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When digital goes physical


With average in-store purchases exceeding online sales by two and three times, popular online-only retailers, including Birchbox, Piperlime, Bonobos and Blank Label are continuing their expansion into physical storefronts, further accelerating the trend of online retail concepts expanding their omnichannel sales strategy to include physical locations.

While the allure and attraction of opening physical store locations is appealing, there are fundamental differences between operating an online-only storefront and a physical store environment. The success of moving into an omnichannel offering hinges on how a brand prepares for and manages a collection of critical factors during the process.

To test the waters, multiple online retailers have been seeking “popup” or temporary retail space as an alternative to a permanent physical location — with mixed results. This strategy is largely driven by the relatively low cost of entry for most popup events, along with the opportunity to create an initial impression in multiple markets in a short period of time. For the most part, a popup location by definition and relatively short duration provides only a limited opportunity to build a connection and awareness with new customers.

Most digital retailers considering a physical location have likely already built and manage a complex system of distribution channels, including order fulfilment, website analytics and a host of other interconnected disciplines. In making the transition to the physical retail environment, new challenges need to be considered, including building a team of professionals to guide the decision making process in a whole new world, specifically relating to store design, municipal regulations, architecture, site selection, lease negotiation, construction management and store merchandising. Almost every business book ever written stresses the importance of knowing your own strengths and weaknesses and it absolutely applies here.

The axiom of “failing to plan is planning to fail” rings true when transitioning to the physical environment. In creating a digital concept, these brands created a comprehensive business plan to guide the launch of their digital storefront, and it is critical to take the time to craft and develop a comprehensive strategy for this process as well. This plan should include a clearly articulated mission for the physical stores (e.g. promote brand awareness, drive sales growth, etc.), a breakdown of estimated expenses related to new store design/architecture, a new store growth count and target market strategy, and a definition of success related to the new store program.

For most digital-to-physical retail concepts, the goal is not simply to saturate a market with physical stores, but to drive brand awareness and traffic to the digital storefront. Therefore, identifying which major metropolitan markets most closely reflect their customer profile — which may not be where the digital storefront is currently operating — while also providing exposure and maximizing customer engagement is extremely important.

Significant attention and thought should go into understanding where to position the physical store within a particular retail environment (e.g. corners, in-line, visibility, signage, etc.) and which co-tenants in close proximity could maximize the opportunity for success. This is happens to be true for all expanding retail concepts, including established retail brands, which can underemphasize the importance of this part of the process and find themselves in challenging store locations as a result.

The days of retailers executing more than 50 new store rollout programs are largely behind us. In today’s retail environment, even national brands are viewing their stores more as showrooms to support and drive online sales; and this is even more significant for digital retail concepts. Given this, total store count for an entire new store rollout program may only be one per targeted major metropolitan area, and include only five to 10 stores total in strategic cities throughout the country.

According to U.S. Department of Commerce, more than 90% of retail sales are still occurring in-store, however, as digital retail concepts make the move into the physical storefronts, the industry continues to gather critical data and information regarding the ideal size, layout and positioning of these stores in the traditional retail landscape. The good news: those who have made the move to open brick and mortar locations have experienced increased sales and customer retention both in-store and online.

As consumers continue to seek out more authentic and sustainable products, the emergence of digital brands into the physical store environment has created more outlets for smaller and, in many cases, U.S.-based manufactures, ultimately creating more options for consumers. This is a trend that will continue to grow in the foreseeable future and is truly an exciting and groundbreaking movement for the retail industry.

James McCandless is the managing director of retail for Streetsense, an X Team International partner and multidisciplinary design and strategy collective providing solutions to the retail, restaurant, hospitality and real estate sectors. Streetsense focuses on creating meaningful brands, places and experiences. To learn more, please visit

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