More trends to watch in 2024. While many businesses invest in improving their online presence and expanding their e-commerce or omnichannel options, some retailers are realizing the importance of strengthening their in-person interactions and going back to basics. Every year, brands that sell directly to consumers (DTC) decide to open their own physical locations.
The reasons for this change vary from company to company, but there are several advantages to having a brick-and-mortar store or flagship location. These include building stronger bonds with customers, earning their trust, and providing a convenient location for online order pickups, returns, and local deliveries.
According to a detailed report called "The Halo Effect III" by ICSC, which analyzes sales data from both physical stores and online platforms of 69 retailers across 2,103 stores, opening a new store leads to an average increase of 6.9% in online sales in the area around that store during the initial weeks after its opening. For newer DTC brands, the online sales boost is even higher, at 13.9%. Conversely, closing stores has a significant negative impact, with sales dropping by 11.5%.
Brands like Melissa & Doug, Kizik, Radio Flyer, Princess Polly, and thirteen lune have embraced the trend by opening physical stores to offer unique consumer experiences that differ from the digital realm. Transitioning from being solely online to having a physical presence could be significant, especially considering that nine out of the top 10 e-commerce websites also have brick-and-mortar stores. Additionally, while 68% of U.S. Gen Zers trust online-only brands, it's worth noting that more than 20% of sales currently occur online, with that number expected to reach 25% by 2026, according to Forbes. Therefore, earning trust and loyalty through physical locations will positively impact the bottom line.
