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Online retailers go offline to benefit customers [Chicago Tribune :: ]
[April 17, 2014]

Online retailers go offline to benefit customers [Chicago Tribune :: ]

(Chicago Tribune (IL) Via Acquire Media NewsEdge) April 17--As a first-year law student with job interviews on the horizon, Huy Nguyen was in the market for a well-fitting suit that wouldn't blow his budget.

Online custom suit retailer Indochino enticed Nguyen with the right price and quality, but what ultimately sold him was a Facebook ad offering old-fashioned service: in-person measuring and styling at its Traveling Tailor pop-up shop downtown.

"I like the in-person contact, having a professional's advice," said Nguyen, 22, who brought three fellow Chicago-Kent College of Law students with him to buy suits at the pop-up shop, which runs through April 27 at Block 37. "If I measure myself at home, I don't know if I'm doing it correctly." As many traditional retailers scramble to boost their online presence in an age of rapid growth in e-commerce, a growing number of online retailers are investing in bricks-and-mortar shops to put in valuable face time with their customers.

Online menswear brand Bonobos was among the pioneers when it launched its physical Guideshops, offering fit and style advice, in 2011, and later made its apparel available at Nordstrom. Eyeglass retailer Warby Parker, as well as Gap Inc.-owned Athleta and Piperlime, are other digital success stories that have set up offline locations.

Online crafts market Etsy isn't opening its own stores but is developing a wholesale service to help its sellers get their wares into independent boutiques and large retail shops across the world. Etsy Wholesale, which launched in beta a year ago and will launch publicly in August, screens and assists sellers to ensure they are able to produce at the scale necessary to satisfy orders from buyers such as Nordstrom, West Elm and New York boutique Michele Varian.

The trend, which has accelerated during the past year, doesn't suggest a reverse commute from digital to physical as much as the mounting importance of hitting customers from all angles, said Joe Scartz, chief marketing officer for Digital BrandWorks, a Chicago-based consultant helping retailers thrive in a digital world.

Smartphone-wielding customers have come to expect an always-on shopping experience, including the option to walk into a store, Scartz said. And as many traditional stores face down showrooming -- that's the practice of checking out the merchandise in-store and then finding the cheapest price online -- by offering price-matching alongside the added value of their associates' expertise, online retailers are having to compete on more than price, he said.

"If these online retailers don't compete in an omnichannel way, they will lose ground to the bricks who are able to do this kind of thing," Scartz said, employing the retail world's favorite buzzword.

Though e-commerce is growing fast, up 17 percent last year compared with 3.5 percent growth for bricks-and-mortar stores, it represented just 5.8 percent of the $4.53 trillion in overall retail sales in the U.S. in 2013, according to eMarketer.

For some online retailers, pop-up shops are low-risk opportunities to dip into the offline waters without making major lease or inventory commitments, Scartz said.

Often, the real moneymaking remains online while the physical locations serve public relations or marketing purposes.

"Physical real estate is very expensive in desirable locations, and brands that choose to do this often have secondary goals other than sales, such as awareness, Web acquisition or branding," said Sucharita Mulpuru, an analyst with Forrester Research.

Gilt City, the local lifestyle arm of designer flash sale site Gilt, has been hosting occasional warehouse sales since its founding in 2011 to connect with its members and drive them to their brand partners' physical locations, said Steven Schneider, president and general manager of Gilt City.

It held 18 events in 11 cities last year. At the semiannual Chicago Warehouse Sales, the next one of which starts April 25 at 1747 W. Hubbard St., members are treated to signature cocktails, minimakeovers and brow consultations, plus a curated set of fashions up to 90 percent off retail prices.

"It's a great differentiator for us," Schneider said.

The digital-to-physical migration was a radical idea when Indochino launched its first Traveling Tailor shop in its home base of Vancouver, British Columbia, in 2011, with the purpose of reaching customers who wanted face time, said co-founder and CEO Kyle Vucko. But with 24 pop-ups planned this year, the physical presence has become a crucial part of the online retailer's business.

"It's a big sales driver for us," Vucko said. The company gains a lot of new customers through the events because of walk-by traffic, the media attention that comes with having a local hook and the ability to meet local "influencers" who will spread the word, Vucko said.

In addition, "we get to understand who our customers are, what motivates them, what they already own from a clothing perspective, so we ... can better create a full wardrobe or understand what they need to buy next," Vucko said. The significant investment in the shops includes hiring locals to serve as style guides so they better know each region's style preferences.

Vucko, who dropped out of the University of Victoria his senior year to start Indochino with a classmate in 2008 because their own suit-shopping experiences had been so disappointing, said the pop-ups aim to provide the perfect shopping experience for a man.

At scheduled appointments, men are joined by style guides to be measured, pick from among rows of fabric samples, choose from among 20 customization options, then pick shirts and accessories, all within 30 minutes and in an environment where "it feels safe to be clueless." The guides input customers' data into iPod Touches, and the made-to-measure suits, which start at $429 for a two-piece, are ordered online and delivered to customers' doorsteps from factories in China.

Retail director Jennifer Clarke said the face time often gives men the courage to be more adventurous in their fashion choices. Texture and color are less scary in person than on a computer screen, she said, and a trusted consultant is walking them through the customization options, from pocket flaps to colored stitching for the buttonhole for a boutonniere, and offering answers to questions the men didn't know to ask.

Accessories also sell better at the pop-ups because the style guides show customers how to complete the outfit, Clarke said.

"Let's not just buy a charcoal suit, let's buy the whole package," she said.

When furniture brand Interior Define launched its online shop in January, it followed a month later with a small showroom in the Wicker Park neighborhood.

The 3,000-square-foot space, which features only samples, "allows the touch and feel, and second it allows people to be brand advocates for us, which has helped with online sales outside of Chicago," said CEO Steve McClearn, who expects to open more showrooms. The in-person interaction also gives the company feedback about which pieces are doing best and what to tweak.

It has been interesting to see how customers interact with the brand, which hand makes its products to order in China and ships directly to the consumer, said co-founder and creative director Rob Royer.

Some people who first learn of the brand online won't purchase until they go the store and hear the story in person, while others who walk by the store feel most comfortable getting on their computer to get more information and purchasing online, he said.

"They go back and forth," Royer said. "It's all about giving customers an option." ___ (c)2014 the Chicago Tribune Visit the Chicago Tribune at Distributed by MCT Information Services

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