#IRL Mania: The New Value Of A Retail Footprint For DTC Brands
By Mike Menkes, Analytic Partners
While news of legacy retailers shuttering locations dominates the headlines, direct-to-consumer (DTC) brands like Casper, Allbirds and Rent the Runway are launching physical retail locations “In Real Life,” (IRL), and luring consumers with chic storefront design, enthusiastic salespeople and exciting products.
Our extensive research and analyses attest to the omnichannel nature of retail. With consumers often being exposed to media in one channel, but buying the product in another, it’s clear that measurement needs to be considered holistically. But given the widespread belief that the direction of omnichannel is away from “bricks” towards “clicks,” why ever would so many brands decide to put out a shingle?
Here are a few things to consider:
Brick-And-Mortar Presence Boosts Business
Each location helps drive incremental sales both offline and online: Our research shows that consumers are more likely to purchase a product or service if they have the opportunity to experience the brand. Brick-and-mortar presence also serves as branding in and of itself, particularly when supported with PR, marketing and promotions. The benefits of having a physical presence can outweigh any potential cannibalization of online sales for many growing brands. Some data even points to brands benefiting from a lift in online sales following the opening of a physical store.
A Storefront Provides An In-Built Focus Group
Storefronts also help brands to demonstrate and sell complex products: The National Retail Foundation says that using a retail store for customer research is the number one trend of 2019 in retail. The very idea of a “concept store” is about being able to interact with customers and capture every bit of the in-store journey with data to potential optimize in all of your retail channels. With an IRL store, you can more readily demonstrate complex products, more easily assess how merchandising drives sales, and you can talk to consumers about their experience. It’s an ongoing retail focus group that has the benefit of real product interactions — not moderated discussions in a conference room.
Inventory Management Gets Connected To AI
Inventory management is getting smarter, faster and more accurate: There’s been a lot of discussion about the Amazon Go concept, which uses scanners to create “frictionless commerce” and thus sell more goods because you don’t have to queue up for purchases. Walmart is wiring its store of the future for a different reason: inventory management. One of the great challenges all stores have is determining quickly what you do and don’t have in stock, as customers walk out if they don’t find what they want. Walmart needed data in which to train new AI models and created a lab — named “IRL” — within an existing store. Walmart also is using this real-time inventory functionality to update its web site and app accurately, which helps with quick shipping for e-Commerce orders or in-store pickups (for click and collect).
Make #IRL/In Real Life Connections
Interacting with consumers in new ways to build brand demand: Despite how virtual our lives may have become — or perhaps because of it — physical retail stores provide a human touch element of the real-world marketplace. Those Amazon bookstores have been theorized as a place where Amazon connects people through their Prime Membership. Amazon also of course bought its way into the eighth-largest grocery chain in America with the Whole Foods Acquisition. Apple stores are all about connecting people to the brand and now offer classes in photography and even serve as places for political gatherings. I was excited to see that Toys ‘R’ Us will be back with two new stores this holiday season. Yes, I will be there letting my kids test out the toys and posting cute pics of their experiences on Instagram, which is one of the retailer’s big goals.
How we shop is changing, but people still want experiences away from their digital devices. We do love beautiful and interesting places, and experiencing products and services in real life continues to be a factor in decision making for many brands — in addition to, not instead of, online shopping.
As to the future of retail, look to teenagers. They may not hang out in malls as kids did in the past, but they believe in the excitement of Nike, they want to touch and experience Apple products in its latest concept store. DTC brands understand all of this. They will go boldly forward digital first, but offer ways to connect IRL as they build their brands.
Mike Menkes is Senior Vice President at Analytic Partners. Located at the New York office, Menkes has spent the past decade helping grow Analytic Partners’ consulting services. Menkes currently focuses on key global clients and corporate initiatives centered on delivering client service excellence. He has a keen interest in identifying breakthrough insights and implementing processes to help clients make use of advanced analytics.