To Digital And Back: The Retail Revolution Comes Full Circle

Traditional brick-and-mortar retailers are flocking to digital channels to avoid going out of business. Oddly enough, at the same time, many digitally native brands are doing the opposite — not to avoid bankruptcy, but to accelerate growth.

Retail apocalypse skeptics have been saying it for some time: Brick-and-mortar retail isn’t dying; it’s just changing. And the problem with traditional retail was never that it lived in physical stores instead of digital ones. The problem was that it stayed traditional while the future of retail moved on without it.

That future — now the present — was shaped by digitally native brands, starting with Amazon as it put brick-and-mortar booksellers out of business. Now, those digital natives are moving into the physical storefronts they’ve cleared and building a new future, one that is neither physical nor digital, but omnichannel.

This is where four-year-old digital shoe company GREATS now finds itself as it opens its second physical location in New York City (the first was in Venice, California).

Founder and CEO Ryan Babenzien said the company’s plan was always to move into physical retail at some point. His only regret is not doing it sooner.

Getting Physical

Babenzien said the reason GREATS and so many other digital natives are getting into physical retail is that this channel provides an experience that simply cannot be replicated online — and that’s why consumers will never fully abandon the live shopping experience in favor of eCommerce, he said.

The CEO doesn’t believe brands must have both digital and physical channels to make it, but he said it’s smart to have both — a retail presence improves digital efficiency and becomes profitable as standalone retail relatively quickly.

When eCommerce first became a thing, Babenzien remembers companies in apparel or eyewear believing they could survive solely online. Today, he said, it’s clear that such an approach would be a mistake and would sell the company short. Everything is about omnichannel now — and “omni” includes physical storefronts.

“You can’t replace the feeling of an Italian leather sneaker digitally,” Babenzien said. “The value of touching and trying something on is still the best way to experience our product.”

Safety in Numbers

Babenzien said that, ironically, one of the reasons so many retailers are struggling is size — they’ve over-succeeded and have become unwieldy. There are many big box stores for consumers to choose from, he said, and the products are pretty much the same no matter which one customers visit.

For digital natives venturing into the world of physical retail, Babenzien said this won’t be a problem. Brands like GREATS are under-distributed, he said, and that isn’t going to change. Even if physical retail proves to be a boon for GREATS, the brand will open 10, 50 or 100 shops — not the thousands that have oversaturated the market with big box names.

Babenzien said this exclusivity drives demand, and the limited availability drives customers to the channels where the product is available.

Similarly, he added, wholesale retailers are buying hundreds or thousands of brands, and the more they include in their product assortment, the harder it is to present each one well. Digital natives like GREATS have the advantage of presenting only their own products, thus owning the product assortment as well as the end-to-end experience.

The Physical/Digital Feedback Loop

Physical isn’t digital, but it can be informed by it, said Babenzien. GREATS, like any merchant, has core products that remain customer favorites whether they’re sold in-store or online. Thus, he said to let digital point the way when determining which products to include and spotlight in the inherently limiting channel of traditional retail.

However, the CEO said it’s also important to listen to shoppers at each location. There are bound to be outliers that perform better in one setting than another. The Venice store, for instance, does good business selling slides because of the warm weather, but the New York store likely will have a different favorite that’s more suited to the local weather and fashion tastes.

When One Door Opens…

While prophets of the retail apocalypse may make physical retail sound like a bad business plan, Babenzien said that’s not the case; it’s simply a different, and often challenging, business plan, but one which he said can deliver a lot of value to a business when done right.

“All the digital native brands are now opening retail stores,” Babenzien said. “We’re building a brand and we’re agnostic to how a customer experiences or buys us. We want to make sure to give them the option. Some people like to buy online; others like stores. Options and balance are the key — and the hardest part.”