The Rise Of The Showroom-Store
Online only or eCommerce retailers have some distinct advantages, as I noted a few times in the past (my longish read on the Retail Wars, here). Significantly lower inventory, storage, labor costs and no taxes on purchases, to name the most important ones.
This has allowed clothing, eyewear and purveyors of many other things to operate online only stores quite profitably. Growing numbers of consumers reared on the Internet have taken to this shopping model like fish to water.
But, as the NYTimes noted yesterday, increasingly, online retailers are opening “showroom stores”. Bonobos, Etsy, Piperlime (a Gap eCommerce only, until today, unit) and others. Small and located in low-cost locations, these showroom-stores allow customers to touch and feel goods, perhaps even try something on (if they carry your size). In other words, online retailers want to have their customers experience the distinct advantages that traditional brick-and-mortar retailers enjoy, but without all of the attendant costs.
Interestingly, the stores are also seeing that those that walk into these stores are spending more compared to online shoppers and are buying more frequently too…but that’s probably not what is driving this:
The companies say they are catering to customers who want to see what they are buying in person, and who see shopping as a social event. As they build the locations, though, the retailers are reimagining some long-established rules — carrying less inventory, having fewer staff members and embracing small and out-of-the-way locations. In the process, they are creating what could be a model for efficient in-store operations: the store as a showroom.
And that last sentence is key.
I am not a retail expert (yet), but think about your local Macy’s or JCPenney (JCP deserves its own case study for other reasons…perhaps some day). Do they really need to store that much inventory in high-cost malls and anchor stores? Perhaps that’s where the retail format ends up long-term. Not for bread and milk but for apparel, luggage, jewelry, etc. A limited selection, smallish showcases, fewer staff. Anything that walk-in customers want to buy and is not their most bought item will be delivered from a warehouse hundreds of miles away.
Clearly, not something that works for the instant-gratification types, but can consumers live with next day or 2-days-later delivery in exchange for higher quality, lower cost goods? Wait…isn’t that what Amazon has been doing for a long time now?
nice. your analysis are growing more profound by the day.
saurabh