The impact of online retail channels on both customers and retailers in the past two decades has emerged in some remarkably unexpected ways, as aptly revealed by the developments of the e-commerce men’s clothier Bonobos. Early predictions about the effects of a multichannel strategy often have proven inaccurate, generally to the benefit of retailers and their customers.
First, many people assumed that with the growth of online channels, the surviving offline stores would be the large retail powerhouses that could afford to survive by relying on massive, impersonal, warehouse-like locations. Instead, because e-commerce provides support for a wider range of unique, specialty retailers, their associated offline stores tend to be more varied. For example, when Bonobos got its start as an online retailer, it insisted it would never move offline. Yet by opening several small, creative Guideshops that serve a showrooms for its suits, shirts, and ties, the clothier establishes attractive locations for customers to visit, try on its offerings, and interact with attentive sales clerks in person.
Second, early offline and online channels mainly tended to appear as distinct channels. In contrast, modern versions are closely integrated, as retailers work to offer an omnichannel experience to customers. This approach ensures consistent pricing, branding, and experiences across channels. It also offers customers more choices, such that they can purchase online and receive a delivery at home, purchase online and pick up in stores, or buy items directly in stores. In Bonobos’ Guideshops, they also can visit the showrooms to select the right color, size, and fabric for them, then (with the assistance of the attentive sales clerks) place their orders through Bonobos.com using dedicated devices in the stores. They receive their semi-customized order, delivered to their doors, soon thereafter.
Third, rather than encouraging conventional, standardized store designs, multichannel retailing has led to the arrival of a variety of creative storefront iterations. As customers grow to expect greater convenience and more compelling experiences from their shopping, retailers have innovated with pop-up stores, mixed-use destinations, and convenience offerings in brick-and-mortar locations. Thus malls feature a wider mix of services, restaurants, entertainment, and specialty retail than ever before. For Bonobos, its ability to build showrooms, instead of a traditional storefront, has been the key to success. The showrooms only feature a selection of its clothing offerings, so its inventory costs are minimal. Because the small showrooms also allow it to provide personalized service, it has enjoyed significantly increased sales: Bonobos sells twice as many suits per customer through Guideshops as online, as well as 50 percent more shirts.
Discussion Questions:
- How has multichannel retailing improved shopping for customers, both in store and online?
- What are the advantages and disadvantages of showrooms from Bonobos’ perspective? From customers’ perspective?
Sources: Tom Ryan, “Is Bonobos Paving the Way for e-Commerce Showrooms?” Retail Wire, July 8, 2014; Michael Ellis, “The Evolution of the Internet and Its Impact on Retail Spaces,” Wired, July 17, 2014.