The trend analyzed in JLL’s report reflects Gartner L2 analysts’ prediction a couple of years ago that physical stores are an inevitable tactic in any startup’s growth strategy.

The study also demonstrates the value of pop-ups. Nearly 62% of permanent stores opened in the same city where an e-commerce venture opened their first pop-up shop. Popular cities for that trajectory are New York, Los Angeles, Detroit, Chicago, Washington, D.C. and San Francisco. Last year the greatest number of permanent stores were opened by formerly online-only retailers, including Everlane, Allbirds, Away and MM.LaFleur.

Less popular is the showroom concept, despite its attention and promise. Just 15.1% of the physical stores run by digital retailers eschew in-store inventory; of those that do operate as showrooms, 69.2% feature apparel and accessories. Just 30.8% of showrooms are furniture, home furnishings and housewares companies that have traditionally used the model. Casper opened a showroom in SoHo this year and now has 16 of its experience-based stores nationwide, in both urban areas and mall locations, according to JLL.

In New York, the SoHo neighborhood retains its appeal as a shopping district. Warby Parker was among the first pure-plays to open there (on Greene Street in 2013), and the eyewear brand has expanded to more than 75 physical stores nationwide. Others with permanent locations in SoHo include UNTUCKit, BaubleBar, Indochino and Glossier, according to JLL.

Most of the digital startups opening stores sell apparel, which suggests that the category benefits from in-person shopping. Nearly three quarters (74.3%) are apparel and accessory brands like Bonobos, UNTUCKit and BaubleBar, according to the report. And half sell goods with high price points, (like MM.LaFleur and Peloton), compared to just 32% that, like ModCloth and Chubbies, offer merchandise with mid-tier prices.

Daphne Howland | October 10, 2018
Original Article:  Retail Dive – Digitally native brands set to open 850 stores in 5 years