Opening a brick-and-mortar store has become a vital next step for many direct-to-consumer (DTC) brands looking to drive growth. Jeff Kreshek, Federal Realty’s Senior Vice President of West Coast Leasing, has seen this shift in interest unfold in real time, stating that “truly digital-first brands know that they are missing out on customers by only being online,” and while the change can be daunting, the reward is well worth it.

There’s a reason why an overhaul like this can work so well, many potential customers want to see a product in person and are able to do so thanks to a new physical retail property. The experiential nature of in-person shopping is a key part of this industry-wide trend. Brands seek physical storefronts with the goal of interacting as well as engaging with consumers, not just selling to them. “We go after brands that will resonate with our customers,” Kreshek continues, “and having a new storefront with a tailored audience can have a major impact on a brand’s success.”

In addition, as online customer acquisition costs continue to rise, brick-and-mortar locations provide a cost-effective way to reach new customers. Competing for customers’ attention in a world over-saturated with online ads can be a challenge. Many brands have begun to see that physical retail stores can foster the same brand awareness and customer loyalty at a lower cost.

Consider Gorjana, a jewelry company that got their start in wholesale but now has over 20 brick-and-mortar locations, one of which sits in Federal Realty’s Bethesda Row shopping center. Gorjana’s initial expansion into CEO Jason Reidel’s hometown seemed intuitive— during an interview for our upcoming podcast, he stated that the storefront would allow them to “actually articulate our brand in a physical space” in a way they’ve never done before. Gorjana storefronts exhibit a certain vibe, details such as their signature mango wood finishes and brass hardware create an experience significantly more immersive than scrolling through a website or buying from third party sellers. This aspect of brand story is only really accessible with retail properties, another big reason why digitally native businesses are looking to expand into brick and mortar. Kreshek furthers this point stating that “the physical store can serve to educate the consumer” so that any hesitancy on quality, fit, or look that may arise with online shopping goes away.

“[we could] actually articulate our brand in a physical space”

Jason Reidel, CEO of Gorjana

Online retailers that are ready to expand their business with “offline” stores have three options: determine where loyal customers are and plant roots there, seek out the best and busiest real estate opportunity, or experiment with pop-up retail spaces and partnerships with big name brands who already have physical locations. This experimentation is how Casper, an e-commerce mattress company that launched in 2014, got their start in the physical world. Today, you can visit one of many Casper showrooms at Federal Realty’s Santana Row shopping center.

Lucky for these brands, many real estate investors and landlords have been supportive of this trend and have embraced offering pop-up retail spaces and unique physical formats. Do you have an online business you’d like to expand with an offline storefront? Discover Federal Realty’s best-in-class shopping center locations.