Online Retailers Invest in Bricks

A record number of e-commerce retailers opened physical stores last year and 850 more are set to open in the next five years, reported JLL, Chicago.

The JLL Clicks-to-Bricks report noted online mattress retailer Casper will open 200 stores within three years, women’s intimates company Adore Me announced plans for up to 300 additional stores and online sneaker seller Allbirds recently opened a 4,800-square-foot New York flagship and plans more stores in four cities in the next year.

“The clicks-to-bricks retailers’ expansion plans demonstrate the value these brands place on having a physical presence with which to engage shoppers,” the report said.

One business plan is the “showroom model,” JLL said. “They came of age in the digital era, so it makes sense for clicks-to-bricks retailers to operate on a showroom model–that is, to offer only samples of products for customers to try out and then ship actual purchases to shoppers’ homes from a warehouse,” the report said. “Bonobos and Indochino, for example, both operate as menswear showrooms. M.Gemi, the shoe retailer, and Universal Standard, the plus-sized apparel company, operate similarly.”

But only 15 percent of clicks-to-bricks physical stores are showrooms that don’t carry any inventory, the report said. Most of those that operate as showrooms are apparel and accessory retailers, followed by furniture, home furnishings and housewares companies such as Casper mattresses.

New York remains the top city for both temporary “pop-up” stores and first permanent locations. “More than half of clicks-to-bricks retailers opened their first pop-up locations in New York City, and more than a third opened a first permanent location there too,” the report said. Los Angeles, San Francisco and Chicago are also popular destinations for digital retailers’ first permanent location.

More than 60 percent of permanent clicks-to-bricks stores opened in the same city where the online retailer opened its first pop-up shop, JLL said. In addition to New York, popular cities to debut a pop-up and then subsequently locate a permanent store include Los Angeles, Detroit, Chicago, Washington, D.C. and San Francisco.

“Most clicks-to-bricks retailers sell apparel and accessories,” the report said, noting nearly three-quarters of clicks-to-bricks retailers are apparel and accessory brands such as Bonobos and UNTUCKit shirts. Half of all clicks-to-bricks retailers have high price points such as Peloton indoor exercise bikes, while 32 percent are mid-priced retailers, including ModCloth and Chubbies.

The average store size for a clicks-to-brick retailer is 2,808 square feet, JLL said. Apparel and accessories retailer LXR & Co. has the smallest average store size, just 250 square feet, while furniture and housewares retailer PIRCH has the largest average store size with 27,000 square feet.