- Warby Parker, started online in 2010, spearheaded the trend of e-commerce companies opening bricks-and-mortar stores.
- It now operates 64 storefronts and is headed toward 100.
- Everlane, Casper, Harry's, Untuckit, Allbirds and Boll & Branch are other examples of brands growing their physical footprints.
- The lines between online and offline retailing are increasingly blurring.
Eyeglass retailer Warby Parker, founded online in 2010, plans to have nearly 100 stores across the U.S. by the end of this year.
The internet-first company helped spearhead the trend of "online moving offline," after it decided in 2013 to open its first store in New York, where so many shoppers were requesting a place to try their glasses on. From that point forward, moving into retail was a logical step for Warby to gain exposure, new customers and insights into shopping behavior.
Today, Warby has 64 stores in well-vetted markets within prime real estate. It's also tested pop-up shops, stores on wheels (in decked-out school buses) and other "mediums" to reach customers, CEO Neil Blumenthal told CNBC.
"We think the presentation by retail experts of 'either [online] or [offline] is a false choice," Blumenthal said. "It really is the intersection of the two. ... And we are trying to approach retail expansion in a very deliberate manner, where we are testing and learning."
Now, names like Everlane for apparel and accessories, Casper for mattresses, Harry's for razors, Untuckit for button-down shirts, Allbirds for tennis shoes and Boll & Branch for bedding are growing their physical footprints.
A strategy for many retail upstarts has been to use their online databases, determine where a patch of loyal customers are located, and plant a store there. Others are simply seeking out the best real estate after developing relationships with top U.S. mall and shopping center owners.
"The common characteristics [with these online-first brands] are that they're digitally native ... they're vertically integrated, meaning that they totally understand their entire supply chain, and they're selling their own goods," said Art Coppola, CEO of real estate investment trust Macerich, on a recent earnings conference call.
"But the other thing is ... they all want to have stores," Coppola went on. "Having stores is not an appendage. It is the core to their strategy."
In turn, real estate developers similar to Macerich including Simon Property Group, General Growth Properties and Taubman are offering up-and-coming retailers flexible lease terms, helping them design their spaces and promising other sweetened benefits to entice them to move into their properties.
"This is where we have to help them as landlords," Coppola said. "At the end of the day, the offline stores are a much lower cost of acquisition of new customers ... and have a much higher long-term value per customer and a much higher conversion rate."
According to Casper CEO Philip Krim, the goal is to get the product to consumers "when they want it, how they want it." Many times, that's via bricks and mortar.
"When we were first talking to potential landlords, there was a lot of skepticism that they didn't want mattress stores in the mall," Krim told CNBC. "Now the landlords see what the experiences is about, and it brings a lot to their properties. ... Now it seems like we can choose our [real estate]."
Many of these retail brands today are also much more flexible in the size of their stores, circumventing a precedent set by department stores ages ago, to develop one model — one floor plan — and stick with it. Instead, companies today aren't afraid to start small and move around.
"In the 'old days,' committing to expensive, long-term leases for a young brand like ours would have been a huge burden, and likely an impossibility at this stage in our business," Ariane Gold, the founder of handbag company goldno.8 and a former designer for Ralph Lauren, told CNBC.
"However, the world of pop-ups and short-term, low-risk leases have opened many doors for us to grow our presence offline," Gold said. Her company recently was highlighted at Simon Property Group's rotating pop-up exhibit in a New York mall, called "The Edit."
These days, "many landlords will consider profit sharing as a means of payment," she explained. "Creating in-person experiences for our customers are within our reach and definitely a part of our plans."
Industry experts are calling for more brands to expand, similar to the so-called Warby Parker model, in the coming years. There's Away for luggage, Outdoor Voices for athletic apparel, M.Gemi for Italian leather shoes — the list of these new-to-the-market brands is seemingly endless.
In turn, the lines between online and offline retailing are increasingly blurring.
There's a glut of real estate on the market for moving into. And many business owners couldn't be more optimistic about the opportunity, despite headlines that scream "retail apocalypse" and "death of the mall."