-Chief Executive Dave Gilboa’s laptop to make purchases via the website.

‘It was clear that some of our customers wanted a physical shopping experience,’ said Blumenthal. The low-cost designer spectacles company would later launch the Warby Parker Class Trip, a store built into a school bus that visited 15 US cities and it now has more than 30 retail outlets across North America.

Grant Thornton’s Head of Retail, Ian Smart says: ‘Online retailers are increasingly showcasing their products to enable customers to view and feel them before they buy. Many consumers still want the experience of the physical proximity to the product, particularly products such as fashion garments and furniture. Showrooms blend the ease of technology and online shopping with the enjoyment and benefits of the shopping experience.’

As the trend evolves, we could see these kinds of ‘stores’ in every town. ‘The showrooms that might start to appear on the high street may stock a limited number of pieces, for example a pair of trousers in a single size, ensuring that customers can feel the fabric; and the customer service may draw from the leisure sector, with staff becoming brand advocates and customers being treated more as guests.

Designed for social media

‘This approach could help retailers establish themselves as purveyors of lifestyles, rather than goods – something that will go down well in the age of Instagram and is a move towards more experiential living,’ says Smart.

These showrooms are unlikely to end up looking like your local branch of Tesco. They might be sparsely stocked, feature fridges of drinks (as in branches of estate agent Foxtons) or be styled like a coffee shop that’s a hip space to lounge in while enticing you to post on social media what you’re looking at.

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Opening doors to new markets

We could also see pop-up showrooms in novel locations, like Made.com’s airport location in Amsterdam or at music festivals, which brands love because they can get their name in front of high-spending, young, early adopters.

‘A key benefit to online retailers is that they can tear up the rule book and be more dynamic than those with a strong existing store presence. This would allow them to personalise their stores to the location in which they are based or to the customers they are trying to attract,’ says Smart. ‘CEOs may want to adopt this model to protect and grow revenues, as well as to build market share as consumer tastes change.’

Many consumers have developed a ‘showroom’ style of shopping, says Smart, going into a physical store to browse and get a sense of the product they would like to purchase, before doing so online. But with 90% of all retail purchases still coming through physical stores, online retailers seem ready to take their products to the high street.

Driving sales

And, as Smart points out, the showroom model has a long history. Car showrooms have long been a fixture of towns around the world. But even they are being shaken up.Volkswagen and Hyundai have recently opened snazzy showrooms at Birmingham’s Bullring and London’s Westfield shopping centres to save potential buyers from needing to travel to edge-of-town industrial estates, and to boost their brands among women and younger consumers.

It sounds like an obvious road for a successful retail website to head down. So is there any reason CEOs wouldn’t want to choose it? ‘The model is largely unproven, so some CEOs may wish to wait and see,’ says Smart.

‘There are also challenges for an online-only retailer to develop a physical presence. For example, managing an estate of shops requires specific skills and capabilities that are markedly different from the challenges associated with online retail (see panel, above). Additionally, the introduction of physical shops will inevitably be expensive and have an impact on your price, so there is plenty to consider.’

From clicks to bricks - things to think about when you're considering a showroom

1. Establish the business case - Why bricks and mortar? Will it add a new dimension to your business and, crucially, will it drive sales growth?

2. Consider the costs - One of the attractions of an online shop is its low cost compared with the high street. Can you afford the investment?

3. Think logistics - Displays, promotions, stock levels, equipment and materials must all be covered in your plans. Get them working seamlessly.

4. Survey the market - Research local competitors and look at footfall in your chosen location. Make a realistic estimate of how many people you’ll be able to entice in.

5. Recruit the right sales staff - Staff will make or break your business. Hire personalities who can engage browsers and help them complete purchases.

6. Rethink your advertising - Advertising a physical business is completely different to its online equivalent. Think local, but don’t ignore the web tools marketers use.

> Get in touch: if you're considering a move to a physical space, or to discuss this article in more detail contact Ian Smart.