Physical retail weakened during the pandemic, and in some cases, it hasn’t come back. However, there are former online-only companies now reexamining their position on brick-and-mortar stores. Why the shift in strategy and distribution?
For example, in 2010 Warby Parker’s main strategy was to cut out the middleman and sell directly to consumers at a cheaper price than consumers could get in stores. Now they have a different story to tell – or sell.
By the end of 2012, Warby Parker had opened 200 stores in 36 states. These retail locations now account for 60% of the company’s total sales. That’s a big shift. It’s also very good news for commercial real estate companies. Vacancy rates at shopping centers declined to 5.6% in the first quarter of 2023.
Warby Parker isn’t the only digital native company that has embraced the shift. Companies such as Everlane (apparel), Casper (beds), Away (luggage), and Allbirds (athletic shoes) have also moved to include storefronts and retailers.
What’s pushing the move? One factor is the increasing cost of online advertising and acquiring new customers, making stores a viable option to finding new customers and adding revenue.
Which do you prefer – online or brick-and-mortar?
Group Activities and Discussion Questions:
- Poll students: What has taken place in online and in-store shopping?
- Why do companies avoid opening physical stores?
- Why are some online companies now embracing physical stores?
- Divide students into teams. Have team find an example of online company that moved to physical stores. How did the company accomplish this?
- Now, have each team select a company that currently sells only online. Have the teams develop a marketing strategy for bringing that company into the physical store to sell its wares.
Source: King, K. (13 May 2023). Online-only startups adopt a bold new strategy: Opening actual shops. Wall Street Journal.