Are new brick and mortar solutions the key to digital brand growth?

Image: Showfields Instagram page
Jan 29, 2019
Tom Ryan

A few more communal retail spots have arrived in recent months to join a growing crop of places offering turnkey solutions to support digital natives’ journey to physical retail.

In December, a four-story brick and mortar retail concept called SHOWFIELDS, “bringing digitally native brands to life with customized flagship spaces” opened in lower Manhattan.

So far, only the first floor has opened with a focus on wellness brands. Most of the 11 tenants offer testing and trial in Instagramable settings.

The first floor also houses The Den, a space for rotating cultural programming. In 2019, the second floor will open with home brands, the third with fashion brands and the fourth will be a community-centered co-working and programming space. Food and drink will be available.

For digital brands, a six-step online process helps configure the size of their space, the length of their stay and staffing requirements. A monthly fee is required.

In November, Macerich, the mall owner, opened BrandBox in Tysons Corner Center outside Washington, D.C. after recognizing that “digitally native brands are a key part of the future retail landscape and require a more flexible approach to traditional real estate.”

The 11,000-square-foot space will house six rotating brands with the focus on flexible space and lease terms. Macerich will also help with design and buildout, staffing, social and experiential marketing. Tenants will also have access to an analytics dashboard.

Matt Scanlan, co-founder and CEO of Naadam, an apparel start-up, told CNBC that Macerich “set us up with retail technologies and subscription software that are normally inefficient to install for a pop-up but can be transformative in terms of learnings.”

Macerich plans to expand BrandBox to its malls in Santa Monica, Philadelphia and Scottsdale.

Other physical places supporting digital brands include b8ta with 14 stores across the country, The Market @ Macy’s inside select Macy’s locations, Neighborhood Goods in Plano, TX; Fourpost at Mall of America and West Edmonton Mall in Alberta, Canada; “The Edit” from mall-operator Simon at Roosevelt Field Mall; and the just-opened The Gathering Shops at Westfield Garden State Plaza in Paramus, NJ.

DISCUSSION QUESTIONS: What do you see as the biggest benefit that turnkey marketplaces offer digital brands as they transition to physical retail? What is needed for these rotating, digital-native led marketplaces to click with consumers, as well?

Please practice The RetailWire Golden Rule when submitting your comments.
"Turnkey marketplaces are the new pop-ups. "
"The win for digital native brands with these temporary spaces is the ease with which they can be up and running AND gain valuable data about customers."
"The SHOWFIELDS concept is a great example of a marketplace that capitalizes on consumers’ love of the theater of shopping."

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14 Comments on "Are new brick and mortar solutions the key to digital brand growth?"

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Paula Rosenblum

I’m not crazy about the transient nature of the locations. I somehow think digital natives need to establish a beach head where customers will consistently find them, order, pick up product, etc.

I think it’s a key to profitability.

Chris Petersen, PhD.

Today’s customer has become the point of sale. They research, shop, purchase and collect anytime and everywhere, including physical retail. Beauty lies in the eyes of the beholder. The best way to understand what resonates with today’s customers is to be where they are to see their experiences first hand. Turnkey marketplaces offer digital brands the opportunity to walk in the customer’s shoes. Great turnkey marketplaces expose customers to innovation and experiences not found in traditional retail.

Charles Dimov

This is a delicious innovation in retail. Going experimental-physical gives digital-native retailers an opportunity to test the waters with brick and mortar. Then if their customer base reacts well to seeing, touching, smelling or tasting their products, it opens a new channel and avenue to them. There are many retailers like Indochino and Frank & Oak who made this same transition, profitably.

What retailers need is to remember to make it an event. Get customers to want to come out to meet them in person. Make it a special occasion and make sure to interview the customers about whether a permanent physical presence makes sense. Experiments like these are what retail needs more and more. Well done!

Jeff Sward

Congratulations to Macerich and other mall operators for becoming enablers and nurturers of emerging brands. Yes, digitally-native brands need counsel and support as they migrate into the physical world. And yes, brick-and-mortar native brands need counsel and support as they work to evolve very old thinking and execution. I will always maintain that physical retail has a huge advantage over digital retail. Shopping and buying is a sensory and emotional experience. The memory of that sensory and emotional experience (brand loyalty) will be present when the customer migrates back and forth from digital to physical shopping/buying. So will that memory be rooted in the 1980s or 2020?

Neil Saunders

This sounds good as a marketing activity, especially for small brands wanting to increase their profile. In this way, it’s something of a stepping stone between having no physical presence and having a permanent location where customers can come and visit. Ultimately, I suspect big and successful digital brands will want to have their own spaces where they can control all aspects of the operation.

