Speakers at the National Retail Federation Big Show said that the key to the industry's future success remained in bricks and mortar.
"The best retailers have innovated, so that the physical store has the upper hand again," Ron Johnson, CEO of tech home service company Enjoy and the visionary behind the Apple store, told a keynote audience in New York.
The appreciation for physical retail comes as several online pure-play brands have struggled to make a profit, with the cost of customer acquisition remaining stubbornly high. Casper Sleep was the latest to reveal that it's been racking up losses — to the tune of more than $90 million in 2018 — and doesn't expect to be profitable for a while.
Getting customers, and loyal ones, is more easily achieved when physical stores are in the mix, several experts said in various panels during NRF's first conference day.
When it comes to customer acquisition, "physical retail is more effective than a billboard," Matt Alexander, co-founder and CEO of Neighborhood Goods, a brick-and-mortar curator of brands, that is often billed as a "new kind of department store."
Doug Stephens, speaking Sunday evening at a gathering of Microsoft teams involved in retail, said that as digital advertising has proliferated, it's also lost its edge. "Digital advertising has become marginalised," he said. "We are swimming in a sea of media and communication from brands. Stores are the new channel for retail. Stores are an incredibly powerful means of bringing people together."
Dan Pelson, chief operating officer of AREA15 - a mall-like "retailtainment" complex opening in Las Vegas in April - and Tal Zvi Nathanel (co-founder of and CEO Showfields, a four-storey, 14,707 sq ft experiential space in New York that works with emerging online brands), said that the human desire for gathering and connection represents one of retail's most highly prized elements, a driver of traffic.
Nathanel, Pelson, Alexander, Stephens and Kevin McKenzie - a partner at CrowdedSpaces, which derives analytics and measurements from physical retail - all emphasised the importance of creating compelling spaces, providing good customer service, flexibility in how space is used, and assessing the utility of brick and mortar, often with analytics technologies to measure in-store activity.
That means calculating a store's marketing value and not just its top-line sales.
Crate & Barrel CEO Neela Montgomery, speaking during a keynote address on Sunday, said the retailer has taken into account that a customer may decide to buy thanks to their store visit, but the sale may not be made at that store. That demonstrates a physical store's influence in customer acquisition, the metric that appears to be falling short at so many DTC brands.
"We're not accounting for the value of stores," Stephens said. "Buying advertising doesn't work anymore. Stores are not about the distribution of products anymore, they're about the acquisition of customers."
