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Is Click To Mortar The Next Big Threat For Jewelers? |  October 15, 2014 (0 comments)

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Merrick, NY—Now that e-tail behemoths like Amazon and Piperlime (a Gap company) are opening physical locations, will clicks-to-bricks be the next frontier for retail? More importantly, does it mean that just as jewelers learned to compete with Blue Nile online, they will have to compete with a Blue Nile store down the street?

It’s possible.

Online retailers are trying a variety of brick-and-mortar options. Some, like Athleta (women’s athletic wear, also a Gap company), are opening regular stores in regular malls. Others, like online menswear retailer Bonobos or furniture retailer Design Within Reach, are opening small showcase shops.

And Blue Nile is testing the waters with branded boutiques in two Nordstrom stores. At present, shoppers can touch and try selected pieces of the e-tailer’s bridal product there, but they don’t walk out with a bag, either Blue Nile’s or Nordstrom’s. They still need to buy online.

Bonobos’s Guideshops are brick-and-mortar locations that also don’t stock merchandise but are staffed with advisors to help customers both measure and select the right clothing from the Bonobos line. Customers can order on-site or online. According to an article from the International Council of Shopping Centers,

Bonobos says purchases made after visiting one of its Guideshops (there are six nationwide) tend to be twice as large as other online orders.

Physical pop-up shops can be a boon to both an e-tailer who wants to test the concept or expand its reach, and to mall landlords with vacancies to fill. For example, ICSC points to Cady’s Alley, a 120,000 square foot retail/residential redevelopment in the heart of Washington DC’s tony Georgetown section. Tenants for short-term showroom space include Design Within Reach, Rent The Runway (a designer clothing rental site), Poggenpohl, Waterworks, and a Steven Alan clothing store.

“This is a theme that’s happening everywhere,” says Brian Watkins, president of Seattle-based Ritani, whose bricks-and-clicks model has nearly 200 prestige jewelers as partners. “It’s an inevitable retail trend that consumers will expect more and more integration of online and offline.”

But for a pure-play etailer selling on price to expand offline--with its attendant store overhead and sales tax implications--it means the price advantage goes away. A full-margin e-tailer like Zappos that sells on service and selection rather than price would be in a much better position to transition to physical locations than one that sells predominantly on price. And Blue Nile, despite being a household epithet among jewelers competing with it, is not that well known among consumers. Its name recognition ranks far below that of Kay, Jared, and other jewelers.

Plus, says Watkins, the skills required for an offline retailer to go online are vastly different from an online retailer expanding offline. He cites Tiffany and Nordstrom as good examples of offline retailers that have gone online successfully. Tiffany does so by curating the selection of product on its website. Nordstrom, on the other hand, offers a greater selection of product online than in its stores.

But an online retailer that never had a physical store needs to figure out how to translate the online experience to an offline environment. Would an e-tail jeweler open full-line jewelry stores, complete with bench jeweler and gemologist and cases of merchandise? Or would it open a kiosk with a consultant and a bunch of iPads—essentially just a bigger computer?

So is click-and-mortar a threat to jewelers?

It’s definitely coming, says Mark Keeney, vice president of Ritani. “Consumer trends have become so clear that online or offline alone isn’t going to cut it. I think it’s inevitable that Blue Nile or a similar company will eventually have a local presence.”

But it doesn’t have to spell disaster for jewelers. “Retailers have one, five, maybe even 10 years to figure out how to create a differentiated experience,” he says.

Ritani offers one way to integrate bricks and clicks—“we’re the solution to the online part so you can do what you do best,” say Watkins and Keeney—but Watkins believes that within 10 years there will be as many as 500 business models that are successful at online/offline integration.

“You just have to decide what works for you,” he says. “But whatever you choose, start thinking about it now.”

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