In this digital revolution, stores are media

Discussion
Ethan Song, Co-Founder & CEO, Frank And Oak - Photo: James Tenser
Mar 23, 2018
James Tenser

Innovative, digital-first retail concepts are sprouting physical stores as the revolution continues in how consumer goods are brought to market.

In a session at this week’s Shoptalk conference, the founders of three successful, but very different, born-for-the-web retailers shared their formulas for cultivating business models firmly rooted in both digital and physical ground.

Ethan Song, co-founder and CEO of Frank And Oak, a Montreal-based apparel seller, said its 17 physical stores are located in “up and coming, creative neighborhoods” in major cities “coast-to-coast” across Canada. The company serves more than three million mostly-Millennial members via a web site that offers individual items or a subscription service that delivers a personalized box each month.

“We view the store as media,” said Mr. Song. “E-commerce-only misses much valuable data about our customers. It’s smart to feed store data into the rest of your business and use different KPIs to measure success.”

M.Gemi, a “new-luxury” online shoe retailer, operates both permanent and temporary “fit shops” — showrooms, really — that co-founder and CEO Ben Fischman considers points of entry for the brand experience.

“We’re like fast-fashion for footwear,” he said, explaining that the web and mobile sites present limited quantities of a new style each week sourced from craft manufacturers in Italy. Each shoe style may have 30-40 attributes. The style attributes and size assortment for each production run are carefully matched to expected sell-through.

M.Gemi presently operates fixed stores in Manhattan and Boston, as well as a mobile shop, Andiamo, an ice cream truck that it parks outside shopping malls to dispense gelato and offer try-on experiences.

New customers use the fit shops to gauge the product quality and comfort. Purchases are shipped to arrive within 48 hours.

“They improve onboarding of shoppers to our digital platforms,” said Mr. Fischman. “They are also a bit of a Trojan horse for us since they let us gather attribute data.”

Awaytravel.com has attracted a cult following for its stylish roll-aboard luggage. The brand also operates 4 high-end luggage shops in New York, Los Angeles, San Francisco and Austin that co-founder Jen Rubio envisions as “community hubs.” Each has a unique design.

“We design our stores to be very Instagram-able,” said Ms. Rubio. “For us having a physical store means meeting customers’ short-term needs. It’s not a showroom model. We must carry physical inventory.”

Away recently had a successful experience with a pop-up in a Paris hotel, she added.

DISCUSSION QUESTIONS: Is the era of pure digital-only retailing coming to an end? Is it strategically valuable to think of stores as another media channel? Of the physical store approaches discussed in the article, which will flourish best in the new digital era?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"A brand doesn’t fully become 'real' until the customer can physically engage with it – stores are the fundamental way shoppers are used to doing it."
"This is the future of brick-and-mortar retailing; limited inventory and maximum engagement."
"To consider what consumers want from stores to be “media” ignores 90 percent of the power of the store...we can’t afford to lose 10 percent."

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29 Comments on "In this digital revolution, stores are media"


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Lyle Bunn (Ph.D. Hon)
Guest

To call the store another media channel is to miss the whole point of consumer engagement. The powerful element of media is that it expresses and imparts information. The powerful element of interactive media is the interactivity, in which a dialogue or relationship is developed and sustained. The store expresses values and should inform about products and services. Interactive media (in-store or otherwise) must contribute to the retailers, its brands and the shopper. The store as media channel, nope. The store as engagement experience using media, absolutely.

David Katz
BrainTrust

Ethan made another important point in his presentation at ShopTalk this week. For Frank & Oak, stores are a data collection point. At his stores, retail associates are trained to collect consumer data: basic demo and psychographic information is collected along with … what did the customer try on? What did they buy? Why did they not buy? Anecdotal observations?

All of this becomes part of the customer’s profile and influences personalization when they visit the web site.

Bob Phibbs
BrainTrust

Couldn’t agree more there Lyle!

Mark Ryski
BrainTrust

I don’t believe pure digital-only retailing is coming to an end, but rather online players are realizing that there’s value in having a physical presence. In this context, I think it’s perfectly valid to think of physical stores as a media channel. While it’s hard to pick winners among the group of companies mentioned, I think it’s exciting that native digital retailers are finding their way to brick-and-mortar stores.

Paula Rosenblum
BrainTrust

Oh dear … I’m starting to feel like Mother Time or something. Digital-only retail was a problem the first time around in the late-’90s, because the marketing expense was crazy. And so between that and shipping costs, it was very hard to make money. Hence there are only a few survivors. As far as I can see, those problems have only gotten bigger not smaller. Even paid search and SEO is expensive. In other words, pure-play remains a challenging space. We know you can generate revenue … but can you generate profits? Not sure.

