From the Cloud To the Curb: Part II

Just last week, we discussed the seemingly, at least upon first glance, return of the physical retail store, as evidenced by the physical store expansion efforts of online first, formerly online only, retailers like Bonobos, Warby Parker, and Birchbox. And though the economics of physical stores are less attractive than those of online stores, a point that these companies have publicly admitted, they are also necessary for these companies to grow.

Furthermore, these companies' physical retail stores are quite different than traditional big box retail stores, or even than many boutiques out there today. And these differences help make the economics of the modern day physical store a bit more attractive.

So what are these differences?

Well last week we discussed one of them: a shared online/in store inventory system that leads to less in store inventory but higher lifetime customer values and higher rates of customer satisfaction.

But we promised to discuss a few of the other differences in detail and today we'll do just that.

Data is useful. No one can deny that. And data can be powerful. Very powerful. Particularly if you know how to use it and do so in an effective manner.

And let's just say that Warby Parker has a lot of data and more importantly, Warby Parker knows how to use it.

In fact, the layout of Warby Parker's flagship store in NYC highlights products that customers want, frequently browse for yet don't buy, perhaps because they're unsure how they will fit, etc. And Warby Parker stocks its store in a lean fashion, again, using data and customer shopping history drive inventory. Finally, the Warby Parker store maximizes employee utilization by allowing technology, iPads and the like, fill roles that employees typically fill, much to customers' indifference.

Finally, just as its online store drives physical store layouts and sales, Warby Parker has wifi sensors and other advanced technology that allows them to study in store customer movements, in store browsing patterns, and link them with purchases to bridge the gap between customer purchase intent and actual purchase. This meaningful, powerful information allows them to tailor marketing efforts and overall business model/structure/practices to maximize sales. In this way, physical stores also help Warby Parker with its online store efforts.

In this way, the modern physical store is quite different and significantly more efficient, useful, and cost efficient.