Hot Topic: Omni-channel Retailing

Omni-channel RetailingExactly one year ago we crafted an article discussing the pros and cons of brick-and-mortar retail versus online shopping.  At the conclusion of the article we forecasted where we believe the future of shopping was headed:

“So, where do we see the future of shopping going?  Our answer: neither specific direction – we truly believe that the days of physical stores being separate from online shopping is soon-to-be over.  We feel that, in order for each channel to be successful, they (in-store and online) must work together to deliver a unified and consistent customer experience.  Brands will need to go above and beyond expectations and provide an enjoyable and convenient shopping experience.  This can be done as brands incorporate new technologies into stores to make the shopping experience more efficient, and continue to offer helpful resources for the consumer.  The largest challenge that brands will face is to create one flawless and integrated system, which incorporates both in-store and online shopping together.  We believe that the brands that can do this will be the most successful regardless if they are predominately an in-store or an online brand and retail experience.”

Fast forward to present day.  Meet the term Omni-channel Retailing.  In definition, “Omni-channel Retailing” was created to describe the phenomenon created by merchants who aim to provide consumers with a seamless experience whether shopping online via desktop or mobile device or at a traditional brick-and-mortar location.  Does forecasting this idea certify us at AIP as psychics?  We’ll let that be your call.  In this article, we will discuss how the future for online retail/e-commerce may very well be brick-and-mortar, and will look at some of the brands that are finding success in doing so.

Online/e-commerce retailers are rethinking their online strategy, realizing that physical shops are again one of their biggest assets.  In the last few years, more than 20 online/e-commerce companies in the US have launched a physical presence to better market their goods, forge closer consumer relations, and actually boost online sales.  As an online retailer, the key to a successful physical store is a seamless offline transition, especially when consumers expect, from a retailer, the ability to shop across all channels without limitations.  This expectation was created by the dramatic change in the use and availability of digital.  Online consumers are only a click or a swipe away from buying from a competitor forcing retailers to understand the extreme need and importance of engagement.  By opening physical locations, brands aim to increase awareness and draw consumers in a realm where the retail options aren’t infinite or influenced by a “gatekeeper” – think Google SEO.  And the obvious reason, for purveyors of tactile goods and personal products like clothing, eyewear and jewelry, selling these items in person has great appeal.  The big benefit of flagship stores is that they make incredible marketing vehicles.  Not only do these brick-and-mortar locations tend to be economically successful on their own but they also generate a lift in incremental shopping to the online store.  By doing so, retailers are merging their online and brick-and-mortar presence to provide a seamless customer experience across the web and in-store, which purely online businesses cannot match.  The phenomenon of Omni-channel Retailing was born from the fact that retailers realized that consumers value convenience and engagement above all else.  That means that consumers expect to be able to use any combination of purchasing, fulfillment and customer service options in-store, online, while out and about, and over the phone – throughout the entire shopping process.

Amazon received much attention in November 2015 when it opened its first brick-and-mortar extension – a bookstore in Seattle’s University Village.  But Amazon is only among the latest, if largest, e-commerce players to take their presence from online to traditional retail.  Here’s a look at some of the most successful brands to move into the Omni-channel Retailing model.

 Warby Parker, known for creating a popular brand by selling stylish eyeglass frames for under $100, is one of the leaders in Omni-channel Retailing.  After starting online in 2010, the brand opened its Manhattan (Soho) flagship location three years later and now has 20 stores nationwide, with plans to open another 20 this year.   These brick-and-mortar locations have become a great generator of awareness for the brand and drive a lot of traffic to the website accelerating e-commerce sales.

Bonobos, a menswear brand, first launched its “guideshop” showroom concept when it opened up its office lobby as a fitting room for customers in 2011 in Manhattan.  Now Bonobos has 20 brick-and-mortar locations, stocking no inventory, however, letting customers try on clothing while orders are placed online for home delivery.  Customers make appointments with stylists, or “guides,” get fitted, place their order online through the stylist and get their custom-fit clothing delivered to their homes.  The concept is that consumers want to shop in stores for the engagement benefits, but don’t necessarily want to leave carrying shopping bags.  With these guideshops in place, Bonobos.com is the place to fulfill orders without having to worry about stocking inventory in a location, letting the retailer focus 100% on customer experience.  The average order size in a Bonobos store has proven to be twice of that online alone.

Birchbox’s, a mail-order subscription service offering beauty product samples, brick-and-mortar experience strikes a balance between appealing to the loyal customer who’s familiar with the brand and introducing the concept to those exploring it for the first time.  The first Birchbox retail location opened in Soho, NYC in 2014 with an experience-driven concept.  Engaging with its customers in-store by incorporating video tutorials streams, a “Product Matchmaker” touchscreen for a personalized experience, in-store user reviews displayed on iPads, and a “Try Bar,” a service beauty bar that offers manicures, makeup applications, and hair styling using Birchbox-approved products.  For now, the Soho store serves as an experiment to learn about the ways its obsessive and devoted customers interact with the products, however, there has been much discussion regarding expanding their in-person brand presence through brick-and-mortar.

Blue Nile, leading the jewelry industry in e-commerce, opened its first brick-and-mortar location in 2015 at the Roosevelt Field Mall in Garden City, Long Island.  Since then, the brand has opened three additional in-person locations, which they refer to as “Webrooms.”  Understanding that a consumer’s number one objection to buying jewelry online is not being able to see and touch and feel the product, these locations were opened to allow customers to size up the items but all transactions remain online via in-store tablets and with the help of non-commissioned consultants.  Blue Nile’s Webroom is on the other end of the spectrum from traditional jewelry stores, in terms of both physical look and shopping experience creating a unique experience for consumers.

Rent the Runway, a designer-gown (and now women’s wear) rental service, opened their first brick-and-mortar location in NYC purely at the overwhelming request of their customers.  The brand now has 5 brick-and-mortar locations throughout the US.  The move from online to physical retail stores allowed the brand more exposure, and more frequency from current customers.  The consumer psychology behind the Omni-channel Retail strategy is also key as stores help appease fears women have when trying new brands, and also allows them to explore more styles than they would discover online.

There’s no surprise that when an e-commerce online brand opens a physical brick-and-mortar store there is a direct impact on the ability to acquire new customers.  Doing so enables the brand to gain the ability to drive new consumers and influence sales physically and digitally.  Furthermore, as discussed above, retailers are not only looking for but expecting, a differentiated brand engagement experience.  Omni-channel Retailing is the answer.  These retailers are looking at their storefronts as an extension of their brand, rather than the focus – and that is the direction we foresee continuing and trending in the brick-and-mortar vs. online shopping debate.          

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