Stores are media. Stores are marketing vehicles. Stores are a way to showcase your brand and give customers the look and feel of your products. And as long as your leases aren’t 50 year ones, likely you will do well with them.

So, I’m a fan of properly run stores, and am not sure new retailing concepts have to be born digital. They could be born in all channels right out of the chute.

Michael La Kier
BrainTrust

It’s much too early to say digital-only retail is coming to an end. It’s better to think of stores as the physical manifestation of a brand vs. a “media channel.” It’s a place where people can touch and feel merchandise and immerse themselves in the experience. Thinking about it in this manner means a physical location is a significant asset. The trick is — as many are finding out — don’t overbuild!

Max Goldberg
Guest

These three retailers epitomize the concept of omnichannel, with each facet benefiting the whole. I expect other retailers to move in this direction. By using digital, in-store and pop-ups, manufacturers and retailers can appeal to consumers and generate sales.

David Weinand
BrainTrust

I definitely don’t believe digital-only retail is coming to end. However, retailers and brands that started online that have a story to tell and an experience to share will benefit greatly from using the physical store as a channel. The data collected from the physical experience will prove invaluable in shaping things like product mix, merchandising approach and growth plans. We brought 30 retailers to the M.Gemi in SoHo at NRF and their approach of building a user fit profile in the store and then allowing access to that profile online was quite smart. I don’t know which of the three store concepts will be most successful as there are too many variables outside of just the fact that they opened stores but I do believe specialty fashion is smart to have stores.

Bob Amster
BrainTrust

Digital-only concepts can, and will, work in certain category segments (like dog food). Stores acting as another medium may be a reality. We have read a number of stories in which e-commerce retailers say that their sales online increase in those areas in which they have a physical presence. So, in that vein, having a physical store is like advertising for the e-commerce channel.

Art Suriano
BrainTrust

Stores are not going away, but they are evolving. That is taking place because of the new concepts and technology being introduced mostly by e-commerce companies. It is not possible for an e-commerce company to compete and reach their full potential without some physical presence and online companies realize that. Each year we see more e-commerce companies breaking into brick-and-mortar with pop-ups, a store-within-a-store or their own retail locations. What we are seeing as well are the innovative ideas that differ from one brand to another creating curiosity and in most cases success.

I expect that over the next 10 to 20 years, we will see most of the traditional stores that we have today replaced with many of these new concepts as well as many e-commerce companies becoming the major brick-and-mortar players of tomorrow.

Ricardo Belmar
BrainTrust

The key distinction is that channels are not just media or sales outlets – they are an important part of a multi-faceted engagement model for all retailers. A brand doesn’t fully become “real” until the customer can physically engage with it — and stores are the fundamental way shoppers are used to doing so. However, a digital-only brand opening one to three stores (whether pop-up or fixed) isn’t going to create a critical mass of touch-points to reach large consumer audiences.

The real value for the brand is to learn more about their customers in a way they can’t do with an online-only presence. We see this stated outright by M.Gemi — they use their locations to learn more about fit and what their customers want. Stores have moved beyond just being a sales channel — they are a critical interaction and engagement point for the retailer/brand-to-customer relationship!

Joel Rubinson
BrainTrust

I predicted in a blog last year that retailers as publishers was the coming sea change. Amazon could easily turn the big two into the big three. Walmart has similar assets. I live in digital and have done a lot in shopper. With all due respect, I think shopper experts miss the larger picture. It is not that the store is a medium. It is that retailers offer immersive physical and online environments that, when combined with unified deterministic data, will redefine marketing. I’m not sure the folks at Amazon or Walmart even realize what they have — I bet they don’t.

Joanna Rutter
Guest
1 year 7 months ago

To the first two questions: Yes and YES! This is what customers want. Period. Now let’s have a conversation about stores being a data trove, not a media channel. That’s what these data-driven, online-first retailers are actually after (“They are a bit of a Trojan horse for us”). Sure, they’re building their brand, but more than that, this is a research and customer experience optimization game.

To the third question: I think all three brands mentioned have strong physical retail presences. To me it’s more about using the data you already have in your CRM and in user behavior metrics to build a store where it’ll have traction, and to build a store that satisfies what the customer is after. See: ELOQUII opening shops in Ohio, not Soho. We’re already seeing that the winners in this age are data-driven, efficient and lean, allowing them to focus on the customer above all else.

