“Come to our store and we’ll give you a personal guide …but you can’t take your purchases home today!” Sounds counterintuitive, but it’s basically the model of Walmart’s new men’s clothing store, Bonobos.
For several years we have been saying that the death of retail has been greatly exaggerated. The Department of Commerce – contrary to the constant din of “Digital sales are taking over!” – continues to say that more than 90% of retail happens in bricks and mortar stores.
Giant retailers like Walmart know all about the advantages of bricks and mortar. Recent moves by Amazon into the bricks and mortar retail space are validating those advantages. Here’s our take on it:
- People want to shop in person so they touch, compare, and try it out before they buy.
- They want instant gratification. They want to take possession and take it home right now, right after they pay.
- Folks can save a few bucks on consumer products under $20 and over 8 oz. when they pick them up rather than have them delivered.
- Nobody wants to go through the hassle! The fact is, if you actually saw, touched, and tried it when you bought it, chances are you won’t return it.
- Everybody loves surprises! Part of the fun of physical shopping is discovering something you weren’t looking for.
Retail properties near transit stations, colleges, and appointment-based businesses are in demand. Why? Foot traffic! Bonobos is a hybrid 3-way fusion where the best of on line and the best of bricks and mortar combine. Its success depends on how much we, the consumers, will compromise.
Will we give up on our desire for instant gratification? Is getting more personalized attention worth waiting a few days for our purchases to arrive at our door?
Walmart’s Bonobos thinks, in the men’s clothing space, you’ll take that trade off. They offer physical stores with one of everything they sell. You could still get the tactile experience of seeing and touching. You can be sized better than online, and know what you’re buying. This is an advantage over purely on-line sales that can suffer up to 40% returns, hurting the profitability of that model.
Just take a look at Tesla. In an article appearing in the SF Chronicle in 2016, “Uncluttered and sparsely decorated, each store has a handful of cars for test drives. But the stores largely focus on teaching potential customers about the brand. Buyers can order and customize a Model S or a Model X at a Tesla store, but they can’t drive home with one.”
Like Tesla, you go to a Bonobos showroom that “sells” no products. Their site says, “Style is opinion, fit is fact. Find yours at one of our Guideshop locations. One-on-one service. Complimentary style advice. Plus the perfect fit, delivered right to your door.” And they offer “free shipping both ways.”
You get your preferred style, in the size and color you want – you just have to be willing to wait until it arrives. If you went to a regular bricks and mortar retailer and they didn’t have your size or color in stock, they would have to order it for you anyway. So, we are already conditioned to accept our plight of deferred gratification.
Unlike most bricks and mortar, Bonobos “Guideshops” don’t have to carry huge inventories. Inventory is centralized. But unlike on-line, they don’t have to suffer a big return cost. With today’s inventory software and hardware, the orders can whiz through. And the cost of direct-to-consumer delivery is offset by reduced returns and the cost of delivering and maintaining inventory at the individual locations.
Bonobos has several other advantages including a factory outlet type vertical supply chain, a very cool site, and an overall fresh and relevant marketing appeal to millennials. Interestingly millennials are already conditioned to buying “everything” on line. So, for them, this is a step up. They are used to delayed gratification but hate returns. Bonobos will definitely solve that issue.
Will the Bonobos hybrid be the wave of the future? We think it’s ingenious and a good bet that the customer will meet them half way. What do you think?
Who Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders