FROM CLICKS TO BRICKS: WHY ONLINE RETAILERS ARE GOING BRICK-AND-MORTAR, AND HOW KIMCO IS HELPING

Online retailers have generally focused their businesses on digital channels. They’ve known that they can attract customers through online advertising, email marketing, search engine visibility, social media promotions, and mobile marketing. The brick-and-mortar channel has traditionally been far from online retailers’ radar.

Not so anymore. Omni-channel retailing has changed the game, compelling online retailers to gain footholds across physical channels. Several top online retailers have opened brick-and-mortar stores over the past couple of years. This expansion is positive for both online and brick-and-mortar retail, as well as the industry as a whole.

From Kimco’s perspective, we believe we have a role to play in helping fuel this momentum by supporting online retailers’ foray into the brick-and-mortar space. We’ve launched our new Clicks to Bricks Program, which offers qualified online retailers one year of free rent if they open a store in one of our shopping centers nationwide. Our program will give e-tailers access to over 745 high-quality centers in the nation’s top primary and secondary retail markets.

We’ll also provide retailers a personal business counselor who will assist in site selection, helping ensure business owners are setting up shop in the right location with strong demographics, foot traffic, co-tenancy, visibility, and other key factors. The counselor will also advise on how to build out the chosen space to suit the retailer’s business and inventory. After the first year of lease, the retailer can choose to exercise a four-year extension option.

We’ve seen many online retailers recognize the value in opening brick-and-mortar locations over the past couple of years. For instance, men’s fashion house Bonobos extended offline in 2011 with the opening of Bonobos Guideshops. Its roster of shops has now grown to eight. Bonobos describes its Guideshops as “e-commerce showrooms that deliver personalized, one-to-one service to those wanting to experience the brand in-person.”

The value of the in-store experience is shared by Gap-owned Piperlime. “Today’s customers demand accessibility to their favorite brands across multiple channels,” said Toby Lenk, President of Gap Inc. Direct, when Piperlime opened its first store in New York City in 2012.

Trendy eyeglass boutique Warby Parker is among the most recent e-tailers to step into the physical world. "We believe the future of retail is at the intersection of bricks-and-mortar and e-commerce," said Warby Parker cofounder and co-Chief Executive Neil Blumenthal when the retailer was in the midst of its five-store rollout this year. Warby Parker writes on its website, “Our retail ideal is to create spaces that combine the snappy ease of online ordering with the fun and serendipity of real-life shopping.”

Online beauty subscription company Birchbox is seeking space in NYC to open a brick-and-mortar store to offer 2,000 different beauty products to shoppers. Touch screens will also be introduced in the store to help shoppers read product reviews posted on the website.

All these retailers see that customers still like to touch and experience a product before they buy it, especially if that product is higher end. These retailers are also finding they can attract more customers by providing fun and special in-store experiences, which can help them personify their brands and win more hearts and minds.

We see further evidence of the online-offline retail convergence from a recent Accenture study. Sixty-five percent of online shoppers reported they plan to “webroom” this holiday season, or browse products online and then buy them in stores. It is essentially the opposite of showrooming, which we’ve seen become less of a challenge for brick-and-mortar retailers as they’ve found ways to better integrate online technologies into their business models. Now it appears online retailers are facing a similar directive: Find ways to use brick-and-mortar retailing to complement and strengthen their businesses.

At the end of the day, the line between online and brick-and-mortar will continue to blur. From a customer’s perspective, shopping is shopping, regardless of the format. Retailers can capitalize on this shift by evolving their business models to integrate online and offline channels. Both segments are more relevant than ever as we converge into a retail melting pot.

Kimco’s goal is to be a leading supporter of retail’s growth. And we’re happy to do our part to help online retailers navigate the brick-and-mortar business and help reduce their risk in opening physical locations. If you’re interested in receiving more information on the Clicks to Bricks Program, feel free to contact Kimberly Covino, Director of Portfolio Reviews.