Hybrid digital-physical stores will win the retail race in 2016

Shoppers are looking for a seamless experience, and only stores that invest in data will be able to provide it

Frank & Oak co-founders Ethan Song, left, and Hicham Ratnani

Frank & Oak co-founders Ethan Song, left, and Hicham Ratnani, pictured in their Montreal warehouse. (Graham Hughes/CP)

The past year was punctuated by the closing of several high-profile retail chains in Canada, including Target and Future Shop.

The failures happened for various reasons, not the least of which included the companies’ inability to compete with cheaper or more efficient online retailers. Here’s looking at you, Amazon.

Companies that went in the opposite direction, however, didn’t get as much attention in 2015. These are the operations that started as online-only, but are now in the process of expanding into the real world with so-called bricks-and-mortar stores.

The best Canadian example is Montreal-based Frank and Oak, which began a few years ago as an Amazon-like online repository for men’s clothing. Over the past year, the company has been in mega-growth mode and now has more than a dozen stores in Canada and the United States.

The difference between Frank and Oak and, say, Jacob or other struggling real-world clothing retailers, is that it has customer data at the core of its DNA.

As founder Ethan Song explains, the company knows a lot about its customers because it is online first. Customers fill out profiles that include a host of preference settings, which store clerks can use to tailor in-store experiences.

Customers can make appointments on their phones, then show up and have an associate ready for them with suggestions. The stores and employees are smarter, enabled with more information, a stark contrast to shopping 1.0 where clerks are clueless about who they’re helping.

Such data-powered stores are popping up in increasing numbers, from cycle-wear retailer Rapha to women’s clothing vendor Boston Proper. Heck, even Amazon is going in reverse with the opening of its first physical book store in November.

People like to shop for personalized products, but they don’t like shopping for them in terrible stores filled with unknowledgeable staff. Retail chain closures will continue through 2016, but it’s only going to happen to those companies that aren’t able to use data to customize shopper experiences.

Smart 2.0 retailers, like Frank and Oak, will flourish and multiply.


4 comments on “Hybrid digital-physical stores will win the retail race in 2016

  1. This is the kind of innovative thinking that will keep Canada in the game. Offline retail isn’t dying, it’s evolving. The Internet isn’t the enemy (as many retailers see it), it’s a powerful tool that can help businesses grow.

    • Unfortunately, it takes Canadian companies a decade to copy others, only to say “look, I’m hip”.

  2. It kills me on a regular basis that executives don’t know most of this. Technology is not a trend, nor is it going away.