#IRL Mania: The New Value Of A Retail Footprint For DTC Brands

  • September 27, 2019 at 1:07 PM EDT
  • By Retail TouchPoints Team
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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?

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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.

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