Digital Brands Go Brick And Mortar

After dissing physical outlets as passé, online retailers discover that stores still matter

Stores are so 20th century. At least that’s what many online brands believed. Warby Parker, Bonobos, Casper, and other companies didn’t need physical locations to win over millennials and steal market share; a well-designed website was more than enough. And who could fault their logic? Given the brick-and-mortar carnage across America, the evidence seemed overwhelming.

Then a funny thing happened on the way to the retail apocalypse. Stiffening competition, surging online ad costs, and cheap mall space have prompted these so-called digital natives to embrace offline in a big way. In their push to become retail’s next household names, they’re venturing beyond the coasts and big cities into suburbia. The expansion is also an acknowledgment that 90¢ of every retail dollar in the U.S. is still spent at a physical location, according to the U.S. Census Bureau, and Moody’s Investors Service Inc. doesn’t expect it to fall below 75¢ until the middle of next decade.

The clicks-to-bricks phenomenon includes big names such as Amazon Books and Casper Sleep— which popularized the bed-in-a-box—as well as lesser-known startups like men’s shorts retailer Chubbies and hair color brand Madison Reed. All told, these digital natives now operate more than 600 stores nationwide, according to Green Street Advisors LLC, a real estate research company.

“What some brands are starting to figure out is, ‘Oh, wait. Perhaps these retailers who have been around for 100 years were onto something,’ ” says Jared Blank, a senior vice president at Bluecore Inc., a retail consulting company. “You will definitely see more of these insurgents coming into brick and mortar.” Micky Onvural, chief executive officer of Bonobos Inc.—bought by Walmart Inc. in 2017—says malls increasingly see the menswear company as an anchor tenant. “They want us there,” she says.