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From Clicks to Bricks: Online Retailers Open Physical Stores

(Newsday) 8/21/2017

· News

Fragrance.com retail storefront at the Roosevelt Field mall Aug. 15, 2017. Photo Credit: Chris Ware

Online retailers are invading the mall.

A growing number of e-commerce companies — including national names such as Amazon.com and locals such as Fragrance.com of Deer Park and FranceandSon.com, a Farmingdale-based furniture and lighting retailer — are opening brick-and-mortar stores on Long Island.

Their reasons range from building brand awareness, to getting feedback and data from customers, to establishing trust with customers who might be wary of shopping with an online-only company.

Online retailers that open physical stores — or “clicks-to-bricks retailers” — are “infusing the retail industry with something new and something different,” said Faith Hope Consolo, chairwoman of the Manhattan-based real estate firm Douglas Elliman’s Retail Group. “This is a very fast-growing segment now.”

Moreover, Long Island is a favored location for online retailers to test physical stores, real estate executives say, partly because of its relatively high incomes. Nassau County’s median household income was $99,465 in 2015, and Suffolk’s was $88,663, according to the most recent census estimates — almost double the national median of $53,889.

And Long Islanders are enthusiastic about shopping.

“Long Island is a real up-and-coming area for fashion,” said Michael Africa, marketing manager for Canadian e-commerce clothing retailer Oak + Fort, which opened a 3,000-square-foot store at Roosevelt Field mall in Garden City in June.

Online retailers have been taking market share from traditional, physical retailers in recent years as shoppers embrace shopping on their desktops, tablets and smartphones. Online-only stores benefit from ow real estate expenses, centralized inventory management and customer service, and the ability to take orders at any time and deliver almost anywhere.

But there are advantages to having a physical store. Some of the stores opened by online retailers are temporary “pop-ups,” while others are more permanent. “There is nothing like having a store in your face,” Consolo said. “If you want to grow organically, what better way to get the attention of Wall Street and the press?”

Other virtual enterprises that have launched a physical presence on Long Island include jewelry retailer BaubleBar of Manhattan; home décor and furniture retailer One Kings Lane of Manhattan; jeans retailer NYDJ of Vernon, California; and women’s clothing retailer Say More Boutique of Patchogue.

“The customer base on Long Island is quite diverse and often are considered ‘first adapters,’ following new brands and trends closely,” Zachary Brandon Beloff, national director of business development at Indianapolis, Indiana-based Simon Property Group, which owns and operates Roosevelt Field, said in a statement.

Nationwide, e-commerce players that have made the jump to physical stores include eyeglass seller Warby Parker, cosmetics company Birchbox, men’s clothing seller Bonobos, and designer dress rental company Rent the Runway, all based in Manhattan. Others include plus-size fashion brand Eloquii, based in Manhattan and Columbus, Ohio, and trendy sportswear companies Athleta of San Francisco and Fabletics of El Segundo, California.

Around the country, online enterprises are targeting traditional malls, outlet centers and downtown shopping districts, with many opening in New York City. Locally, the focus is on malls.

“Most online-only retailers test brick-and-mortar locations in the city first, if and when they make their way to suburban markets like Long Island, you are likely only going to see them pop up in the malls,” said Jayson Siano, managing principal of Garden City-based Sabre Real Estate Group.

Several online companies have opened stores at Roosevelt Field. Jewelry seller Blue Nile opened its first-ever physical store at the mall in June 2015. The company calls the bright blue-and-white, 325-square-foot store a “webroom,” a hybrid online and offline shopping experience, said Amanda Winters, a spokeswoman for the company.

Blue Nile now has five webrooms in four states, averaging 500 to 700 square feet and employing five to six people. Founded in 1999, the company, with nearly half a billion dollars in sales, went private in February after it was acquired by an investor group.

The webrooms have large TV screens on the walls displaying social media posts from customers. Shoppers can view and try about 400 pieces of jewelry, including engagement rings, and get advice from consultants. Shoppers can also access the online catalog from in-store tablets. If customers see something they like, they can order it online through Blue Nile’s website at the store, on their mobile phone or on their computer at home. Delivery is free via FedEx, with some orders arriving at the customer’s home the next day.

“Our webrooms have really exceeded our expectations both for sales and foot traffic,” Winters said. “Many of our customers who come into our webroom have never heard of Blue Nile before.”

Fragrance.com opened a pop-up shop in October 2016 at Roosevelt Field to test the market. The 1,500-square-foot store displays a selection of the company’s 1,000 designer fragrances and offers discounts of up to 70 percent off retail prices. Sales associates use iPads to provide information to customers or help with purchases. They also give coupons for online shopping.

