As consumer dollars shift away from goods and toward experiences, now may not seem like the best time for brands to bet on physical retail space to generate revenue.
With customer experience top of mind for brands as vacant storefronts spring up in droves due to economic uncertainties, some direct-to-consumer (DTC) brands are taking advantage of available real estate and turning to securing storefronts. physical retail space. . These brands seek to attract 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 putting their toes in the water by launching pop-ups, others are going all out by establishing permanent residences and taking out leases, paying rent, and customizing physical space to create an in-person experience consistent with their brand. .
Is setting up a physical store the right decision?
But with the possibility of a global recession and rising interest rates as the Fed attempts to rein in inflation, is creating a physical presence really a good move for DTC brands in this moment ?
Using the phrases from the Magic 8 Ball, it might be better to “ask again later” because we “can’t predict now”.
With a global recession looming and consumer dollars shifting from goods to experiences, at first glance this may not seem like the best time for brands to bet on revenue-generating brick-and-mortar retail space. . But at the same time, the holidays are fast approaching, the pandemic has been declared “over” and while lucky Americans have saved up and reached millionaire status, the economy is still a dichotomy between disposable income and consumers. spending conscious. .
That said, the Magic 8 Ball might be right – it’s a draw. Brands that take the leap take a risk. But as the saying goes, at great risk [sometimes] comes great rewards.
Related article: How does physical customer experience impact digital customer experience?
What does a brick and mortar storefront offer DTC brands?
The DTC transition to a physical storefront is an opportunity to create an immersive brand experience. With the right design, staffing and training, the in-store experience can humanize a brand and create a lasting impression on consumers.
As an example, consider the in-store experience for luxury brands. Purchases at Louis Vuitton may include a designated associate to serve as the consumer’s personal shopper. The consumer can sip champagne while carefully selecting the perfect luxury handbag in a relaxed, candle-lit atmosphere – and the experience is included in the price. The designer bag costs the same price online as it does in-store (minus shipping), but newbies and brand loyalists often go out of their way to get the full in-store experience that can often validate the value of expensive purchase.
A different but equally impactful scenario is to shop at Dick’s Sporting Goods. When searching for suitable shoes, associates offer to measure a shopper’s foot, offer details about a shoe’s function, and specific style suggestions based on a consumer’s foot pronation and the shape of its arch. This experience could potentially be replicated using advanced technologies such as VR and AR tools, but there really is nothing quite like the human interaction that naturally occurs when an associate is given the opportunity to engage with a customer during an in-store experience.
What DTCs could thrive in a physical space?
Physical stores create experiences and offer a try-before-you-buy option. Although garments may vary in size and style and require trying on items to fit, garments are fairly easy to return or exchange if needed.
However, products that require a deeper level of thought and consideration when buying online can benefit from in-store interactions. Products that require a touch to assess their performance and that have a higher price 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 good complement.
For example, consumer goods such as makeup, home furnishings, and mattresses are most often purchased after touching, smelling, and trying and are difficult to value otherwise. Additionally, when considering purchasing these same products online, the buyer’s journey is longer and there may be longer pauses in decision-making due to a more cumbersome return process. or exchange the goods if they are not completely correct.
One DTC mattress company that has ventured into occupying 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 has opened half a dozen showrooms to give potential customers the chance to stretch out on their mattresses as part of a “try before you buy” strategy. And, let’s be honest, reading mattress reviews can be helpful, but people love their mattresses just like they love their coffee – personalized to suit their tastes, needs and preferences, and what one person likes, another despise.
Related Article: 3 Questions Customer Experience Professionals Should Ask About Phygital
Can the brand benefit from an in-person community?
An added benefit for DTC brands 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 brick-and-mortar stores to create 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 it could host in its 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 buying new clothes. Layer on leveraging local micro-influencers to host the workouts and workshops, and Fabletics has created a solid recipe for in-store success.
Should some DTC brands stay digital?
If an in-person experience or building a community doesn’t elevate the brand or support its mission, it’s probably a good idea to stay digital for now. As most people begin to gather in person again and consumer foot traffic slowly but surely picks up, volatility in the economy remains heightened. In the coming months, inflation may slow and rates may stagnate, but consumer spending trends should continue to surprise everyone.
Therefore, playing it safe until the dust settles may be the best decision and, as the Magic 8 Ball says, “ask for more later.”
