Digital native brands find homes in physical stores

Lingerie company Adore Me sold its bras and corsets exclusively online from 2011 to 2016. The start-up was proud of its digital nativity, but a retail experiment in 2016 gave those at the helm an epiphany. The future of retail, they realized, isn’t just online. It’s omnichannel.

“Since Adore Me was born, we’ve been very proud of being online only, tech savvy, and direct-to-consumer, which we still are,” Business and Brand Development Manager Iris Voltaire said. “[But] there’s a demand for feeling the product and fabric and trying [lingerie] on. It’s a great opportunity for us to do one-on-one fittings with stylists in stores…to learn, to teach people about what the right sizing should be.”

Adore Me’s revelatory experiment – a successful Manhattan pop-up shop before Valentine’s Day in 2016 – inspired company executives to open up an appointment showroom at its New York headquarters. When that was a hit, Voltaire said, brick-and-mortar was a natural next step for Adore Me, even though it was never really part of the strategy. Its second retail store opened in Bridgewater in November, and the company plans to open three more between now and March—one will be in Wayne’s Willowbrook mall—with plans for 300 in all.

Adore Me exemplifies a trend of digital-native brands expanding their business from online-only to brick-and-mortar in a development known as “clicks-to-bricks” or “click-and-mortar.” In New Jersey, businesses making the move include mattress company Casper, bedsheet business Boll & Branch, and sellers of wearables like apparel maker UnTuckIt and eyewear purveyor Warby Parker.

Beyond the incidental

“Online retailers are opening stores, pretty much saying ‘we’ve gotta get in front of our customers,’” said Levin Management CEO Matt Harding, a retail real estate developer. “You see a lot of online retailers that do a lot of sales and don’t make money. You don’t get the incidental sale—they’re buying an item and that’s it. In the store, they’re buying other impulse things.”

Online-only retailing isn’t necessarily an inexpensive business model, he added.

“Free shipping, free returns…we all expect that,” he said.

JLL Retail’s Clicks-to-Bricks Report from October underscores the prominence of this trend, indicating that top e-commerce retailers are set to open 850 more physical stores in the next five years.

For Adore Me, the early entry into New Jersey was no accident. After their busiest Valentine’s Day on record in 2018, a hiccup at their previous fulfillment facility caused them to open a fulfilment facility of their own in Secaucus.

“In the beginning we still want to have proximity to the stores from our headquarters and our distribution center,” said Voltaire. “That’s key for us to go over and check in, to teach everyone about our brand. We’re also opening where our customers are. We have a lot of customers in New Jersey and the greater New York area. It was a natural fit.”

Boll & Branch, a Summit-based bedsheet company, set up shop online in 2014 and opened its first and only physical store in the Mall at Short Hills last year. Owner Scott Tannen said although he and his wife didn’t expect the business to be so profitable—instead of pulling in a few hundred thousand dollars in 2014, they hit $2 million in sales—entering physical retail was always part of the plan. Keeping it in New Jersey was as much about Tannen’s Jersey identity as it was about having access to his customers.

‘Nothing more New Jersey than the mall’

“The most valuable thing is to be able to directly engage with your customers,” he said. “There’s also a part of me—most start-ups open a store in SoHo, then Venice, then Austin, then Chicago—they go to the typical places all the time. But me? I grew up going to the Short Hills Mall, and there’s nothing more New Jersey than the mall.”

The buying trends at Boll & Branch’s physical store are different than the buying trends off their website, Tannen noted. Online, the number one selling item is white cotton sheets. Their mall location sells more of their flannel sheets and branded mattress. Tannen considers the Boll & Branch store a type of experiential retail where customers can really feel the products against their skin, and uses the mall location to showcase lesser-known products to customers.

“Our flannel sheets are like butter, they’re amazing,” he said. “But we’ve all felt flannel sheets before. It’s much harder [to tell that they’re different] online.”

Clicks-to-bricks retailers also describe a halo effect, noting increased sales and searches in areas where they’ve arrived in physical form. A representative of Casper mattresses told NJBIZ that there is a notable increase in sales where the store has retail locations such as in Short Hills, and said that the company recognizes each customer’s journey is unique. Some try in store and buy immediately, while some might buy online at a later date. Tannen noted a similar increase at Boll & Branch, as did Voltaire at Adore Me.

“It’s hard to tell where it stems from, but in the zip codes of Staten Island and Bridgewater, we’ve seen an increase in searches for the brand, and an increase in online searches for stores,” Voltaire said. “Sometimes it’s hard to follow the customer where she makes the purchase. Either she sees the store in the mall, googles it on her phone and makes purchase on her browser, or she sees an ad on Facebook and sees we have a store in Bridgewater or Staten Island.”

“It’s helpful to have the stores for brand credibility, brand loyalty, brand awareness,” she added.

Testing without commitment

Another clicks-to-bricks concept, The Gathering Shops in Paramus’s Garden State Plaza, gives 22 online retailers a cohesive physical retail space for them to test out brick-and-mortar markets without committing to real estate. It opened in December.

“We were involved in some small apparel companies trying to grow and we realized their only avenues were online and pop-up shops,” said Brandt Mandia, who co-founded The Gathering Shops with his business partner Sal Martorano. “We wanted to give them a pop-up but much better. We want them to be there for a minimum of three months, and to help them really make a name for themselves.”

The Gathering Shops’ 22 retailers aren’t just putting their clothes, cosmetics, and home goods on display for sale. They’re throwing events around their products, creating experiences to draw customers into the brands. A resident candle retailer might put on a candle-making class, while resident clothing companies might stage runway shows.

Ray Navarrete, one of The Gathering Shops’ inaugural retailers, sells t-shirts, outerwear, and socks under his brand Digmi. Though Navarrete has managed to land Digmi in some national retailers like Bloomingdale’s and Lids, his business is primarily online. The Gathering Shops offers something more intimate and personalized for small brands like his.

“It’s providing you a platform in a high traffic area, and we get to piggyback on [The Gathering Shops] marketing and promo events,” he said. “There’s a misconception when you land in national retailers that you’re making tons of profit. It was a big accomplishment for us, but it takes a lot of time and scale for that to turn into a profitable project. With The Gathering Shops, it’s an opportunity to be in front of just as many people. The big brands are just going to put the product on the shelf, not do promo around it.”

Martorano said The Gathering Shops was meant to solve problems for small designers—finding the people, and bringing them in.

At Garden State Plaza, which draws in 18 million people a year, he said, “I found [the people]. If I could get 10 percent of those people to come in my store and 10 percent of those people to buy on a monthly basis, it is a great business model.”

Martorano said bringing these brands into physical retail is about introducing customers to the designers’ stories. It’s the human piece that connects consumers to purveyors, which Voltaire emphasized as a drive for Adore Me’s expansion into brick-and-mortar.

“In person, there is human interaction. You can deliver more emotion,” she said.

“We want to meet our customers,” said Tannen, of his Boll & Branch store. “We want to talk to them face to face. I’m there all the time. You come in on Saturday or Sunday, and a lot of times, we’re there.”