'I want to touch and feel': Online-only retailers open regular stores

A growing number of previously online-only retailers are choosing to open regular stores. It's not just to please customers who want to touch and feel goods before they buy. Physical stores are a form of marketing.

Bricks-and-mortar stores are a form of marketing for web-based businesses

Kate Hudson's Fabletics brand of workout wear was originally only available online, but now has a number of bricks-and-mortar stores in the U.S. (Fabletics)

Some of the most sophisticated, high-tech players in retail have decided the future of the business includes good old-fashioned bricks-and-mortar stores.

Amazon's decision to open an experimental grocery store and three bookstores has attracted a lot of interest, but the e-commerce behemoth is hardly alone. A growing number of online-only companies are choosing to sign leases and hire sales staff.

Drew Green is CEO of Indochino, which sells men's made-to-measure suits. He hopes to open 150 stores by 2020. (Indochino)

"Not every customer wants to do something one way," says Drew Green, CEO of Indochino, a Vancouver-based online seller of men's made-to-measure suits that now operates showrooms in several Canadian and U.S. cities.

"We know that our customers like to buy online, but we know that there's a whole other set of customers that prefer to have someone walk them through the process."

That's what Neil Blumenthal, founder of New York City eyeglasses company Warby Parker, has found.

"People were telling us 'I want to touch and feel the glasses before buying them,'" says Blumenthal. He and his partners have opened two Canadian stores. They were among the first of the so-called e-tailers to act on the need for in-person interaction with customers, starting their real-world expansion in 2013.

Kate Hudson's Fabletics brand, men's wear website Bonobos and the Birchbox cosmetics subscription service are among the others to take the leap from cyberspace to actual retail space.

In your face

But serving shoppers who want to touch or try on products before buying isn't the sole rationale for the move, according to retail industry observers. It's also about winning over new customers.

"A website in the middle of the internet doesn't exist to somebody if they don't know it's there," says Blumenthal.

In fact, customer acquisition is the hardest part of running an online-only business, says Green of Indochino during an interview in the company's stylish downtown Toronto store.

He says the company's physical locations have yielded dramatic results.

"In a market where we have a showroom, our online sales grow twice as fast as in a market where we don't." 

For example, in New York City online sales growth is double what it is in Chicago, where Indochino has yet to open a showroom.
Retail analyst Tamara Szames of The NPD Group says it's a natural evolution that retail should encompass both virtual and bricks and mortar locations. (CBC)

Tamara Szames, of market research firm The NPD Group, says retail locations act as a form of advertising.

"If you're trying to capture awareness online, you're really hoping that someone is researching your product or has heard about your product somewhere else," she says.

Consumers scroll so quickly it's hard to acquire a new audience, says Szames. "When they're walking through a mall or through a street, there's a longer physical time that you're able to capture their attention."

Big expansion plans

Indochino's results have inspired Green to declare that the company will open 150 stores in the next four years, an ambitious goal.

"We believe it's realistic," he says. "What I will say though is we'll measure as we go. We're not just going to blindly open 150 stores."

Neil Blumenthal says Warby Parker is also being cautious with its expansion, using what he calls a "techcentric" approach where data gets crunched before every decision.
Neil Blumenthal is one of four founders of Warby Parker, an eyeglasses retailer named after characters found in one of author Jack Kerouac's journals. (Warby Parker)

"We've moved fast but very methodically. We experiment, learn, and use a very agile methodology," he says. "We did pop-up experiments, we tried different shelving."

The company even fitted out a bus as a retail shop, and drove it around to test different neighbourhoods.

So far Warby Parker has 46 stores including two in Toronto. By the end of the year Blumenthal says he'll have 70 in total.

Amazon stores in Canada?

Amazon won't comment on whether it will open stores in Canada. "As for if/what is coming to Canada, we have no news to share at this time and can't comment on the future roadmap of," a spokesman said in an email to CBC News.

But what about the expense of renting physical space? Part of what made online-only businesses appealing to entrepreneurs was that there were no real estate costs.

Blumenthal says that while renting may cost money, so does running an online-only business.

"Managing a great e-commerce experience is not inexpensive," he says. "You need software design, engineering, constantly iterating on the experience, improving, changing and even more important, you have to drive people to your site." He says he views his stores as a marketing cost.

For years it's been standard practice that if you have a store, you need a website. The reverse now may also be true. If you have a website, it doesn't hurt to have a store.

Turns out old-fashioned shops may just be central to the future of retail.


Dianne Buckner has reported on entrepreneurs for two decades. She hosts Dragons' Den on CBC Television and is part of the business news team at CBC News Network.