Over the last decade, we’ve seen retail titans shutter their doors at alarming rates, leaving many malls and retail locations to collect dust. This has come in conjunction with the sharp rise of e-commerce, specifically brands growing on Amazon and Shopify. In the wake of traditional retailers having to close down countless locations, growing DTC brands have been provided the opportunity to develop a flexible omnichannel strategy that compliments their digital-first approach.
What we are seeing is a recalibration of the retail landscape, with some former industry leaders like Toys R’ Us returning with a measured omnichannel approach, and premium DNVB’s that pioneered e-commerce applying their learnings to a new challenge by expanding to brick and mortar.
As an e-commerce focused agency, we’ve found ourselves working more in the physical world, and providing clients such as Jonathan Adler, Veja, and A.P.C. with holistic retail solutions for their blended online and offline presence. Here, we dive into our findings and best practices for retailers looking to establish and scale their omnichannel experience for the next decade. The fundamental strategies from e-commerce still apply: meet the customers where they are and make the experience personal to build a long-lasting relationship.
Why Are Brands Moving Back To Physical Retail Locations?
New brands, often backed by VC’s expecting for fast-paced growth, have continued to emerge and saturate the DTC market. Incumbents and challengers are fighting over traditional DNVB advertising channels such as Facebook and Instagram which has resulted in an unsustainable rise in customer acquisition costs (CAC). Brands can no longer rely solely on these channels to drive customers to their sites, especially when CAC is outpacing customer LTV. With more competition across every consumer category, the DTC buyer’s journey has evolved from linear online touchpoints to non-linear touchpoints across multiple channels. Brands with a physical touchpoint allow potential and existing customers to interact with products in a more personal way, which cuts through the noise of competitors. These 1-to-1 customer interactions can come in the form of pop-ups, temporary showrooms, and new-age “department stores” like Neighborhood Goods and Showfields.
In addition to competition with fellow DNVB’s, brands are facing competition from Amazon and Walmart. Amazon’s delivery options range from two-day delivery to easy pickup at city drop box locations. A Retail Trend Survey reported that over half of shoppers who have tried in-store pickup have done so at Walmart, which has been running its program since 2013. Meanwhile, Shopify plans to create its own fulfillment network, eventually giving its community the ability to compete with Amazon on fulfillment at scale. In the interim, Shopify merchants are strategically using existing retail locations as mini distribution centers to cut costs on last mile deliveries.
How Are Brands Setting Up Shop
When DTC companies make the decision to set up physical locations, they are doing so with a bevy of customer data and demographics, including location, age ranges, and frequency of purchasing. It’s no coincidence that DTC brands have flooded into Williamsburg, Brooklyn over the last couple years. Cross referencing customer data with the demographic data of a potential store or pop-up location, DTC brands get a head start on a successful retail experience from the get-go by meeting their customers right where they are.
On Shopify Plus, this data is baked right into the platform as customers make purchases, and by leveraging Shopify Plus to run all sales channels (ecommerce, brick and mortar, wholesale, Instagram, etc), retailers are able to gather and utilize valuable customer insights to plan for future growth.
It’s important to establish the goals for a retail location, especially if it’s a temporary locale. In many cases, the primary goals of a retail experience are to continue to build community with existing customers, raise brand awareness, and create a unique and memorable experience for customers. When retailers view their stores as marketing opportunities and view their retail location as just one piece of the overall customer acquisition and retention strategy, they tend to take more liberties with the experience, which stands in their favor.
For example, earlier this year the Hill City team established a pop-up at Westerlind, a popular, boutique outdoor shop in SoHo. Calvin Leung, Creative Director of Hill City, said the goal of the pop-up was to connect with the community and raise brand awareness through collaboration with a retailer that shares similar values. Backcountry, the online retailer, ran a pop-up with similar intentions. A brand survey showed that 55% of customers plan to visit the brand’s website after visiting the pop-up and that 63% of visitors had a “much more positive” view of Backcountry after visiting its SoHo retail location. In both cases, brands used the time to gain valuable insights through one on one interactions.
Best Practices For A Best-In-Class Experience
Once a store or pop up has been setup, there are a handful of key considerations that can make or break the success of that physical location. The first and probably most obvious is data collection. Hybrid shoppers’ customer journey may look something like this: discover a brand through Instagram, click through to the website to learn more about the product, go to a retail location to try on product in different sizes, return to the website a week later to purchase that product. The data produced throughout that journey can be extremely valuable, but only if a brands’ systems are unified and collecting data at each touchpoint.
When brands are able to collect customer data, including purchasing history, locations, and interactions between brand and customer in one unique record, both the brands and their customers can have an enriching experience. We recommend a combination of Shopify Plus and Klaviyo to our clients to collect customer data, and communicate with their customers using that data. With Shopify Plus, there is one unique customer record per person, regardless of where they shop, which makes the data collection and data purity much easier to manage.
Another key feature and one that’s set to be in 90% of DTC-brand physical locations is Buy Online, Pick Up In Store (BOPIS). This feature is a great way to save on shipping fees and get customers into the store to experience the brand. To have a truly successful BOPIS implementation, inventory management must be synced across all channels to accurately reflect when items are low on stock, and when a purchase is marked for BOPIS that item in-store is reserved for the right customer.
