© Photo Hannah Morgan

Why More and More Online Shops Open Brick and Mortar Stores

What does the future of retail look like? For a long time, the traditional model of analogue retail had been deemed outdated. Now, however, it is experiencing a renaissance, boosted by online shops that have started to open brick and mortar stores themselves. Our author Viktor Szukitsch presents three examples and argues that stationary retail is here to stay.

It hasn’t been very long that the success of online shops seemed to herald the end of classic, analogue retail. Anxiously we forecast a future of deserted shopping streets and malls – a future in which shopping would be done online more or less exclusively. Today, this development has taken a new turn: Increasingly, online retailers are opening shops and flagship stores themselves. What might seem surprising at first, turns out to be rather inevitable if regarded closely.

Amazon

The online shopping giant set up its first offline presence in Seattle at the end of 2015. At first glance, Amazon Books looks like a normal bookshop. However, it profits from its affiliation with its online mother:

  • The offered range of products is based on data gathered online, and the books are accompanied by their online reviews;
  • payment is simpler, because many customers’ credit cards have already been registered online;
  • in-store prices – which can only be viewed via app – are identical to online prices at all times, so customers never risk missing out on better offers online.

At the same time, browsing is a lot more fun in-store than it is on the website: You can see the book covers while strolling by, you can touch the books, smell and open them at will – and experience a laid-back relaxed book shop environment. Best of both worlds, as it were.

Strolling through the aisles of a bookstore – now at Amazon, too. © Photo Flickr NEO_II

Birchbox

In July 2014 beauty retailer Birchbox – best known for their curated sample boxes – set up a shop in SoHo, New York. On the one hand it serves as a marketing opportunity for the online shop, with which it is strongly interconnected: Customers are able to browse offers, reviews and tutorials via iPads provided by the store. On the other hand the shop doubles as a lab: Using cameras and heat sensors, Birchbox observes customer behavior and draws conclusions for its online strategy.

Last but not least, the existence of a brick and mortar store strengthens customer loyalty. As co-founder Katia Beauchamp explains: “A customer who knows the company and comes in the door has three times the value when she touches the Birchbox store than she would in a normal life cycle with us.” For here as anywhere else, nothing beats trying out products in the shop. And nothing fosters a connection like personal contact, especially if it leads to a pleasant experience – like a treatment at the on-site beauty salon.

Edited

Edited, a German fashion brand by Otto-Group subsidiary Collins opened their flagship store in Hamburg’s Schanzenviertel last October. In addition to its own brand (about 25% of the products on offer), Edited sells the same range of labels as its online store. “With the local store we aim to strengthen brand awareness and gain new customers for edited.de”, managing director Hannes Wiese explains.

Back to the future: stationary retail. © Photo Yuriy Trubitsyn

The Dual Future of Retail

The advantages an offline presence can have for online retailers – advertising effect, a better understanding of the consumer base, heightened experience potential, and a competitive advantage over purely web-based competitors – suggest that the trend will expand in the near future.

Online shopping is here to stay but brick and mortar stores will not vanish either – at least not until as digital browsing, sampling, and experiencing don’t reach the quality and effect of the real thing. Customers’ emotions can be triggered much more directly in an offline context than they are online, where decisions are still made in a predominantly rational manner. Before this changes, some time will pass. And until then companies hardly have a choice but to interlock the two and to create shopping experiences which combine the best aspects of both worlds – for the retailers, as well as the consumers.