There is a widespread exodus of retail sales to online, with online predicted to double over the next four years to over $4.8 trillion USD in 2021, according to eMarketer. Yet, despite this, Digital Native Brands (DNB) are moving into physical stores in ever-increasing numbers. In a report by JLL, DNBs have plans to open 850 bricks-and-mortar stores in the US over the next five years with New York being the most popular location for eRetailers to open both pop-up (41.3%) and permanent (59.5%) stores. Only last month, the eCommerce giant Amazon launched its ‘Amazon 4-Star’ store in New York. Why are significant numbers of the world’s most successful online retailers opening stores on the high street?
Many brands have already explored the option of a bricks-and-mortar presence to gain greater exposure and boost visibility and sales. This is true of online start-ups such as Warby Parker and Everlane. Another example is Casper, the mattress eRetailer, which opened its first permanent shop earlier this year, has a further 18 temporary stores and plans to open 200 more within three years. The company says faster sales growth and lower customer acquisition costs in cities with stores shows that their bricks-and-mortar push is a sound strategy and one they can justify pursuing further.
What is interesting about this trend towards DNBs having a bricks-and-mortar presence is that it appears to appeal to certain types of companies, in particular apparel and accessories companies which make up the majority of “clicks-to-bricks” eRetailers. 74% of those with plans to make a physical push in the next few years are apparel and accessories companies. Customers benefit from being able to try on clothing and accessories before making a purchase.
Another noteworthy feature of the bricks-and-mortar expansion is that 50% of DNBs looking to expand their physical presence are those which sell luxury goods. Consumers are perhaps wary of making an expensive purchase without first seeing the luxury product than they might be if it were a cheaper item. Also, in creating a premium bricks-and-mortar shopping experience DNBs add value to their brand.
At eBusiness Institute, our Digital Transformation experts can provide you with in-depth, step-by-step guidance of the current (DNB) Digital Native Brands landscape. Our specially designed Roadmap covers the different building blocks that are fundamental to ensure the effective analysis of your company’s strategic needs and to facilitate your company’s acquisition of or partnership with DNBs. These building blocks provide knowledge of DNBs within each industry to key stakeholders to facilitate your company’s strategic business decision-making process. They also enable us to identify what the first or most important focus area of your company should be based on your company’s structure, strategies and needs.
Contact us to learn more about how we can guide you on investing in or acquiring a Digital Native Brand.
Sources:
JLL Report : https://spark.adobe.com/page/nis799DxR8eWs/&e=64d152fe25c34fd79fe56b41d52104d5
Google Maps: Amazon 4 stars New York
