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“Brick is not just back — it's always been here. It's just back in a different way. We like to call it the rebirth of retail.”— Amish Tolia, CEO, Leap
Despite growth in online shopping over the last two years, brick-and-mortar is still king.
As Forbes reports, data from the U.S. Department of Commerce’s “December 2021 Monthly Retail Trade Report” found that brick-and-mortar sales grew faster than ecommerce in 2021.
Today, online sales account for 21% of core retail sales, according to Cushman & Wakefield, a global real estate services firm. Experts predict brick-and-mortar will make up 80% of retail sales in the coming years.
All these figures make it resoundingly clear brick-and-mortar stores aren’t going anywhere. However, opening a physical retail location requires more capital, resources, time, and effort than launching an ecommerce channel. The economics can be brutal, which is why it’s critical for brands to have the right expertise in their corner.
Leap, founded in 2018, offers a platform that helps brands launch retail stores and deliver a best-in-class in-store experience with much less risk. Leap’s platform currently powers physical stores for more than 35 brands across geographies and categories, including apparel, footwear, accessories, fine jewelry, and home furnishing.
Amish Tolia, CEO of Leap, joined a recent episode of the “Unpacking the Digital Shelf” podcast, “A New Platform Approach to Brick & Mortar Retail,” to share how his company collaborates with brands — and how its unique model could very well drive the future of both brick-and-mortar and omnichannel retail.
Thanks to a growing ecosystem of retail software-as-a-service (SaaS) solutions and increased access to information online, it’s arguably easier than ever before to launch a digital business. However, this also means there’s more digital competition to capture consumer dollars, particularly for direct-to-consumer (DTC) brands.
Brands now need another avenue to differentiate themselves and focus on brick-and-mortar — and the in-store experience provides that pathway. However, launching a physical retail location is still a much heavier lift than creating a shopping website or putting your products up on Amazon (albeit these things aren’t simple, either).
With physical retail, you need to find the ideal location, lease or build a property, hire staff, and train a team — not to mention the upfront and ongoing capital investment required. Tolia argues that even with all the complexities of brick-and-mortar, it’s still an invaluable channel for brands.
“They have to meet their customer where their customer is. And of course, naturally, there's still a lion’s share of total commerce spend in the U.S. that takes place offline,” Tolia says.
Leap helps brands deliver an immersive brick-and-mortar retail experience.
Tolia says the company assembles all the core components that go into retail infrastructure into its platform, including:
Brands can then use the platform to stand up omnichannel-enabled physical stores. The company also has invested significantly in training and education for its field teams, upskilling them in areas such as customer experience and passive and active selling. Tolia says Leap’s team-first focus is one of its biggest strengths.
“We've assembled these things into our backend and given brands access to our network of locations, our systems and tools, our data infrastructure, and our labor pool to be able to scale up their retail channel in a way that works in concert with their ecommerce to build an omnichannel strategy,” Tolia says.
“They don't have to worry about what we call the ‘unsexy components of retail,’” he adds. “They can really focus on building their brand — the merchandising strategy of the physical locations or how to drive traffic to the store location.”
Once a brand chooses a location within Leap’s network, Leap can launch a physical store within 60 to 90 days, a mere fraction of the time it would take brands to do this on their own.
Leap focuses on creating density in the markets where it operates, allowing its partner brands to benefit from economies of scale.
For example, the company has eight stores within a one-avenue radius on Bleecker Street in New York City. Stores near one another share both resources and business intelligence. For example, some stores share a general manager. The brands also share data and insights that help them improve operational efficiency, sales, and revenue. Tolia gave the example of how this benefits the brands in terms of choosing the right assortment selection.
“How do you put the right assortment in these stores? What percentage of the brands' overall assortment do you put in the store based on the type of data and intelligence that we have so you can drive maximum performance?” he says. “That's a tiny bit of the data strategy of the business. We now have a shared data pool and we can use that to make way better decisions than one brand could on their own.”
Leap also uses data to seamlessly connect offline and online retail.
The company’s unified, comprehensive platform allows it to see what’s happening in a physical store at a given moment in time, as well as what’s happening on the ecommerce side.
“With that capability, we not only understand what's happening in the local market, but we also understand what's happening at the e-comm level … so that becomes really powerful — particularly around understanding a shopper's behavior online, offline, across brands, across categories, and down in a particular locale,” Tolia says.
Leap is innovating how brands craft their in-store experience and how quickly they can stand up physical stores. Naturally, Tolia believes brick-and-mortar is here to stay and that it’ll become an even more integral part of channel diversification for brands.
“I do believe that these brands and brand-building organizations, they're going to continue to think methodically about channel diversification and channel growth in a way that complements one another,” Tolia says. “Historically, these direct-to-consumer brands have just been so focused on ecommerce, ecommerce, ecommerce — which is fantastic, that's what's given them their start — but now it's really incumbent upon them to think about how to diversify in a flexible and agile way across wholesale or even private label, and of course, naturally retail.”
To hear more of Tolia’s insights on the future of physical retail, listen to the full episode.
