As direct-to-consumer (DTC) brands continue to enter physical spaces, we’ve heard plenty about the growing pains these retailers experience by stepping into a new space. However, these stores have a powerful advantage over traditional physical retailers: their nascency in the physical space. Brands that are new to brick & mortar have the unique opportunity to build their stores from the ground up with today’s best technology.
The Growth of DTC and Digitally Native Stores
Warby Parker, Bonobos, Everlane, Brandless and Glossier are among the many DTC brands that have expanded into the physical space. Because of their digital roots, these retailers often have a knack for creating unique, engaging and tech-driven shopping. Additionally, their repository of data from online sales is extremely valuable in building engaging in-store shopping experiences. Meanwhile, we’ve seen this online to offline model expand beyond these types of brands when Amazon opened its first cashier-less grocery store in Seattle’s Capitol Hill district in February. If these companies are succeeding online, how can they think they’ll win in the physical space? Especially when considering the ongoing concerns around physical’s performance and eCommerce’s growth? It all lies in their physical in-experience.
As Amazon opens new grocery stores, separate from Whole Foods, they will not be tethered to any existing or legacy technology. Instead, they’ll almost certainly start with modern tech that strives to create a rewarding, digital experience for customers from the get-go. As digital brands continue to open stores, this clean slate will continue to encourage the adoption of customer-centric solutions, that bring the best of online into stores and create engaging customer experiences. This will include in-store tech like electronic shelf labels that enable retailers to boost basket sizes, and protect margins by deploying omnichannel price and promo strategies with speed, agility and consistency.
However, as retailers expand and build modern physical spaces, they’ll need to take some things into consideration, especially in terms of the partners they enlist for these expansions.
Working with the Right Partners
Building a tech-driven store involves a lot of moving parts. Many initiatives can be far too complex to build in-house, or just simply outside of the retailer’s scope of capability. As such, third-party vendors are necessary to integrating digital initiatives and building the desired store.
It’s important for brands to choose partners that will help them build and maintain their vision. As such, these new stores are looking for vendors that are:
- Reliable – Retailers opening these new stores want partner technology that allows them to consistently be on the leading edge of the industry. This means they need a high-quality experience that meets shoppers’ expectations with no interruptions.
- Scalable – Brands opening their first physical stores want to be prepared to expand, without growing pains, in the case of success. As such, they want light infrastructure that is easily installed and expanded throughout the store.
- Offer Significant ROI – The margin for error for new stores is very slim, as such it’s important that all investments result in a strong ROI that keeps stores running and growing for years to come.
Consumers Openness to In-Store Tech
If the hype around DTC stores isn’t enough proof that these tech-driven concepts are attractive to shoppers, there’s proof in the data as well. According to our research study with Planet Retail, 67% of shoppers think technology improves the store experience.
Meanwhile, A.T. Kearney’s 2019 survey states that 72% of shoppers want technology that allows them to reduce time checking out, 61% desire technology that allows them to reduce time looking for products and 52% want tech that allows them to understand more about a given product and how to use it.
For some time, customers have shown their demand for in-store technology that creates the digitally-driven experience they expect from retailers. It’s now up to retailers to make these investments. It’s true that digitally-native stores have an advantage thanks to their lack of legacy infrastructure and arsenal of data. However, this doesn’t mean that existing retailers should continue business as usual. They must take a page from these new brands’ books and invest in technology that transforms the store in a way that meets customers’ demands for tech from the ground up.