Retail Trends

Stores Team Up with Digital Natives for Omnichannel Success

2 min read

For many digital native brands, a sharp website was enough to win over loyal customers and stake out their share of the market, but there are good reasons that a significant number of digital natives are also investing in physical locations over the next five years.

For digital natives who want to go physical, pop-ups are an attractive option because they generate brand awareness and avoid the costs of long-term leases. However, pop-ups are transient and can be costly. Showrooms make the most of their retail space by keeping the bulk of their inventory off-site, but they risk losing sales if stock is not available.

But a third option is emerging which could benefit the store as much as the digital native: an “aggregate” retailer who helps digital natives develop their physical presence, but also benefits from the data-centricity of the online brands.

The Physical Advantage

Some argue that the goal for digital native brands were always going to be physical.  That’s because physical retail still accounts for about 85 percent of purchases and it has other advantages over a pure-play online model.

High shipping costs, extensive digital advertising, and a discount-driven environment can put a real squeeze on the profit of online-only retailers.   And stores can do what websites can’t: create immersive brand experiences and connect at a more granular level with local communities and customers.

The Digital Advantage

However, digital native brands do have an advantage over their brick-and-mortar competitors in the sense that they generally have richer customer data which can be used to make better business decisions, provide better personalization, and ultimately enhance the in-store experience.

Digital-native retailers are already data-centric, which makes them better equipped to predict customer needs and wants. Typically, they don’t require as much floor space, as they already have a digitized supply chain that is capable of executing omnichannel fulfillment. In fact, these two fundamental capabilities are exactly what stores need to provide customers with the omnichannel flexibility and personalization, both in the store and online.

The Digital Native Multi-Brand Store is Born

We are seeing a new trend where “retail aggregators,” stores like B8ta, Brandbox, and Showfields provide space for digital native brands. It’s a little like a “store-within-a-store” model, but more of a partnership where digital native brands a more creative and ultimately scaleable introduction into the world of physical retail. Perhaps more physical retailers will consider the benefits of dedicating space to digital natives in their future.

This hybrid business model is a trend that will likely continue, and whether you are a physical retailer looking to enhance your offering with digital brands or you are a digital native looking to set up in a retail aggregator, both have the same objective: seamless omnichannel retail. And having a flexible, cloud-based retail platform will make it easier to share data and deliver a better experience in the store and online, for both.

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