Blog Cin7 Global DTC brands are opening more physical stores – here’s why
02 August, 2022

Global DTC brands are opening more physical stores – here’s why

This is a guest blog post written by Cin7 partner, Marsello. Learn more about our partner program.

Content Summary

Multi-national, globally-renowned Direct-to-Consumer (DTC) brands are adapting to growing online competition. The cost of acquiring a customer online is increasingly expensive as brands compete for ad placement. In this article, we’ll dive into why this means it’s more important than ever to build customer relationships and collect customer data.

Across America, the death of the mall has been widely reported, with the pandemic touted to be the final nail in the coffin.

But at the same time, multi-national, globally-renowned DTC brands are opening bricks-and-mortar stores left, right, and center. Both Warby Parker and Allbirds, DTC giants, have plans to expand their physical presence to boost profits, and others are following suit.

Why are we seeing a return to bricks-and-mortar?

1. Digital advertising is no longer cheap.

When e-commerce was in its infancy, digital marketing and advertising were cheap, and getting good digital ‘real estate’ was much less competitive. At this point, it made complete sense to downsize your physical presence—why pay rent when you could spend that money on digital ads and make 10x or even 100x the sales?

But as a majority of retailers filled the online space, it became harder and more expensive to stand out from the crowd, and returns on ad spend diminished.

What’s more, digital ads become even more expensive as you scale. So much so, that it will eventually make more sense for a growing business to pay rent and get foot traffic than add that spend to a digital ad account.

“No digitally native brand has achieved a billion dollars in annual revenue without a store. You need those stores as a cost-effective customer acquisition channel at some point.”

—Jason Goldberg, chief commerce strategy officer, Publicis

In another interesting effect, a study by the International Council of Shopping Centres (ICSC) found that when a retailer opens a new physical store, web traffic coming from that geographical market increases by an average of 37%. So not only does a physical store increase foot traffic, it also increases online traffic—and thus, online sales.

Bricks-and-mortar and e-commerce are no longer competing go-to-market strategies, they’re complementary channels. The “bricks-and-mortar is the past and online is the future” mindset is simply outdated. But at the same time, retailers who take an old-school approach to bricks-and-mortar will struggle.

2. We’re people, not robots.

As much as technology augments our lives, it cannot and will not replace our need for in-person interaction, at least not for a long time yet. The pandemic was a testament to this. Sure, we have the technology to work, shop, and socialize remotely, but we simply don’t want to live our whole lives on a screen (at least, not yet).

Workplaces are trying to attract people back to the office to increase morale and build back up that buzzing workplace atmosphere that has been lost to the waves of WiFi. And though we’re still on shaky ground, it’s clear that people have no desire to be holed up in their houses forever.

Getting out and about to wander the streets, browse shops, get coffee with friends, go out for dinner… it’s part of who we are. But when  we’re out shopping, we’re looking for that missing piece; the experience we don’t get when we’re online.

We are more discerning about in-store shopping experience than ever before, so retailers are using their physical stores as an opportunity to build community and create a deeper connection between customers and their brand.

Retailers are also realizing that their physical stores act as much as showrooms as points of sale. Consumers can go in and get a hyper-personalized experience: they can talk to an employee, browse the store, try on clothes or compare products in the flesh, and get authentic, in-person feedback.

While large multi-national retailers have the budget for extensive customer research, independent retailers still have the edge on customer experience.

Owner-operators are often behind the till, and staff are there because they are passionate about the products they sell. Where customers shopping at large retail chains will rarely connect with the same person twice, independent retailers know their regulars by name.

The experience that is delivered by independent retailers is the kind of personalization big box retailers strive for, and spend millions of dollars trying to recreate.

Apple’s Genius Bar is designed to bring customers into a ‘club’ and connect them with employees in person—all part of Apple’s exclusive, high-touch customer experience. Image source: Macworld

3. Better cross-channel data is more accessible.

A savvy retailer knows that e-commerce and bricks-and-mortar work in tandem. The experience must be seamless between the two.

A good in-store experience can lead to social follows, email sign-ups, website traffic—and more sales. A good online experience can likewise drive foot traffic, as people come to browse your store for inspiration, speak to a passionate expert, try in-store before they buy, or take advantage of click-and-collect convenience.

But an even savvier retailer collects customer data both in-store and online, so they can more accurately attribute all sales to their marketing channels and activities.

Let’s look at some examples of common frustrations.

  • EXAMPLE 1:
    You’re a fashion retailer. You send an email out to your customer database promoting this season’s new collection. While you see some direct sales on the online store, you’re not sure how many people shopping in-store have come in because they saw the email.
  • EXAMPLE 2:
    You’re an independent jewelry retailer, with a large following on Instagram. Some of your social media followers liked a post about a new necklace. Later that week, they come in-store and buy the necklace, but you can’t know that they saw the post, so you assume your social media isn’t very good at driving sales.

What if you could get visibility over which channels drove sales in each of these examples? What if you had the data to know when an in-store sale was generated by an email or even a social media post?

Integrated data is one of the most powerful tools an omnichannel retailer can possess. It’s simple. When you know what works, you can do more of it.

Brands who succeed in the new world of bricks-and-mortar…

✔ Build customer relationships.

First and foremost, you need to know who your customers are. Collect customer details at every possible opportunity—through promotions, at POS, from QR codes in marketing or at events or launches, through a loyalty program, et cetera. Learn from them—understand who your core customer is, and what messages they resonate with. Then, build genuine connections and grow with them. Engage with them on social media, greet them in-store, send your top customers access codes to pre-release products.

✔ Build an authentic brand experience.

Stay true to your brand’s vision, mission, and values. Live and breathe them. Hire people who believe in what you do, and who share your values too. If you have a purpose or desire to make an impact on the world, be loud about it. Get really creative, build an in-store experience around what your brand stands for, then use your digital channels as a ‘window’ through which to showcase the in-store experience.

✔ Do smarter marketing.

Know where your in-store sales are coming from, and which channels and activities get the best results. It can be difficult to know what the sales impact of opening a new store is, so be data-driven and methodical as best you can. That’s not to say you shouldn’t do something unexpected—like a big PR stunt—but track it. Connect your POS, marketing, inventory, and e-commerce data. Test, measure, rinse and repeat.

Cin7 + Marsello

Powered by Cin7 and your e-commerce data, Marsello works seamlessly in-store and online to provide a true omnichannel customer experience.

  • Capture in-store and online customer details
  • Deliver personalized and timely automated marketing
  • Incentivize repeat purchases with email, SMS, a loyalty program, and more
  • Grow your average basket size with advanced product recommendations
  • Accurately track and attribute sales to your marketing activity

Book a demo with Marsello





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