From Bricks to Clicks… Back to Bricks

A lot of successful online retailers are discovering the key to brick-and-mortar



Much has been written lately about the difficulty retailers have been having—in particular the impact of the internet.

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Retail has certainly evolved in that internet shopping is and will remain a vehicle which consumers use to shop. As online companies increase in number and grow and develop, they too continue to search for new ways in which to interact with their customers.

Until recently, this interaction has mainly been through social media. However, now online retailers are recognizing there is value to traditional brick-and-mortar stores.

Internet companies have what may be a distinct advantage when deciding to enter the brick-and-mortar space. An internet company, already successful online, is trading on inside information. They know exactly where their customer lives, works, how much they buy and what products they buy most frequently. They are privy to very detailed shopping patterns of their consumers.

More and more we are seeing internet companies begin to open stores. A great example of this is Warby Parker. I visited their Lexington Avenue store recently and realized that this is one of the hippest companies in the internet eyewear business today, yet they still decided to open a store on the Upper East Side of Manhattan.

I thought that the Upper East Side was not quite fitting with their core customer style base. My assumption therefore was their choice of this location had to be because of the physical space, a beautiful landmarked building (both interior and exterior) and coincidentally with a vintage landmarked sign that reads “prescriptions”; the building is a tremendous brand statement and in the densest area in all of Manhattan—all attributes a traditional retailer would consider when making a decision to open a store.

All of the above might still be true. However, the single component that Warby, as an online retailer has access to, is their customer data. Not only did they find an incredible piece of real estate that would act to advertise and increase brand awareness, but they knew that their customers were within a stone’s throw of the location based on their accumulation of actual data over time and therefore ultimately taking much of the risk out of the decision.

Historically, brick-and-mortar retailers based their site selection on many types of data: foot traffic, car traffic, sales volumes of other retailers, co-tenancy, income levels, area population, mass-transit counts—all necessary pieces of information. The assumption is if all the boxes were checked in these categories, then a new store would likely succeed.

Brick-and-mortar retailers for years have tried to assess where their customer is coming from, and some of the ways they have done this is by asking a consumer for their address at the checkout counter or having them fill out a form. In today’s fast-paced digital world, that would be the equivalent of using an abacus to solve math equations. More importantly, by the time the retailer has the opportunity to interact with a consumer to collect this data, they have already invested their capital and resources in opening a store.

It won’t be evident to the retailer until the store is open for quite some time whether their site selection is accurate. If that’s the case in a market such as Manhattan, given the rent levels, the penalty is lethal. If there is no fix, retailers are forced to carry the losses on their books for years.

Today’s retailer has to operate in both spaces, online and in store. The idea that retail is dead is simply not the case. It is evolving using new technology and information to make better educated decisions.

What I suspect will happen is the brick-and-mortar retailers will study and learn from online retailers and perfect their own online business (ultimately closing the consumer data gap). At the same time, online retailers will look to brick-and-mortar experts to learn how to successfully operate a store.

What may change is where retailers choose to locate. If we assume they are able to pinpoint with extreme accuracy where their customer is living and working, then I believe we will begin to see new viable areas emerge for them. If I am correct, this will lead to a healthier market, a broadened retail landscape and successful retailers going forward. It will, however, take time for this transition to occur.

The evolution has just begun!

Andrew Mandell is managing partner at Ripco Real Estate.