A recent study showed that 36% of retailers rank synching online and in-store inventory as an obstacle, and 22% reported their legacy systems are not sophisticated enough for their omnichannel needs. Verbal+Visual often works with an integration partner, such as Fisher Technology, to ensure our merchants have all channels communicating with back end systems and the ERP.
As customers peruse your physical location, it’s important to think about how your e-commerce site is working in tandem with the offline experience. Showrooming or Webrooming includes activities such as researching product information, reading reviews, and looking for alternative pricing online. By designing a site experience with these practices in mind, retailers can be proactive about providing customers with a rich content experience to help ensure conversions. Mobile site design should take into account that in-store shoppers are looking for quick product information such as price, sizing, and inventory. If a certain product or size is not available in store, shoppers will turn to mobile to check availability online.
Retail Dive’s recent study shows that about a third of participants reported frequently going to stores to try out items before buying on the web. Retailers can capitalize on this trend by allowing customers to save products to a wishlist or add to cart in-store, and buy later online.
On the e-commerce side, retailers must do a better job explaining and promoting BOPIS as an option. To do so, retailers can follow these cues:
Clearly show BOPIS option on the PDP along with inventory availability at nearby locations if something is sold out online
Make BOPIS a shipping method option at checkout
Invite shoppers to opt in to email or SMS notifications when the order is ready for pickup
Have a strategy for managing BOPIS option at peak traffic, to avoid discrepancies in inventory across channels
As we mentioned earlier in this post, the cost of customer acquisition is rapidly rising and it’s important for lifetime value to be placed at a higher premium. Loyalty programs, then, are an easy way to encourage repeat shopping through customer affinity and incentives. By intertwining your loyalty program into the in-store experience, you can provide customers with the ability to use loyalty points to complete their purchase, and add to their points by giving them added loyalty points to buy additional items within that particular store visit.
Who’s Doing It Well
Over the last few months, we have visited some of our own clients’ physical retail spaces as well as other brands we think are leading the way in their omnichannel approach. Nick, from our sales and marketing team, has provided a summary below of some of his favorite IRL brand experiences:
Across The Pond. This multi-retailer pop-up in SoHo took place over three days and was hosted by our friends at The Ember Company. As the name suggests, the brands were all UK-based and were setting up shop to raise brand awareness and gain insights on US shoppers and their buying habits. I spoke to Dov O’Neil, from the eyewear company Cubitts, who explained that his goal was to understand the customer journey of purchasing glasses in the US as compared to the UK. Where does an eye exam fall in the purchase? Do customers prefer at-home try-on or in-store visits? All of the brands I stopped at were after the same type of information for their respective products, trying to find who their ideal customer is in the US market. However, a mistake almost all of the retailers made was not setting up a system to collect prospective customer emails. They were not prepared to capitalize on people showing genuine interest in the brands and who wanted to continue to engage with the brand online.
Aimé Leon Dore. ALD launched its collaboration with Porsche online and offline, at the Jeffrey Deitch gallery in New York. On display, a restored Porsche 911, custom designed for the collection and for use in the brand’s digital lookbook. ALD does a masterful job of translating its brand guidelines to whatever medium it decides to create on. The carefully curated layout of the gallery and its mix of merchandise, artifacts, and Porsche paraphernalia was a perfect mirror for the how the brand exists in the digital world. Online, a deliberate mix of content and commerce makes shopping feel experiential. Of course, Aimé Leon Dore’s flagship store also extends the brand’s online aesthetic to IRL. The cafe attached to the store encourages customers to take their time shopping but more importantly, allows them to connect with other brand evangelists. The store employees understand the importance of user generated content, allowing and even helping customers take pictures of the various artifacts placed throughout the store.
Veja. The flagship store at 205 Mulberry Street provides a window into the brand’s thoughtful and ethical practices, and is a bold entrance for the French-based brand to introduce itself to the neighborhood. The store is stripped down and keeps many of the original locations’ details. This level of transparency and rawness is exactly what the brand is all about. The company’s mission is laid out across the walls as you walk into the store, and before you see any merchandise - reinforcing the brand’s commitment to thoughtful commerce. The in-store team is extremely well informed about the product line and what materials make up each model, and which ones are the most eco-friendly. Using Shopify POS, employees can easily pull up customer profiles and find their order history and shoe size from past orders. Read more about our work with Veja.
It’s clear that the DTC model has greatly shifted from 10 years ago to a digitally-native-meets-omnichannel mindset, and premium retail brands need to invest into a well balanced omnichannel approach to survive and thrive. By focusing on experience over consumption, the brands we’ve outlined above are establishing a strong foundation for years to come. They are able to maintain high LTV’s, low(ish) CAC’s, and have sustainable growth curves for the long haul. We’re grateful to be working with a bevy of brands who are taking thoughtful approaches to crafting online and offline experiences worth remembering. After all, we as humans make and keep connections to our experiences over individual purchases, and the brands that craft memorable experiences are sure to be in our hearts and wallets for a long time to come.