Online stores are bucking the digital trend they set in motion and retreating from higher advertising rates back into brick and mortar retail spaces where rents have dropped. Digital small businesses are following in the wake of their bigger competitors like Amazon and Shopify.
Small Business Trends contacted Andrew Witkin, founder and president of StickerYou, a provider of custom stickers and labels, to learn more about how and why this digital tide is reversing.
Witkin explained via email how this new focus is fueled by brand awareness.
Online Retailers View Business Through a Different Lens
“Certain ecommerce-only retailers are looking at physical retail through a different lens, from the perspective of what a physical store/buying experience can do for their brand that is unique or better than what can be done online,” he writes.
Not surprisingly, the bottom line is driving this shift. Witkin highlights how the marketing ROI is being amplified and how some owners of commercial real estate are sweetening the pot.
Store Closures Drive the Trend
“Rents at retail stores are improving, given widespread traditional retail store closures. Some landlords are more open to shorter-term rent deals and pop-up concepts, so there is a lower risk to trial a physical retail store,” Witkin says. “The ROI on the retail investment can be viewed against the physical store’s sales as well as incremental online sales due to the physical store’s awareness-creation.”
Consumer Behavior Adds to Momentum
The new trend also owes some of its momentum to an increase in store closings by big retailers like Sears, bumping up mall vacancy rates.
Witkin also attributes a growing preference among retail consumers to physically interact with products. These customers want the kind of tactile experience an online store can’t provide.
Commercial Owners Offer New Incentives
Commercial real estate owners clearly realize the importance of attracting these previously online-only small businesses. Established mall operators like Macerich have added services like BrandBox to further entice online entrepreneurs to physical locations.
Online eyeglass seller Warby Parker joins the ranks of high profile online sellers moving to a physical retail space.
Witkin sees the trend gaining momentum creating a new online/brick and mortar hybrid unlike the chain retailers it is replacing.
Physical Retail Changes Shape
“I believe more online retailers will get into physical retail,” he writes. “However, I don’t believe the scale of stores will be the same as that of traditional retail chains. Perhaps an online retailer will have a few stores in a city, but I don’t believe many online retailers will go past that. Many online retailers may only open up just one store, or a handful of stores.”
Witkin also sees a paradoxical trend in the opposite direction to some degree with brick-and-mortar stores investing in their online presence. For some time, they focused on omnichannel pick up locations which gave them a good footing.
However, Witkin says these traditional brick-and-mortar retailers need to improve the merchandise experience in store so there’s more reason to engage products and not just pick things up from their physical locations.
The Jump from Online to Offline Retail Requires Consideration
Witkin also makes a few suggestions for any small businesses looking to make the jump.
“I would first evaluate if the business, merchandise or brand experience can be enhanced by a physical retail location. If the answer is yes, then I would start with a pop-up and test the waters.”
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