L2 research has always supported an omnichannel model where online presence drives consumers either to the store or to click on the buy button. Pure-play retail (online and brick-and-mortar) is on its way to being extinct, as evidenced by the shutdown of Fab.com and the fact that Net-a-Porter is yet to turn a profit. Smart players with digital roots– Warby Parker, Birchbox, Rent the Runway – have recognized the value of stores and have started to invest in them.
Perhaps the strongest piece of evidence of good things to come for the hybrid e-commerce/brick-and-mortar model: Warby Parker was valued at $1.2 billion this week in a $100 million round of funding led by T. Rowe Price. After implementing a try-on program (three pairs shipped free of charge) the brand started launching stores in New York, Boston, Chicago, and Los Angeles. And Warby Parker’s David Gilboa has said Warby Parker stores averaged $3,000 in sales per square foot last year, which is higher than Tiffany & Co. and just under Apple.
L2’s Digital IQ Index: Specialty Retail finds that while the number of digital buyers is expected to increase to 186 million in 2018, the number of expected digital browsers is significantly higher.
Furthermore, the majority of retail leaders are not closing stores. Of the top quartile of brands in L2’s Specialty Retail Index, just three (Abercrombie & Fitch, Coach, and Williams-Sonoma) are actively reducing their digital footprint.