The store was originally set to close in January after the Christmas shopping season, but the company decided to keep it open to gather data around major shopping holidays, Fragrance.com president Jason Apfel said. “For us, it is about increasing brand awareness,” said Apfel, whose company was founded in 1997 and has more than $200 million in revenue and more than 200 employees. “It allows the Fragrance.com brand to get in front of a lot of eyeballs. This is a test store so the idea is to have more stores across the country.”

Privately owned Oak + Fort, the Canadian clothing retailer, was founded in 2010 as an online retailer. It opened a small boutique store a few months later in Vancouver and has since expanded to 18 stores across the United States and Canada, employing about 200 people. It plans to continue its growth with new locations each year.

“What we find with online and social media is that it is hard to advertise because it is a crowded space,” said Michael Africa, marketing manager for Oak + Fort, where a majority of sales now come from in-store sales. “Brick and mortar drive shoppers to retailer websites.”

Since opening its Roosevelt Field store, Oak + Fort is seeing more online orders coming from Long Island, Africa said.

Fashion jewelry e-tailer BaubleBar opened its first store, a 1,200-square-foot pop-up at Roosevelt Field, in 2015; it closed after six months. BaubleBar said it chose to open a temporary store after analyzing its data, top performing markets and customer feedback. The company, whose products are sold at Nordstrom, Bloomingdale’s and Anthropologie, also explored other retail concepts, including pop-up shops in New York City.

“We decided to test a suburban geography and a shopping mall format,” BaubleBar co-founder Daniella Yacobovsky said in a statement. “Our limited-time concept shop provided us with an opportunity to test new ideas and gather additional learning.”

Seattle-based Amazon was an early experimenter with physical stores. It opened pop-up kiosks in shopping malls in 2014 and physical bookstores in 2015. It has 38 pop-up stores in 17 states and eight Amazon Books stores in seven states, with five more bookstores in the works, according to its website.

An Amazon pop-up store opened at Green Acres Mall in Valley Stream more than a year ago. Located on the mall’s first level, the 300-square-foot kiosk sells Kindle e-Readers, Fire tablets, Amazon Fire TVs, Echo devices and other Amazon-branded items. An Amazon spokeswoman declined to comment about the Green Acres kiosk.

One Kings Lane opened its first brick-and-mortar retail location in Southampton over Memorial Day weekend. The Southampton location, in the town’s iconic former Rogers Memorial Library at 11 Jobs Lane, built in 1895, is described as a “seasonal shop.” A company spokesman declined to comment on the location. One Kings Lane, launched in 2009, was acquired by Bed Bath & Beyond last year.

Wen Wu, the owner of Farmingdale’s France and Son, took the business online as a direct-to-consumer retailer in 2012. It was founded in 1982 as a wholesaler in Queens by Wen’s father, Sal Wu, who is now retired. The company, with more than $10 million in revenue, sells sofas, lighting and rugs to retail customers, interior designers and architects.

France and Son has a 60,000-square-foot showroom, office space and warehouse in Farmingdale. Two years ago, the company opened a flagship store in Chelsea, Manhattan. The company plans to build up its Farmingdale location along Route 110 as it learns what kind of products Long Islanders want.

Despite the high rent and long lease, the company’s 4,000-square-foot Chelsea store “is worth it to establish the brand and legitimize what we do,” Wu said. “People feel more confident about ordering from a website that has a physical store. We also want to meet people face-to-face, [let them] see our products and get feedback.”

France and Son’s brick-and-mortar business now accounts for about 20 percent of its sales. The company, which has about 35 employees, is considering opening more stores.

Jennifer Poppiti, owner of women’s clothing retailer Say More Boutique, started her business online in 2014, selling out of her home in Islip and delivering nationwide. But her goal from the start was to open a physical store. In April, she moved her business from the virtual world to a 1,100-square-foot space at the Shoppes at New Village in Patchogue. She sells clothing, with prices ranging from $12 to $100, that she picks from various designers.

“I started online because I was getting my feet wet,” said Poppiti, a former special education teacher. “I knew I didn’t want to stay online. I knew I wanted to interact with my customers and be a part of the community.” E-commerce is “very competitive” and requires “a lot of money” for advertising and marketing, she said, while having a brick-and-mortar store instills trust in customers who may be cautious about buying from online retailers. By “having a physical location, it becomes a little bit more trustworthy,” Poppiti said.

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