Retail in Asia


Do digital brands need physical stores?

It’s not uncommon to see established retailers entering the online marketplace. Even the most longstanding department stores and luxury maisons now have a structured omnichannel presence, so sales can be made via social media platforms and e-shops, as well as in physical stores.

However, the latest retail trend is seeing the opposite happen: fashion brands and businesses, which started out purely online or digital, are now setting up physical stores.

Online retail represented a $6 billion market in Southeast Asia in 2015, but online sales equated for just 4% of total retail for the year, according to a report by Bain & Company and Google. The e-commerce platform still only represents a slice of the total fashion and apparel sales pie, despite 250 million consumers in Southeast Asia now being connected via smartphones and some 100 million actively engaged in online transactions.

Meanwhile, global e-commerce is expected to plateau at about 20 to 25% of the market, meaning that, for 2017 at least, the vast majority of sales will still happen in physical stores. So, digital brands are getting physical.

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Being online brands, data is important in making the shift from on to offline. For digital showroom Moda Operandi, e-commerce software allows the luxury fashion retailer to know a customer’s sizes and style taste before they walk in the door. So, making a physical space personally curated just for them, is easy.

“We have reams of information on these women because of the online experience and can deliver surprise and delight that feels so organic, but it’s actually powered by data,” Lauren Santo Domingo, co-founder of Moda Operandi, told Business of Fashion.

Image result for moda operandi showroom

The retailer’s first showrooms opened in London in 2014 and the company plans to add 12 more locations in the US, Middle East and Asia.

Meanwhile, physical stores are proving powerful marketing and customer service channels for digital brands. Take Hong Kong-based Grana, the affordable luxury basics brand founded by Australian Luke Grana. Starting out online in 2014, it now has two ‘pop-ups’ in Hong Kong; ‘The Soft Spot’ at Causeway Bay and ‘The Fitting Room’ on Hollywood Road, in Sheung Wan. Both showrooms are designed to service Grana’s less-tech savvy customers and those simply wishing to try before they buy.

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“Need to try something on? Want to meet the team? Have questions?” reads a statement from Grana on its website.

Offering a strong proprietary product – another must-have for successful digital brands – Grana understands it is selling to a global customer, one that is unique when it comes to customer service expectations, so digital-only isn’t enough to express their product message. Especially for new clients.

“We travel the world for the fabric, and we also like to travel the world to see you. Drop by, we’d love to see you soon,” says the brand.