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Wednesday, December 19, 2012

Web Shopping Sites Hang Out Real Shingles

Once Proudly Web Only, Shopping Sites Hang Out Real Shingles

Michael Nagle for The New York Times

Piperlime, the Gap Inc. unit that was online-only for six years, opened a SoHo store this fall.

Andy Dunn was fierce about the Internet-only model of his apparel company, Bonobos, after helping to found it in 2007. He gave a speech, “The End of Apparel as We Know It,” arguing that stores were a bad economic decision. As he told a news channel in 2009: “We keep men out of retail stores when we know that men fundamentally don't enjoy shopping.”

A customer trying on clothes at a Bonobos store in Manhattan, one of six locations the company opened this year.

How times have changed.

Recently, Mr. Dunn was looking with satisfaction around a Bonobos store in Manhattan, one of six the company opened this year. “I was pretty puritanical about e-commerce only,” he said, but found that about half of would-be customers would not order apparel online because they wanted to feel the merchandise. E-commerce is growing fast, he added, but “that doesn't mean the offline world is going away - it just means it's changing.”

After years of criticizing physical stores as relics, even e-commerce zealots are acknowledging there is something to a bricks-and-mortar location. EBay and Etsy are testing temporary stores, while Piperlime, the Gap Inc. unit that was online-only for six years, opened a SoHo store this fall. Bonobos plans to keep opening stores, and Warby Parker, the eyeglass brand, will soon open a physical location.

The companies say they are catering to customers who want to see what they are buying in person, and who see shopping as a social event. As they build the locations, though, the retailers are reimagining some long-established rules - carrying less inventory, having fewer staff members and embracing small and out-of-the-way locations. In the process, they are creating what could be a model for efficient in-store operations: the store as a showroom.

“Well over 90 percent of sales still happen in physical stores, so there is a huge, compelling reason to think about the physical store as a driver of sales,” said Sucharita Mulpuru, an analyst at Forrester Research. She said Web retailers had advantages over traditional ones: they are not stuck with old cash registers and sales software, and the weak commercial real estate environment combined with their Web sales history allow them to get leases on good terms.

Faith Hope Consolo, a Manhattan retail real estate broker, said she was seeing more inquiries from online-only retailers about opening shops, particularly in smaller spaces.

“They'll show them a few products, lure them in and hopefully have them hooked,” she said. “They feel that, yes, people are online, people have apps, but there's nothing like the spontaneous face-to-face.” Some stores take the revised model to an extreme. An eBay pop-up store in London that opened this holiday season has no actual merchandise, just scannable screens displaying gift suggestions.

Others try to give shoppers a semitraditional experience, but without all the costs. “If you build it backwards, you rethink it,” said Mr. Dunn, the Bonobos chief executive.

Mr. Dunn said the store idea stemmed from customers' requests to try on items before a purchase.

Though Bonobos suggested that customers order multiple sizes, that didn't fit with the ethos of good service he wanted. “Clicking on six sizes and having them shipped to me is not a great experience,” he said.

Also, he said, “the cost of marketing a Web site and the cost of free shipping both ways was approximating a store expense,” he said.

Bonobos added two sales representatives in the lobby of its Manhattan office last year to show clothes to customers, and Mr. Dunn said that within six months, each was on track to achieve more than $250,000 in sales. Based on that, this year, Bonobos struck a deal with Nordstrom to carry its clothes in its shop, and opened its first store.

For his own stores, Mr. Dunn did not want a typical retail model that required carrying a heavy inventory, staffing for heavy foot traffic and paying for prime real estate.

Instead, he took 700 square feet in Bonobos's existing fifth-floor office and converted it into a store, called a Guideshop. Customers make appointments, which generally last 45 minutes, so one or two employees handle the entire store at once.

Most retail stores have to carry each item in a range of colors and sizes, a significant cost, but Bonobos does not, instead using the Web site as its virtual back room. Customers do not leave the store with merchandise; instead, the employees place an online order that is delivered to the customer, often the next day.

A version of this article appeared in print on December 19, 2012, on page A3 of the New York edition with the headline: Once Web Only, Shopping Sites Hang Real Shingles.