July 12, 2013

Online retailers warm to brick, mortar

Some owners don't buy in to the demise of physical stores, citing benefits virtual outlets can't offer.

By DEBRA D. BASS / St. Louis Post-Dispatch

Retail analysts have long predicted the demise of brick-and-mortar boutiques. E-commerce, and now increasingly mobile commerce, has been touted as the future for growing sales.

retail storefronts
click image to enlarge

Claire Zilch, left, and her sister Liz shop last month at Geranium Jewelry in St. Louis. Geranium, a wholesale accessories line based in Ballwin, Mo., opened its first retail store at The Boulevard-Saint Louis in November 2012.

Stephanie S. Cordle/St. Louis Post-Dispatch/MCT

So why are successful online boutiques setting up real-world shops?

Well, for starters, e-commerce sales in the first quarter of 2013 accounted for just 5.5 percent of total sales in the U.S., according to the U.S. Census Bureau. That's not insignificant; it's still a whopping $58 billion, which is $8 billion more than the same period last year. But with 94.5 percent of the market still out there, it's no wonder Google, the most successful online channel on the planet, is looking to open retail stores.

"People really want to touch something and see exactly how big it is and talk to someone. You can't underestimate that," said Katie Miller of Scarlett Garnet Jewelry, a seven-year-old business that opened a storefront last year in St. Louis. "You can do great work with photos and video online, but there's no real way you can have the immediacy of seeing it, buying it and taking it home right away."

After years of selling online through their website or Etsy.com and through pop-up shops at local art fairs and farmers markets, Miller and her partner, Garnet Griebel, wanted to try a physical location. Miller said it was a little scary, but they worked to keep their initial costs low. She said they knew almost immediately it was the right decision.

Online retail is not as low-cost and carefree as it seems, she said. Each item has to be described in minute detail; photos have to be engaging (they hired models and professional photographers); and the website had to be updated constantly.

It's not just putting up a snapshot and a price and watching the sales roll in, she said.

"When you're online, you're competing with everyone else online," she said. "That's tough."

Conversely, her shop deals with fewer clients, but she has the luxury of their full attention. A physical store also gives her credibility online.

"Having a store gives us more of an identity," said Tina Anthon, president of Geranium Jewelry, a wholesale accessories line based in Ballwin, Mo., that is already carried by thousands of stores nationwide. Anthon's four-year-old online wholesale arm has been a bona fide success, increasing sales each quarter. It gave her the courage to open Geranium Boutique in November in Richmond Heights, Mo.

She is already thinking of her next location.

"People come in, and they want to know if we are a chain. They seem to want us to say 'yes,'" Anthon said. "The store has definitely helped boost our brand image and brand recognition. Instead of being a little piece of someone else's store, we design our space."

She said a store was not in her plans initially.

"It's definitely more expensive, but it's another avenue to grow, so if it's working we want to continue down that path," Anthon said.

Anna Friss of Blue Bird Apparel, the namesake of the newly opened Blue Bird Boutique, said that for years she noticed her online sales only grew noticeably in ZIP codes where her clothing was carried in local shops, because people saw something they wanted, needed a different size and looked at the tag.

"It's so not true that online is better. You still have overhead online," Friss said. "Yes, there's rent and electricity (at her store location), but there's not 1,000 other shops just like you in the same place."

Friss said operating online for years made her feel as though "no one knows that we even exist."

"Then I got this fan in the store from some weird state and she was so excited to find us, and I was like, 'For real?' I couldn't believe it," Friss said. "I thought I was talking to no one (on her blog and social media channels) for so long."

It turns out the out-of-state shopper had seen photos of her clothing and mentions on other sites but could never find her e-commerce site.

"For so long, you figure people just 'like' things (by clicking the 'like' button) or see it and don't even pay attention," Friss said. "But you don't think people are actually listening. Opening the store and talking to people has been awesome for me."

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