Can Digital Native Brands Save Brick-and-Mortar Retail?

More brands that were once online-only have begun to add physical stores with new ideas on how to operate them.

Daniel B. Kline
Daniel B. Kline
May 15, 2019 at 7:40AM
Consumer Goods

"Malls are dying."

"Americans prefer to shop online."

"Nobody wants to leave the house to buy anything."

Those statements all sound true. And, in some cases, data shows that they could one day be true: 2018 saw over 8,100 brick-and-mortar stores close, while more than 5,500 have shuttered their doors so far in 2019. This all makes it seem like the retail apocalypse is a real thing.

But it's not.

Legacy retailers that refuse to embrace change are dying, while chains willing to evolve -- think Walmart, Target, and Best Buy -- have thrived. In addition, retailers which began on the internet, like Amazon, Warby Parker, and Casper, have shown that there's value in adding a physical presence.

"It's true that many legacy retailers are over-stored and have stores in the wrong places," wrote AlixPartners Senior VPs Alexa Driansky and Asher von Stein. "It is also true that physical locations currently owned by digital natives still only figure in the hundreds. However, the strategy behind the act is worth paying attention to, and some established retailers already are."

A mall

Some malls and shopping plazas are adding non-conventional stores. Image source: Getty Images.

Change is needed

What's very clear is that most legacy retailers that have chosen to ignore the internet (or at least not make responding to the changing demands of consumers) a priority have struggled or gone away. The impact was felt worst by brands like Toys R Us that entered the digital era too saddled with debt to make major changes in their stores.

The retailers that have thrived have worked on reinventing their brands. In most cases, that has involved embracing a customer-first omnichannel model. But offering consumers flexibility in ordering, pickup, and delivery only solves part of the puzzle.


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"Forward-thinking retailers are relocating, resizing, or opening new stores that feature reinvented concepts such as interactive dressing rooms, Instagrammable moments and other experiential aspects, dedicated spaces for events, services like on-the-spot alterations, etc," wrote Driansky and von Stein in their report "Retail Store to the World: The Reports of My Death Are Greatly Exaggerated".

Old school brick-and-mortar chains can learn a lot from how their digital native rivals have approached stores. Because they're not bound by any sort of legacy, these new players can experiment until they find a model that best serves their customers. That has led to once-purely digital companies like Amazon, Warby Parker, Casper, Adore Me, Indochino, and Untuckit to now have at least 100 physical stores each, with some brands having plans for many more.

"And this is because the store is not dead; it simply must be reimagined as the hub of a customer-centric model," wrote Driansky and von Stein. "There will always be an appetite for the physical and social experiences that only a store location can offer."

Embrace change

Stores allow customers to physically put their hands on products. They can try things on, talk with store personnel, and get a real feel for what they're buying. That's valuable as part of the retail ecosystem, but it has proven to not be the only thing most retailers need.

It's important for brick-and-mortar chains to look at what digital natives are doing online and in physical stores. They should not merely copy what's working, but adapt these tactics to the demands of their customers.

Stores aren't dead. They're just something different, and retailers who embrace that will survive and even thrive.