Clicks to Bricks: Retailers Building Scale by Changing Channels
E-commerce is clearly still in its infancy as a volume-driving “channel,” but the establishment of digital flagships, often in lieu of physical ones, is driving a host of additional benefits for retailers. The “bricks-to-clicks” model of the past is beginning to be turned on its head, and a new wave of retail competition is transforming the landscape without laying a single brick.
Japan-based, fast-basics retailer Uniqlo has set its sights on generating $10 billion in the U.S., with 20% of that originating online. This may seem like an ambitious goal, given that its U.S. presence is currently limited to three stores in New York and its next physical flagship opening, in San Francisco, isn’t due until October. In the meantime, the company is said to be on the hunt for an agency that will build out a U.S. digital flagship for its brand. Uniqlo’s e-commerce platform will definitely get its volume engine cranking, but it will also prime the pump in markets slated for future stores, while driving global brand awareness in a way that its spotty physical footprint can’t just yet. Uniqlo’s agency RFP included a stipulation that the e-commerce infrastructure “provide a universal foundation for future expansion in other global markets.”
Often referred to as its country’s equivalent to Nike, and marketed in the U.S. as “the biggest brand you’ve never heard of,” Chinese challenger brand Li-Ning is also determined to make its mark in the U.S., but its first lob over the fence wasn’t to open a Manhattan mega-store or even a couple of pop-ups. In fact, while the $1.23 billion company expects the U.S. to account for 10% of its international sales by 2018, it has no imminent plans to hang anything but virtual shingles here. With the premise of enabling consumers to “feel the personality of the brand” as if they were in a physical store, Digital Li-Ning debuted in March and has garnered a 425 percent increase in unique monthly web visitors. The brand has since created a robust virtual ecosystem that incorporates Facebook, Twitter, Pandora, YouTube, and the blogosphere into its digital mix. Clearly, Amazon isn’t the only e-commerce pure player intent on shaking things up.
Although Burberry’s bleeding edge drives into digital stand out as an impressive exception, the rest of the luxury market has largely resisted the rush to e-commerce, and instead relied heavily on carefully-curated physical flagships situated in major markets. Amazon’s just-announced foray into fashion will provide a much-needed margin boost to its portfolio but its determination to sign on brands such as Michael Kors, Vivienne Westwood, and others also portends of it transforming into the digital flagship of choice for many luxury brands.
Store-less and Stellar
Watching Walmart television ads while in Manhattan has always felt dissonant to me. After all, getting to a Walmart from Manhattan requires a tedious trek off-the-island to Secaucus, NJ. Did they flunk hyper-localization 101 or is something else at work? Thanks to the magic of its endless online aisles, Walmart actually counts Manhattan as a top market, and one that isn’t reliant on New York bargain hunters making hikes to neighboring states or succumbing to its ongoing store-building overtures. Any future ribbon-cuttings in the Big Apple are bound to grab headlines, but for Walmart, they will signify the achievement of a multi-channel milestone.
This article originally ran on the International Licensing Industry Merchandisers' Association (LIMA) site.