Ralph Jacobson
BrainTrust

This is not an all-or-nothing landscape. There is plenty of room for online pure-plays that have neither a need nor a desire for physical stores. Thousands of these entities are thriving worldwide. I prefer to think of the CONSUMER as the channel. There will always be multiple ways to shop. However, the consumer will determine the long-term viability of the retailing touch-points.

As for which approach(es) will flourish, I believe we get a bit too enthralled with every hip, new, trendy entry into the marketplace, whereas several more traditional approaches continue to grow based upon their laser-focus on their defined audience, rather than the shotgun approach hoping some customers will “stick.”

Christopher Jordan
Guest

The underlying message behind those that’ve been successful with these concepts is there’s no one-size-fits-all solution. Whether the physical location is used for sizing, experience, distribution, etc. is entirely dependent on the line of business, market position and strategy.

The converse has been the downfall of traditional (cringe) omnichannel strategies by big retail — assuming that unifying inventory, messaging and data 1:1 between online and offline is a blanket solution.

Gene Detroyer
BrainTrust

A couple of years ago I wrote of a store on Corso Como in Milan. On this fashion street, this small store was designed to engage the shopper with a limited inventory (sizes, colors, styles). They would sell to the shopper, but their preference was that the shopper would find what they want and ultimately buy it online and continue to be a customer.

This week we had a Smart Cities delegation from Finland and took them to two stores that have taken the next step in interactive selling. Essentially, turning their stores into interactive media. Sonos and Rebecca Minkoff. (If you are ever in NYC in SoHo, both are worth visiting.) Even the technologically-advanced Finns were very impressed by these outlets.

This is the future of brick-and-mortar retailing; limited inventory and maximum engagement.

Lee Peterson
BrainTrust

Yes! Two major things: he’s right, stores ARE media now and we need to measure them differently (change the KPIs) right away. It’s not about same-store sales anymore. Why would it be? Most specialty stores are doing at least 20 percent of their business online! Stores also need to be smaller and much more product-interactive. This is the transition we’re about to go through for the next 30 years. From warehouse to showroom. Why do you think Walmart bought Bonobos? Think: showroom electronics, showroom apparel, showroom toys, etc. Sometimes the “tea leaves” are right there in front of us, and the movers are usually the ones holding them out right in front of our faces! Ethan Song’s got it together.

Doug Garnett
BrainTrust

This suggestion is dangerous. Consumers go to stores to test, touch, shop and buy. To consider what consumers want from stores to be “media” ignores 90 percent of the power of the store in an era when we can’t afford to lose 10 percent.

This thread of “radical” is classic digerati thinking and appears to reflect the tech tendency to dismiss the human need for physical things and trust before buying.

That said, M.Gemi may succeed despite fuzzy thinking about stores. Rosenzweig’s “The Halo Effect” shows plenty of examples of business success where those in the business believed it was their strategic brilliance that drove success when the truth is far different.

Brandon Rael
BrainTrust
All brands, retailers and stores are tied to their public images, thus all stores are essentially media products in the digital age. We are entering into a unifying age where it is essential for retailers and brands to have an online digital presence, as well as a multi-sensory physical presence. The emergence of the superior in-store showrooms like the model spearheaded by companies such as Frank and Oak, Bonobos, Warby Parker and other digital-first companies demonstrates that this is clearly the future of retail. Traditional retailers and department stores have observed how successful this model is. Walmart, in particular, has made the shift and built an impressive digital-first portfolio through their acquisitions of Jet.com, Bonobos, Modcloth and others. Consumers are seeking a wonderful and frictionless experience across all channels. They are engaging with a brand that will bring value into their lives and provide a physical experience that a purely online e-commerce retailer is unable to provide. The challenge for these companies is to find the right balance of personalized, customized services, which is a… Read more »
Adrian Weidmann
BrainTrust

Shoppers don’t know or care about channels — they simply want to shop. And shop through the easiest method and path available to them, specific to the product or service they’re looking to purchase. The store needs to be a seamless and informed element and option in that journey. Regardless of the label, the store and everything associated with its experience must be done in the interest of and for the shopper. She is the most important person in your store. Everything you do — technology, analog, digital, a smile — all needs to be done for her.

Peter Luff
BrainTrust

No, there will continue to be a place for the next-generation retailer coming to the market with a pure digital play. After all, it’s relatively low cost. What I think we are seeing though is, from these examples, a realization that there are additional approaches that can be added including physical stores which allow for an immersive experience and greater emotional connection with the brand.

Dividing retail up into separate channels is an old fashioned way of thinking, it’s now about single-channel retail where all the available tools are intertwined to provide a maximum return.

