What is a digital native brand?
Digital native brands are retailers that were ‘‘born’’ in the online environment and use technologies to manage their business and build a strong presence on the internet without having physical stores.
Reasons that have taken digital native brands to physical spaces
With fewer barriers to entry than traditional retailers and low investment, digital native brands have grown significantly in recent years, especially during the first year of the COVID-19 pandemic, which resulted in the online shopping boom.
But then why are these brands looking for physical spaces?
• Cost
While digital native brands have easily found their niche of customers online, many have struggled to win over a larger number of consumers. As more competitors have entered the digital market, brands have been vying for customers through the same digital marketing channels. This move increased the cost of acquiring customers, an important financial health metric for retailers. Digital native brands then had to turn to physical locations to grow their customer base.
• Experience
A second reason why digital native brands have expanded into physical stores is because of the unique sensory experience they provide to get closer to customers. Brands that know how to use their rich database, containing preferences and consumption habits, will be prepared to take advantage of the wave repressed by experiences.
• Impulse purchase
Another benefit is the opportunities to increase the average ticket. According to First Insight research on shopping habits and consumer behavior, consumers tend to make more impulse purchases in-store. 78% of men said they would likely add extra items when shopping in-store. Among women, nearly 90% report that they would probably buy something else.
Challenges
The pandemic has created a favorable scenario for tenants and retailers have one of the best opportunities in years to find interesting commercial spots. Owners are more flexible and interested in bringing new occupier profiles to their properties and many digital native brands fit this profile. Manuel Puig, Retail Specialist at Cushman & Wakefield, talks about the current real estate landscape for these retailers: ''Landlords are interested in exclusive tenants, who provide memorable shopping experiences, and help with foot traffic and consumer engagement. '', account.
Despite all the advantages, opening physical retail stores requires study and planning. Location, for example, is one of the most important points for the success of the operation and the best of them, in the best neighborhoods, main streets, centers and malls still have high prices. While rents in general are still recovering, in the most coveted locations asking prices are approaching pre-pandemic levels.
Omnichannel remains the best way
While the pandemic has hit brick-and-mortar retail hard, consumers around the world are seeing consumers returning to stores in search of the experience. At the same time, online retailing will continue to grow, as essentially physical stores have also seen the need to be present in the digital environment as well. Finding the right Omnichannel strategy to acquire customers and satisfy their preferences will continue to be the focus of every retailer.
Cushman & Wakefield has specific retail services. They encompass all stages of the business cycle, for both occupiers and owners.