Ralph Jacobson

I hate to make a blanket statement, however in my experience, on average, online retail startup founders have far less retail-specific expertise than the typical physical retailer. So, turnkey physical setups like these can really help the digital natives. Also, creating physical awareness of your online brand is always a good thing in the shoppers’ eyes.

Cynthia Holcomb

Exciting retail. The potential and likely future of “have to shop” destination retail. New turnkey marketplaces, allowing fresh, ever-changing retail environments that are lacking at the mall. People still love to shop in physical environments. People are just tired of shopping at the mall. Turnkey marketplaces are the new pop-ups. Access, democratizing retail for digitally-native entrepreneurs.

Bob Amster

The biggest advantage that these marketplaces offer digitally-native brands is a jump-start to getting into business quickly and thereby removing certain aspects of starting a store’s business like a systems infrastructure — it’s ready made retail space. What the retailer then has to manage is the product, the logistics and the personnel.

Brandon Rael

Having an experiential showroom-like shopping journey is critical to driving a more meaningful connection between these digital native brands and their customers. A more turnkey like approach is essential for setting up these marketplaces and Macerich, Showfields, and other popup-oriented companies are helping with the transition. Especially because opening a physical retail space has a far more complex operating model than it appears on the surface.

Digital-native brands have historically grown exponentially once they have opened a physical place. Commerce happens 24/7, with the customer leading how they want to engage. It’s key for these digital-native brands to set up a place to entertain, connect and inspire.

Doug Garnett

Physical space dedicated to a partial implementation of brick-and-mortar retail for digital natives? A lot of things don’t add up.

First, it sounds partial. Rather than sell their goods these are like promotional popups. There’s some value. But if the good are important they should be sold. And if they aren’t true retail spaces, then customers are going to read that as negative.

Second, we need to remember that Sharper Image failed in the end. Why? Too much competition carried goods that were far too close (and Sharper Image dedicated themselves to a few hero products). These sound like poorer versions of the Sharper Image store.

This idea doesn’t add up for me because it lacks the unifying value of retail: a place to shop for curated, related goods.

Ken Morris

Turnkey marketplaces make it quick and easy to launch a physical retail “store.” The other advantage of these marketplaces is a captive audience/foot traffic of consumers that are interested in exploring and experiencing the latest new product.

The SHOWFIELDS concept is a great example of a marketplace that capitalizes on consumers’ love of the theater of shopping. The shops in this marketplace offer consumers to experience the products, which makes the shopping fun. The product really makes this fly. I have personal experience with Naadam and they hit all the buttons with great product, great social message and great price … retail theater at its best.

Thank you for posting this article. As a digitally native online retailer of decorative tiles, we jumped at the chance to participate in a decor-focused pop-up shop called The Design Quarter in Fashion Island, Newport Beach, from Oct-Dec 2018. The cost to participate was less than a 3 day trade show. The leads that were generated were incremental, and have already been profitable for us. We marketed our presence there heavily to our customer base, so we were able to meet many of our customers for the first time. Among those that could not visit, we believe it built our credibility. Last, our customer interactions are normally limited to phone conversations or emails with prospects who are specifically interested our products. At The Design Quarter, we were able to interact with professionals and homeowners who had never considered our products (or the idea of buying tiles online), and listening to their questions and concerns helped us refine our site content and other messaging. Overall, it was a very positive experience for us and we hope… Read more »
Ricardo Belmar
The win for digital native brands with these temporary spaces is the ease with which they can be up and running AND gain valuable data about customers. For many of these brands, the marketplace operator is removing the cost and experience barriers that keep these brands from opening stores. Plus, it gives them a test to see if they could sustain a particular store format. For example, will they be a showroom, with no inventory? Or a curated selection of merchandise? Having visited the BrandBox experience, there is no single right answer. Nadaam uses their space to introduce the brand to an audience that may not have heard of them before with a careful selection of merchandise. Interior Define uses a showroom approach to tell their custom furniture story. As a consumer, you can see that the brands that find these spaces most successful will look to those mall or marketplace owners to help them grow into more locations quickly. Once they reach a certain growth point, they’ll want to control their own stores. But… Read more »
Oliver Guy

There are some interesting concepts appearing. In the Middle East there is a big thing around “retail-tainment” in terms of making going shopping a “complete family day out.” I would anticipate more of this for less mundane purchases. That is not for groceries — although one of the things I am hearing about is in-store cookery schools in order to pull traffic into store — has additional benefit of potentially being an additional revenue generation within the store — using some of the excess merchandising space as customers move to having groceries delivered.

"Turnkey marketplaces are the new pop-ups. "
"The win for digital native brands with these temporary spaces is the ease with which they can be up and running AND gain valuable data about customers."
"The SHOWFIELDS concept is a great example of a marketplace that capitalizes on consumers’ love of the theater of shopping."

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