- May 26th, 2015
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Bricks and Orders: How Birchbox, Amazon, Rent the Runway Are Reinventing the Store
A picture may be worth a thousand words, but the real thing is worth five senses, and possibly full price.
That’s one good reason why manufacturers and online vendors are increasingly opening physical stores – to dazzle shoppers with experiences that transcend transactions and venture into fascination.
In the past year several brands, including Birchbox, Rent the Runway, Bauer Hockey and Amazon, have opened or are planning to open shops in efforts to express the brand in a physical setting. The goal, clearly, is to up sales as well, not only through additional purchases but also by wowing shoppers to pay full price.
So promising has the extension from factory to store been that it is now attracting the interest of investors. Rent the Runway, a digital vendor that leases designer dresses, attracted $60 million in funding from Technology Crossover Ventures, along with Bain Capital Ventures, Highland Capital Partners and Advance Publications. The investment will bankroll several Rent the Runway stores, the first of which debuted in New York in September.
Birchbox, an online beauty delivery company, also is expanding geographically with the help of $60 million in recent funding. It opened its first store, in SoHo, New York, in July 2014. The location follows several pop-up test stores and includes among its features a salon and algorithm-enabled touch screens that visitors can use to find well-suited products, as well as to read merchandise reviews and recommendations.
“We want that message to be clearer to consumers,” Birchbox co-founder Katia Beauchamp told The New York Times. “You’re supposed to discover what you love and then act on that.”
Which leads us back to the lure of the store, and what it is about the retail experience that is causing these companies to build flagships. Beyond the ability to carry a full line of tangible products in one location, stores enable brands to immerse shoppers in their individual wonderlands. They are revising a trend traditional retailers sought to excel at 15 years ago, which is to make the store a recreational experience.
Take by example the leading hockey equipment manufacturer Bauer Hockey, which will open its first store outside Boston this summer. Its employees will be specially trained to take Bauer’s customers through a “fit, learn and experience” process that includes an indoor ice rink.
“At each Bauer retail experience, we will be able to provide in-depth, ‘under-the-hood’ insights into the protection and performance of each product while fitting each player with similar tools and techniques that we use to properly fit the best athletes in the world,” CEO Rich Wuerthele stated in a press release.
Which demonstrates that these experiential stores come at a price, and execution is tantamount to success. There is no shortage of stores – new and shuttered – dotting the countryside. The U.S. alone is home to 12 billion square feet of retail space – 37 square feet for every man, woman and child, according to the real estate firm Cushman & Wakefield. That’s ironically the size of a generous walk-in closet.
More in store
With so many stores out there, I believe the extension from manufacturing to flagships is fueled by a larger trend – one in which brands recognize that their traditional retail counterparts are not fulfilling the omni-channel experience everyone seems to demand. Perhaps these stores serve the role not only of living the brand, but also of establishing a benchmark of how the brand should be merchandised.
Even Amazon is getting into the game. In February, Amazon opened its first physical store, but not in a glamorous setting. Rather, the store is at Purdue University, in Indiana, focusing particularly on the gainful demographic of college students, who in addition to textbooks and computers order lots of easy-to-prepare foods.
This brand-merchandising trend is further supported by a 2014 report by PricewaterhouseCoopers, which concluded that consumers want a fully integrated relationship with a brand, not multiple relationships across multiple brands. Some call this approach omni-channel; PricewaterhouseCoopers calls it the “total retail” experience.
“When it comes to actually making a purchase, consumers make few distinctions between manufacturers and retailers,” the report states. Seventy percent of U.S. survey respondents of the 2014 study said they made purchases directly from a manufacturer. That is up from the year before, when 52% of respondents did so.
It’s not surprising, then, that when consumers do shop in-store, they expect the same kinds of features that are available online or direct-from-manufacturer.
Done well, a store embodies the brand. It becomes a tangible extension of its character – its charisma, even, if the brand is especially good. As more manufacturers and online merchants try on the concept of brick and mortar, it will be interesting to see how the retail landscape further shifts.
This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.