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Why More Online Retailers Are Opening Brick-And-Mortar Locations


You know, there's an old song that goes, everything old is new again. Sort of true, isn't it? Certainly true of shopping. When shopping first went online, the idea was to transform the way that we shopped. Now you can buy anything with a click - in your pajamas if you want to. Stores were going to go out of fashion entirely, it seemed, but now they are opening back up again.

Here's Sally Herships and Cardiff Garcia of The Indicator from NPR's Planet Money to explain.

CARDIFF GARCIA, BYLINE: This is part of a trend called clicks to bricks, where online retailers like Warby Parker, which sells eyeglasses, and, which sells mattresses, are opening brick-and-mortar stores.

SALLY HERSHIPS, BYLINE: But stores that sell other things like shoes or sweaters or lingerie, things you can easily order online and have shipped to you - they are continuing to open brick-and-mortar stores.

GARCIA: Plus, a whole new industry has actually grown up around helping these online retailers sell their goods in the brick-and-mortar store in the real world.

HERSHIPS: You may be wondering, why would someone need help figuring out how to open an old-fashioned, brick-and-mortar store? I mean, this is hardly a new technology we are talking about here. But retail in a physical location can add a whole bunch of new complications for businesses that are used to operating just online.

GARCIA: Nicole Leinbach Reyhle is a retail consultant who runs a company called Retail Minded. And she says the first reason that a retailer might want a brick-and-mortar location is for returns.

NICOLE LEINBACH REYHLE: If you know that the size 8 jeans you ordered are a little too snug but you can immediately go to your local, physical store and get that size 10 versus the back-and-forth, right?

GARCIA: Returning something is also an opportunity for a retailer because then that customer will, of course, be in the physical store and might look around and buy something else. And in fact, a recent study from Wharton found that customers who enter a physical store end up spending more, and the products they do buy are more expensive.

HERSHIPS: And there is another plus to returning items at a physical store. Nicole says the longer inventory is out of stock, the older it gets, the more it risks getting marked down or returned again. So she says returns mean inventory gets back onto store shelves more quickly.

GARCIA: Consultants helping online retailers get into the real world have another strategy in mind - partnerships. For example, one of Warby Parker's first physical locations was a kiosk in the lobby of a hotel in West Hollywood. Partnerships can also mean that small online businesses don't have to carry the lease for an entire space or cover payroll for a whole staff.

And big businesses do partnerships, too. Amazon, for instance, has a deal with the department store Kohl's which lets Amazon shoppers pick up and return stuff at any Kohl's store in the country.

HERSHIPS: So retailers can't count on consumers to behave and shop in any one way. We're shopping online, in stores - at least I am - on social media, while we are watching TV. What this means is that if a retailer wants to be successful, they need to be with us all the time, in all the places.

Sally Herships.

GARCIA: Cardiff Garcia, NPR News.

(SOUNDBITE OF DAYZERO'S "CENTRAL AIRPORT") Transcript provided by NPR, Copyright NPR.

Sally Herships
Cardiff Garcia
Cardiff Garcia is a co-host of NPR's The Indicator from Planet Money podcast, along with Stacey Vanek Smith. He joined NPR in November 2017.
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