The Zalora Shop, ION Orchard, Singapore
The conventional path for most retail businesses has been to open a physical store before creating an online presence, with eCommerce capability. Lately however, we have seen a trend in the opposite direction – brands first developing a web presence before moving into the physical space.
In an era when online shopping is dubbed as the next retail frontier, we are seeing more and more brands that started online expand into offline by setting up physical shops to harness a share of lucrative brick-and mortar sales. We can’t help ponder what some of the motivations behind the growth of online to offline commerce are and what that means to the consumer.
Offline is the new online
While e-commerce has often been trumpeted as the future of retail, the statistics are a little more sobering. According to Enterprise Innovation, online retail represents a $6-billion market in Southeast Asia, but online sales sit below 4 percent of total retail. What this seems to suggest is that physical retail is thriving, over and above the e-commerce hype.
As a result savvy online-only retailers are beginning to recognise that they stand to benefit from a broader approach to communication and distribution. The trend towards physical storefronts underscores the market imperative towards omni-channel retailing, ultimately making shopping and purchasing a better experience for the consumer.
Reinventing the offline retail experience
No matter what is said about the speed and convenience of online shopping, there will always be some shoppers who prefer a physical shopping experience. These shoppers want to touch, feel and try on, as well as physically experience a brand. Physical showrooms service those needs, while also helping brands amass important data on how consumers shop in real time.
Brands have found innovative ways to sync online data with offline experiences. Knowing a customer’s size, preferences, and habits can provide for a seminal in-store experience. For instance, a brand that is fully in tune with its online customer should be about to curate products, make recommendations and provide inspiration when it is least expected in-store. The emergence of beacon technology and various location-based services are driving retailers’ understanding of its customer in-store.
Creating dynamic experiences across channels has taken on new significance in today’s networked society; particularly in emotionally-driven categories such as fashion. The physical store has evolved into more of an experiential playground for brands, where brand values and identity are communicated through the layout, design and concept of the space.
iDecorate, Admirality, Hong Kong
One of the fastest growing design retailers in Singapore, Naiise started out as an online multi-label destination but has since forged an impressive physical presence. In May Naiise opened its 7th and largest store – its flagship store – enabling for more shoppers to interact with its products firsthand, and experience their weekend workshops, at the revamped The Cathay.
Having found success as an online platform, Hong Kong-based home décor retailer, iDecorate, has opened its first bricks-and-mortar store in a multi-brand space — Lab Concepts in Admiralty. While the store only offers a limited selection, it’s enough to raise brand awareness and encourage follow-up purchases online.
On a larger scale, global craft-focused marketplace — Etsy, has been hatching plans to bring its online traffic offline. Many sellers on Etsy also sell in channels other than their online Etsy shop and Etsy is working hard to help them grow their businesses and increase sales. It opened its very first store at Macy’s Herald Square in New York, featuring over 50 products from New York-based makers. The entire catalogue will be refreshed every 2 months with a new theme and new makers.
Various physical experiences
Online leaders have successfully integrated their digital and physical presence, creating multiple touch points that are able to engage shoppers and fulfil their needs. For instance, Zalora premiered its first clicks-and-mortar concept in Asia (where) with a digital interactive pop-up stores, equipped with computers and free WiFi, and provides shoppers with a first-hand look, fit and feel of hand-picked styles from their top selling brands.
Smaller online independent designers and retailers are also giving the physical store experience a chance. While trunk shows are nothing new to micro retailers, taking on a temporary retail space in prime shopping spots is on the rise. In Singapore alone, we have seen The Lifestyle Collective, W.E. X Togetherly and The Attaby Collective create pop-up shops in the last few months, gathering a small group of likeminded and complementary businesses to present their brands and ultimate increase awareness and trust in their brand.
An uneasy transition
The journey from online to offline retail is undoubtedly paved with uncertainty. As digital natives may capture sizeable online traffic, whether they are able to draw audiences offline or establish strong connections with customers remain to be seen. The risk is that physical stores are used merely a “showroom” and transactions will still occur online.
The key to success must lie in the customer experience in-store, and marrying that back to the online experience. In a physical setting it remains to be a collective effort of retailers, malls, department stores and associations to provide brands with spaces that enable them to continue to innovate and delight the consumer. Brands will need to focus on a personalised experience for their target consumer, and find innovative ways to leverage technology to enhance the in-store customer experience and purchases.