With the customer experience being top of mind for brands while vacant storefronts are popping up en masse due to economic uncertainties, some direct-to-consumer (DTC) brands are taking advantage of the available real estate and making a move to secure physical retail space. These brands are seeking to entice customers and extend the overall customer experience beyond digital interactions with high hopes of building brand loyalty and, of course, increasing sales.
And while some DTC brands are sticking one toe in the water by launching pop-ups, others are going all in by establishing permanent residencies and taking on leases, paying rent and customizing the physical space to create an in-person experience consistent with their brand.
Is Creating Physical Store Right Move Now?
But with the possibility of a global recession and interest rates going up as the Fed attempts to slow inflation, is creating a brick-and-mortar presence really a good move for DTC brands right now?
Using the phrases of the Magic 8 Ball, it might be best to “Ask again later” because we “Cannot predict now.”
With the threat of a global recession and consumer dollars shifting away from goods and toward experiences, at the surface, it may not seem like the best time for brands to bet on physical retail space generating revenue. But at the same time, the holidays are just around the corner, the pandemic was declared as being “over,” and as fortunate Americans squirreled away savings and hit millionaire status, the economy is still a dichotomy of disposable income and spending-conscious consumers.
With that said, the Magic 8 Ball may be right — it’s a toss-up. Brands that take the leap are taking a risk. But as the saying goes, with great risk [sometimes] comes great rewards.
Related Article: How Does the Physical Customer Experience Impact the Digital CX?
What Does a Brick-and-Mortar Storefront Offer DTC Brands?The DTC transition to a brick-and-mortar storefront is the opportunity to create an immersive brand experience. With the right design, personnel, and training, the in-store experience can humanize a brand and create an everlasting impression on consumers.
As an example, think about the in-store experience for luxury brands. Shopping at Louis Vuitton can include a designated associate to serve as the consumer’s personal shopper. The consumer can sip champagne while carefully selecting the perfect luxe handbag in a relaxed, bougie atmosphere — and the experience is included in the price. The designer bag costs the same online as it does in-store (minus shipping costs), but first-timers and brand loyalists often go out of their way to get the full “in-store experience” that can often validate the value of the pricey purchase.
A different, but just as impactful scenario, is shopping at Dick’s Sporting Goods. When searching for appropriate footwear, associates offer to measure a shopper’s foot, offer details about a shoe’s function, and suggestions for specific styles based on how a consumer’s foot pronates and the shape of their arch. This experience could potentially be replicated using advanced technology such as VR and AR tools, but there really is nothing like the human interaction that naturally occurs when an associate has the opportunity to engage with a customer during an in-store experience.
Which DTCs Could Thrive in a Physical Space?
Physical stores create experiences and offer a try before you buy option. While clothing can differ in size and style and require trying the items on for fit, clothes are pretty easy to return or exchange when necessary.
However, products that require a deeper level of thought and consideration when purchasing online can benefit from in-store interactions. Products that require touch to evaluate their performance and have a higher price tag or are difficult to return or exchange, create greater friction for the user during the online shopping experience. Therefore, a physical store could be a nice complement.
For example, consumer goods such as makeup, home furnishings and mattresses are most often purchased after touching, feeling and trying and are difficult to evaluate otherwise. In addition, when considering purchasing these same products online, the shopper’s journey is longer, and there may be lengthier pauses in decision-making due to a more tedious process for returning or exchanging the goods if they are not quite right.
One DTC mattress company that leaped into occupying a physical space is Saatva. Saatva is an American luxury mattress company that previously only sold mattresses online (you know, they followed the bed-in-a-box trend?). However, the company opened half a dozen showrooms to give potential customers a chance to lay on their mattresses in a “try before you buy” strategy. And, let’s be honest, reading reviews of mattresses can be helpful, but people like their mattresses just as they like their coffee — customized to fit their likes, needs and preferences, and what one person likes, another despises.
Related Article: 3 Questions Customer Experience Professionals Should Ask About Phygital
Can the Brand Benefit From an In-Person Community?
An additional benefit for DTC brands that are considering expanding their brand into physical spaces are those that will thrive by creating a sense of community.
Fabletics, the subscription athleisure company with a celebrity founder, expanded to physical stores to build a community of like-minded people who wanted great clothes for working out and walking around. With a focus on building a loyal customer base, the company launched community events they could host in their spaces.
These events included workouts and workshops that brought their community together for a shared experience, which contributed to the company’s mission and went beyond just shopping for new clothes. Layer in leveraging local and micro-influencers to host the workouts and workshops, and Fabletics created a solid recipe for in-store success.
Should Some DTC Brands Stay Digital?
If an in-person experience or creating a community does not elevate the brand or support its mission, it is likely a good idea to remain digital for now. While most people are back to gathering in person, and consumer foot traffic is slowly but surely picking up, the volatility of the economy remains heightened. In the coming months, inflation may slow, and rates may stagnate, but consumer spending trends are likely to continue surprising everyone.
Therefore, playing it safe until the dust settles may be the best move, and, as the Magic 8 Ball says, “Ask again later.”
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