Despite warnings about the demise of brick-and-mortar, many digitally native brands are deciding to branch out into physical retail to meet their customer in person. When done right, these locations serve as a powerful ambassador for the brand — as well as a source of revenue — but many digital-first brands were not designed with physical retail in mind. Enter Leap.
“These companies generally think and act a little bit more like a rapid-growth software company,” said Amish Tolia, co-CEO at Leap. “The reality is that none of them are built or equipped to execute a profitable, efficient physical retail strategy.”
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While digital-first brands understand the value of stores, the overhead and risk is high, and the number of legacy store closures this year is a stark reminder of that. So Tolia and his team wanted to help these companies minimize the risk and time needed to launch brick-and-mortar, by presenting a turnkey retail solution that can be tailored to each client’s identity.
Leap finds the store space, designs it, hires the employees and manages the day-to-day operations, but all the branding and products in the store are the client’s. The brand is consulted at every stage to ensure consistency in aesthetic and messaging, while Leap takes responsibility for all store managerial tasks and uses its technology solution to optimize performance.
“We’ve licensed technology from third-party providers to ensure that we have the right retail data to understand footfall, dwell time, engagement time,” said Tolia. “If we don’t have the inventory in-store, we also have visibility into the online business and third-party logistics providers and can drop-ship directly to the customer, if inventory is somewhere else.”
For Brooklyn, N.Y.-based shoe label Koio, Leap-run stores supplement its existing self-owned retail locations. The brand opted to use Leap to help de-risk its quick growth and expansion into new locations. Chris Wichert, co-founder of Koio, described the stores as being indistinguishable from each other in terms of style and service, for instance, all Leap hires are trained on a brand’s history, catalog and branding.
To help improve the chances of success for its store launches, Leap has a series of criteria that it looks for in partners: appealing brands with a quality product, an established and scalable supply chain, and a strong brand message that differentiates it from competitors. Tolia noted that emphasizing that originality and point of view helps attract customers away from mass online marketplaces and into the store.
“We want to make sure that [we immerse] the customer … in everything that relates to the brand, as well as offer a simple assortment that celebrates some of [these] SKUs and styles as heroes,” said Tolia. “Otherwise, you can probably just shop on Amazon and buy a commoditized, unbranded thing.”
For his part, Wichert recommends that e-commerce teams consider the value a store would bring that digital can’t. For instance, a store can provide important experiential moments for luxury brands or companies that want to engage their customers in events and activations.
But because the Leap business model involves taking a percentage of sales, the added value must surpass any financial loss.
“Physical retail doesn’t work for everyone and it’s important that everyone looks at their brand and figures out what makes sense for them,” said Wichert. “We sell shoes that are $250 to $300, so we wanted our customer to feel that ‘Made in Italy’ quality, to get the smell and feel of the leather. For us, it’s really part of the brand.”
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