Chris Buecker
BrainTrust

Yes, in the future we will see more and more digital-only retailers opening up stores. We all saw the success of doing so with onliners such as Warby Parker, Bonobos, Away and Allbirds. The same happens in Europe. For example, in the electronics sector you have e-commerce retailers such as Digitec (Switzerland), Coolblue (The Netherlands) or Alza (Czech Republic) who very successfully opened several physical stores in bigger cities. Strategically, it will put these online retailers in a good, cost-efficient position (compared to the traditional brick-and-mortars). They will strengthen their brand value but also become visible, offer additional service (easy pick-up, return point) and get to know the customer better.

To me, the winning model will be the onliners who will open a limited number of fixed stores. Pop-ups are certainly nice to create some buzz but I do not see them as long-term strategy.

Matt Sebek
BrainTrust

“Engagement channel” is probably more accurate than “media channel.” Brick-and-mortar still exists as an engagement channel for the brand. Always has. What’s been abstracted is the point-of-transaction necessity.

For many retailers, the ability to exist solely in the digital space is a reality. However, as the retail vertical over-calibrates to this mentality, it has potential to become the new commoditization; hence, why we’re seeing brands such as Frank And Oak and Bonobos open showrooms that emphasize non-transactional elements of their brand such as culture, experience and the tangible differentiators of their product.

James Tenser
BrainTrust

Despite the headline, I don’t think store-as-media is the most important takeaway here. For these three retailers, at least, physical presence is largely about customer acquisition, brand experience or meeting short-term needs.
There was a consensus that long-term lease commitments and multiplying prototypes across the landscape are incompatible with their “agile” approach. Pop-up shops, roll-up shops, and a revolving array of short-term leases are at odds with past norms which assume a vast lease portfolio is a primary indicator of retail success.
All stores are communications environments. It’s always been that way. The key question is: What messages are being delivered?

Cate Trotter
BrainTrust

I think to say it’s the end of digital-only retailing is a bit of a stretch. There’s a lot of different models out there that suit different retailers. That said, the physical store is a differentiator. If you think of how many brands there are out there, and how many have stores, it’s clear that not everyone has a store. For those brands that do, the store is a great marketing channel — seeing a brand name on the high street can really help to cement it in a shopper’s mind, and give them increased confidence in that brand as they can go in and try things and interact before they buy.

As the examples show, all of these brands have found that adding a store to their ecosystem has given them increased customer insights, brand awareness and the ability to serve customers faster. I don’t see the store going anywhere.

Rebecca Fitts
Guest

I’m not sure it ever existed. Most online brands are experimenting with physical retail — the most used example is Warby Parker who’s intention was to be purely digital. Amazon isn’t purely online anymore.

Stores are definitely being redefined in Michael Dart’s book Retail’s Seismic Shift he talks about stores as platforms not stores and they are and will be platforms for a wide variety of uses from guide shop, same day delivery, distribution center to experiences.

Harley Feldman
BrainTrust

What is the best way for a retailer to challenge Amazon and provide better service to your customers? Have physical stores. Even Amazon is opening more stores. There is no better way for the consumer to see and handle items, get advice from associates and go home with the product in hand. It is another media channel in the sense the consumer can obtain more information about and have first hand experience with the products and the retailer. The best physical store approach will include ready in-store inventory, knowledgeable associates and great customer service.

Min-Jee Hwang
Guest

Stores offer the chance for a connection that even the most beautifully designed website can’t accomplish. M.Gemi is definitely onto something with their ice cream truck. Consumers want to have a unique experience and explore products as well if they are so inclined. Retailers must go to where shoppers are and engage with them in an organic way. Some pure play retailers may succeed, but multichannel experiences seem to be the wave of the future.

Shep Hyken
BrainTrust

Interesting topic. Most companies should potentially think of themselves as a media company. The new way to communicate and market to consumers has shifted from traditional advertising to creating relevant experiences through content, which includes written, audio and video, for their customers. Companies should recognize that everything they do, on every channel, must have value to the customer.

That sounds like a bit of a daunting task, but that’s what the best companies are doing. Think about Nike. They create a brand presence through content — commercials that create an image, specific content directed toward the different customer segments in their loyalty program, the articles and other information on their website… all of which drive retail sales to retailers, the website and even their own stores.

wpDiscuz
Braintrust
"A brand doesn’t fully become 'real' until the customer can physically engage with it – stores are the fundamental way shoppers are used to doing it."
"This is the future of brick-and-mortar retailing; limited inventory and maximum engagement."
"To consider what consumers want from stores to be “media” ignores 90 percent of the power of the store...we can’t afford to lose 10 percent."

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