GOING TANGIBLE: DIGITALLY-NATIVE MIGRATION TO THE PHYSICAL FRONTIER
GOING TANGIBLE: DIGITALLY-NATIVE MIGRATION TO THE PHYSICAL FRONTIER
Going on thirty years now since the advent of the dotcom boom, entrepreneurs began eschewing “old school” brick and mortar models to trim costs and ostensibly reach more customers.
The digitally-native brand was born.
And while online commerce–seemingly unfettered by the weight of physical space–has only proliferated in recent years, a recent Studio Butch consumer survey reveals important insights into the value of physical space for brands to grow their customer base, and even drive online sales.
To target our findings, we surveyed US consumer perceptions when only considering brands they perceive as operating exclusively online, and excluding large online marketplaces such as Amazon, eBay, Wayfair, etc.
While 67 percent of consumers said they have bought from digitally-native brands in this segment in the last six months, a whopping three out of four said that having a physical space adds credibility to an online-only brand.
This statistic underscores a fundamental truth for digitally-native brands seeking to increase their customer base: trust and affinity is gained faster, and more fully through tangible brand experiences. And that affinity can have a positive ripple effect on the bottom line.
It also reinforces our previous findings that the top driver for consumers to choose to shop in-person over online is to interact with product. Consumers in our survey rated wearables such as apparel and shoes among the top brand categories they would be more likely to shop with the presence of physical retail.
Understanding these truths, and deftly navigating a migration from online-only to omnichannel hybrid, has already created a big brand pay-off for notable, digitally-native brands like Bonobos, AllBirds, Away, and Warby Parker.
Warby Parker’s AR-powered glasses try-on simulator for instance, is still no match for the real experience in their showrooms. Co-CEO Neil Blumenthal highlighted the increasing importance of brick-and-mortar stores to the brand’s growth strategy, noting their aim to open 40 new stores in the past year.
What’s more, the in-person experience doesn’t only offer broader market-share, it observably expands buying habits. A 2019 ICSC study found that when a consumer spends $100 in-store at a retailer, they tend to spend an average of an additional $167 online with the same brand within 15 days.
While engaging consumers through in-person experiences is the goal, for many brands, a fleet of stores in multiple markets may not be feasible, or even practical. The good news: it might not be necessary either.
Though approximately three-quarters of consumers believe that physical space adds credibility to a brand, a substantial 60 percent of consumers said they are more inclined to shop from a brand online merely knowing it has a physical space, even if it's not conveniently located near them.
This finding spotlights a halo effect associated with physical spaces. The mere awareness, or social proof, of a brick-and-mortar establishment enhances perception in the eyes of consumers, and positively influences their purchasing behaviors online.
This means that depending on size and strategy, digitally-native brands could invest in a few key markets, or even a single, flagship location, and benefit from leveraging that/those to grow their audience everywhere.
This approach has proved exceptionally effective for digitally-native baby registry brand, Babylist. After a dozen years as digitally-based brand, Studio Butch worked with Babylist to design and develop their first (and only) brick and mortar space: an interactive 16,000 sq ft showroom experience that opened last fall in Beverly Hills.
Striking a balance between reality and whimsy, the Babylist showroom provides customers a hands-on product experience, while also leveraging QR codes and an app in an omnichannel environment.
While the majority of Babylist’s customer base won’t ever shop there, the brand has strategically focused on leveraging the visibility and reach of the high-impact space far beyond its walls giving consumers anywhere a chance to experience the space. This full-circle migration from digital brand to physical world, then translating the physical experience back to digital is at the retail forefront.
“With Babylist, we were honing in on the bright future of brick and mortar retail,” says David Brady, Studio Butch creative director. “It’s interactive, immersive, and embraces what can’t be experienced online, while blurring the lines between digital and real life.”
While the success brands like Babylist are experiencing by investing in permanent retail spaces is undeniable, interestingly, our consumer data also suggests that permanence isn’t necessarily the silver bullet when it comes to physical experiences.
A substantial 67 percent of US consumers said they are more likely to shop a brand online now and in the future if they've had just one, positive in-person experience. This number creates opportunity for a strategy centering on shorter-term activations.
“We continue to see an increase in consumers–paradoxically younger consumers–wanting brands to show up in the real world to essentially prove their authenticity.” says Chris Giovarelli, Studio Butch strategy director. “The old adage, ‘show don’t tell’ applies here, but the manner in which brands show-up can actually be quite fluid.”
For brands looking to dip their toes into the physical space without a longer-term commitment, temporary pop-ups can be an ideal approach. When expertly executed to ensure a superior customer experience, activations offer brands flexibility to test different markets, formats and concepts, while also creating broader brand credibility by showing up IRL.
“Temporary activations allow us to bring brands to life in bold and attention-grabbing ways that you can’t often accomplish with a permanent build,” says Giovarelli. “Their inherently disruptive nature piques our brains to take notice.”
A smaller relative investment, faster speed to market, and in some cases the ability to make a bigger splash, are just a few of the benefits short-term experiences can offer. Digital-first brands that actively leverage content from short-term pop-ups have an opportunity to tap into the same halo effect previously discussed to reach potential customers.
Our findings highlight the benefits of interconnectedness of offline and online channels for digitally-native brands in today's omnichannel landscape. More poignantly, the data supports migrating paradigms toward embracing that physical space not only plays an essential role in brand adoption, but also translates into increased digital sales.
TLDR:
Physical space builds credibility: 3 out of 4 of US consumers believe a physical space adds credibility to an online brand.
Proximity doesn’t really matter: 60 percent of US consumers are more likely to shop an online brand online, knowing it has a physical presence, even if it’s not close to them.
One time is maybe enough: 67 percent of US consumers said they are more likely to shop a brand online now and in the future if they've had just one, positive in-person experience.
The key takeaway? While there’s flexibility on how it’s done, savvy digitally-native brands seeking to get to the next level should develop a real world strategy.
xoxo
At Studio Butch, we help global and boutique brands build customer affinity through experiences, spaces and content. Let’s connect to talk about how our unique combination of strategy and creativity can help your brand.
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DATA POINT: CROSS-GENERATIONAL CONSUMERS SEEK IN-STORE EXPERIENCES OVER ONLINE
INSIGHT: RECLAIMING CUSTOMER LOYALTY THROUGH POWERFUL POP-UPS
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We help global and boutique brands build customer affinity through experiences, spaces and content. Let’s connect to talk about how our unique combination of strategy and creativity can help your brand.