Should I Ditch My Brick-and-Mortar Stores? | FTI Consulting

I’m a Retailer. Should I Ditch My Brick-and-Mortar Stores?


Senior Managing Director Christa Hart of FTI Consulting’s Retail and Consumer Products practice weighs in on the question that’s sending omnichannel retailers into an existential crisis.

Despite all the doom and gloom around the closing of so many stores in the past few years, online retailers have multiple reasons to include a physical retail presence in their growth plans. The key is understanding the opportunity and knowing how it supports your other sales channels.

The line between online, retail and wholesale is increasingly blurry. Successful companies today are realizing that you can’t just be in one channel anymore. Instead, your strategy must operate 360-degrees around the customer, with proactive steps to make sure you’re ready to serve them at the split second they're ready to buy.

A physical store is a great way to help customers gain confidence in the quality and ethos of a brand. And though customers might not choose to buy in the physical store, the presence provides a way for the retailer to directly shake hands with the consumer.

Consider eyeglass vendor Warby Parker and e-tailor Bonobos, two beloved brands that initially built their strategy solely around e-commerce. By most accounts, the two were surprised at how successful their brick-and-mortar locations were at boosting sales and improving the customer experience. Now, Warby Parker’s co-founder Neil Blumenthal says he is looking to operate 800 to 1,000 physical stores. Bonobos founder Andy Dunn states he plans to open 100 stores by 2020 (according to Retail Dive).

This “handshake” strategy is coincidentally leading to extension and expansion in wholesale. Brands that used to be vertically integrated retailers are starting to wholesale to department stores such as Nordstrom’s and JCPenney. Other consumer brands that once operated their own stores are turning back to department stores and other retailers for distribution. They’ve realized that if they can't afford their own store, they can share overhead with other brands, enabling them to reach customers who might otherwise be unattainable.

These trends are fostering hope amongst hard-pressed department stores, giving them an opportunity to turn back the clock to a time where they were the heart of retail communities. In the future, we’ll see this and much more — retailers becoming less tied to the idea of operating a sole channel, and instead using every and any channel to engage customers wherever they are.

Going Old School

Along with occupying all these channels, brands such as Williams Sonoma, the eponymous American home company, are showcasing products through another, old-school method: print catalogs. Nike, Starbucks, and even Warby Parker are following suit, realizing that the turning of the page and unfolding of a story in the hands of the customer is a highly compelling way to stage and romance a product line. By using “storytelling” to target their audiences, retailers are leveraging television, magazines, catalogs – even blogs – to build a personality around their brand.

We are at the point in retail where all sales channels are joining together in a confluence of product exposure. Brick-and-mortar is a stream worth floating.

About the Expert: Christa Hart is a Senior Managing Director at FTI Consulting. She is part of the firm’s Corporate Finance & Restructuring segment, as well as the Retail and Consumer Products segment. Ms. Hart has more than 18 years of hands-on experience leading organizations inside companies and acting as a consultant and strategic advisor. She is focused on successfully driving change within large, global companies.

Copyright 2018. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.

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