The Power of Bricks
[ Photo by: Decoded Fashion. Written by: Lili Balfour of Atelier Advisors ]
I heard an interesting statistic at the Decoded Fashion event in NYC last month — 95% of high fashion purchases are done in brick and mortar stores. This bit of knowledge may lead brands to believe that they should shutter online stores and focus on a brick and mortar only strategy. Think again.
Betsey Johnson built her first brick and mortar store in 1978 and expanded her empire by approximately two stores per year. Currently, she is closing 95% of her stores. Oddly, despite a 20% decrease in store sales and a 50% increase in wholesale sales, the company was planning to grow stores from 63 to 100 in the near future. Not surprisingly, the question most brands are asking is: what percentage of distribution should be devoted to traditional brick and mortar stores?
Bricks or Clicks?
Well known e-tailers are realizing the power of the physical store. Bonobos recently announced their launch into Nordstroms. Warby Parker credited their move into physical space for not only an increase in sales, but an increase in consumer insight and employee knowledge. After Gap acquired e-tailer Athleta and built physical stores, Tony Lenk, President of Gap’s E-commerce business, stated; “For every dollar that customers in the region spent over the Web, they shelled out an additional $4 in the store.” It is no surprise, consumers purchase more when they can touch and feel the merchandise. Clicks need bricks.
Balancing Act
As with any business decision, your bricks vs clicks ratio is derived from a blend of analytics and customer feedback. The question you want to answer is: where are consumers finding you? Strong brands, such as Bonobos, Warby Parker and Athleta, have the advantage of experimenting with brick and mortar by utilizing partnerships, pop up shops and acquisitions. Lesser known brands will have to be careful when they enter physical space on their own. A store build out can range from $100k to $500k, and comes with annual expenses that are difficult to unravel. A conservative ‘brick approach’ is one store per year, measured regularly against the metrics of other distribution channels.
