The pandemic-era digital spending boom is leveling off as consumer spending patterns return to something resembling normal. The e-commerce space is much more crowded than in 2018 or 2019 too.
And so many direct-to-consumer (D2C) brands that rapidly scaled up their digital marketing and sales in 2020 and 2021 find themselves at a crossroads. They know additional digital investments won’t produce the same returns as before. But they’re also painfully aware of the risks of changing tack and building a brick-and-mortar presence even if the potential payoff — reaching new customers and generating the sort of brand loyalty that’s difficult to replicate online — is clear.
If your closest competitors are diversifying into physical retail too, building a more visible and … [+]
If you’re also struggling to chart a path forward for your digital business and wonder whether now isn’t the time to invest in brick-and-mortar, make sure it’s a good fit first. Brick-and-mortar isn’t appropriate for every digital-first D2C business, at least not right away.
That said, now is the best time in years to build a real-world retail presence. Predictions of an imminent retail collapse are as old as the Internet itself. They’re unlikely to prove true anytime soon. Consumers craving tactile, experience-driven “IRL” shopping experiences are breathing new life into the sector right now. Meanwhile, the in-person retail reset — many restaurants and independently owned shops closed permanently during the pandemic, leaving a glut of prime space — has created a rare opportunity for D2C sellers to lock in long-term leases on generous terms.
Even in this unusually favorable environment, the brick-and-mortar transition is no walk in the park. Competition from IRL incumbents and like-minded digital-first transitioners abounds, and managing (not to mention scaling) a physical retail presence is a lot different than managing a digital one. To succeed, you’ll need to set your business apart from the competition and give prospective customers a reason to choose it over the alternatives.
4 Strategies For Digital Brands Entering the Brick and Mortar Space
When your digital brand is ready to add in-person sales to the mix, follow these time-tested strategies to stand out from your competitors.
1. Invest in Trade Marketing Automation
You’re likely familiar with digital marketing automation. No need to pull back there — both your current online and future real-world retail presence stand to benefit.
But you do need to expand your marketing automation investments to directly support your brick-and-mortar operations. Otherwise, the demands of promoting your D2C business as it rolls out a brick-and-mortar presence will quickly become overwhelming for a marketing team that’s much more comfortable with digital touchpoints.
“Generally speaking, marketing teams in D2C brands don’t have the experience, resources or awareness to combat the insane workloads and logistical nightmares that come hand-in-hand with trade marketing. Trapped under the weight of these tasks with just a spreadsheet for aid is the worst situation a brand can be in, and it is exceedingly difficult to manage brick-and-mortar marketing operations without implementing automated processes,” says Jamie Calon, CEO of Regulator Inc.
Marketing automation software companies like Regulator Inc. streamline development, ordering, transportation, and management of signage, marketplace displays, and other physical trade marketing elements that help your physical points of sale stand out. The result: a more responsive and better-branded shop environment that drives sales and encourages customer loyalty.
2. Use Pop-up And Mobile Storefronts To Build Buzz
“Build it and they will come” is not a business strategy. Before you open your brick-and-mortar shop, generate awareness for it with a transitional format: a pop-up or mobile storefront.
“Pop-up shops let digitally native retailers meet and get to know their customers,” says Shopify’s Allie Decker, “[and] allow customers and fans to ‘put a face with the name’ through a tangible brand experience.”
They also cost less to launch than full-fledged brick-and-mortars, and they’re better suited to partnerships with more established, complementary businesses. Grab a stall at the farmer’s market, set up a residency at a food hall or retail brewery, get a street vendor license — whatever makes sense for your business. As long as it gets your product in customers’ hands and gets your brand out in the real world.
3. Reward Digital Customers Who Buy From Your Brick-and-Mortar
As a digital brand, you probably sell across a wider geographical area than a single storefront (or even several) can serve. Your existing customers won’t all be in a position to make the pilgrimage to your new brick-and-mortar.
Nor will all those who are close enough to pop in. But you’ll convert more if you make it worth their time.
So offer (and publicize) time-limited “IRL” discounts for existing digital customers. Better yet, set up a full-fledged brand loyalty program with rewards points, multiple membership levels, and exclusive perks. If you can identify a core group of “super-customers,” pitch them on a VIP plan that promises long-term or lifetime benefits — like free product and members-first/only access to events and product releases — in exchange for a one-time upfront investment. You’ll probably lose money on it in the long run, but you’ll get a critical capital infusion during your brick-and-mortar rollout.
“Customer loyalty fosters a strong sense of trust between your brand and customers. When customers choose to frequently return to your company, the value they’re getting out of the relationship outweighs the potential benefits they’d get from one of your competitors,” says Sophia Bernazzini, a HubSpot marketing specialist.
However expensive it appears at first, loyalty-based marketing is much cheaper than acquiring new customers from scratch. It also has network effects — loyal customers are your best source of free word-of-mouth marketing.
4. Broadcast Your Story (And Your Experience Going Brick-and-Mortar)
Finally, share the story of your brick-and-mortar rollout. Not just with a perfunctory blog post or two but with full-fledged content marketing, social media, and earned media campaigns.
This requires considerable effort — especially cultivating earned media — at a time when you might feel as if you can’t afford it. But if your closest competitors are diversifying into physical retail too, building a more visible and engaging brand is the surest way to separate your storefronts from the pack.
