Why digitally native brands are stepping up their march into brick-and-mortar

Al Urbanski
Traffic at Allbirds' stores nearly quadrupled in 2022, according to Placer.ai.

Shoppers spend up to 10 times longer in retailers’ physical store locations than they do on their e-commerce sites.

That’s just one of many reasons why so many direct-to-consumer and digitally native brands have hired real estate brokers and emerged in malls and shopping centers, according to a new whitepaper from the digital traffic-tracker Placer.ai.

The long-held belief that purchases considered on brick-and mortar shopping trips are consummated online finds verification in a study included in the report done by the digital intelligence platform SimilarWeb. It found that customers of Outdoor Voices and Everlane spent, on average, more than 35 minutes on store visits compared to less than four minutes in their online stores—where they often made the purchases they contemplated inside the shops.

The whitepaper, entitled “Digitally Native and Direct-to-Consumer Brands Take to the Streets,” holds that retail locations offer an immersive experience that is nearly impossible to replicate online and can speed customer acquisition, fulfillment, and reverse logistics.

The eco-friendly footwear and apparel company Allbirds has maintained a steady level of traffic on its website while seeing traffic throng to its 40-plus stores in the United States. Physical foot traffic quadrupled at Allbirds’ locations from the first week of January through the second week of December in 2022.

Placer.ai reported that Allbirds’ environmentally conscious consumers go to its stores to shop and try on several of the brand’s natural fabric products before going home to deliberate and make their purchases online.

Madison Reed, a hair coloring brand that consumers can use at home or be treated with in shops, has gone from 12 “hair color bars” in March 2020 to 75 in November 2022. Placer.ai’s foot traffic analysis of those locations revealed that, as the brand’s physical store visits steadily increased during the expansion, its online visits increased at much the same pace. Each channel benefited from the other. More new customers were exposed to the brand by getting in-shop hair-coloring treatments and afterward made online purchases that drove them back to the stores, which serve as fulfillment centers for online orders.

Strong and long-performing digitally native brands, Placer.ai found, have an advantage in selecting physical locations due to the intimate knowledge they’ve acquired of their customers’ demographics, psychographics, and behavior online.

Bonobos, one of the first digitally native brands to open brick-and-mortar stores, and now owned by Walmart, has long embraced a distinct profile of its Class A customer base:  young men with advanced degrees who work in professional, scientific, or technical services and depend on LinkedIn to advance their careers. A foot traffic analysis of Bonobos locations done by Placer.ai revealed that they deftly home in on that target customer.

“The degree to which this persona defines the chain’s customer base varies by store,” the whitepaper reported, “yet all of the stores analyzed serve trade areas where residents tend to be over-indexed for most of these attributes—indicating that Bonobos has chosen its store locations wisely.”

Stores opened by Away Travel, a digitally native luggage and travel accessories company known for its durable bags, seek to attract the heavy business travelers who have long been their best e-commerce customers.

“They prioritize quality products and are also likely to travel alone and seek luxury experiences,” according to Placer.ai. “These characteristics of Away’s offline visitors seem consistent with the profile of the brand’s online shoppers.”

The whitepaper predicts that digitally native and direct-to-consumer retail brands will continue to vie with traditional retailers for physical spaces in select markets.

“As e-commerce growth slows and online and physical retail move towards an equilibrium,” said the report, “DNBs and DTCs are likely to ramp up investment in store space and continue reaping the multiple benefits of a strategically brick-and-mortar fleet.”

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