Retail stores helping power ‘digitally native brands’
- February 1, 2024: Vol. 11, Number 2

Retail stores helping power ‘digitally native brands’


What exactly is a digitally native brand (DNB)? In short, a DNB refers to retailers that began their retail journey exclusively online, selling their product line direct to consumers through their digital channel. Although all these businesses start as pure ecommerce plays, many DNBs eventually move offline, choosing to leverage the benefits of brick-and-mortar channels to grow their business even further.


Physical venues offer retailers a range of benefits. Brick-and-mortar stores can open up new sales channels, facilitate an immersive brand experience, enable consumers to engage directly with the brand’s product and reduce customer acquisition costs. DNBs have proved particularly adept at opening stores that consumers will actually want to visit, with leading digitally native brands seeing strong foot traffic trends in 2023.

Analyzing year-over-year (YoY) data for third quarter 2023 shows that, while many retailers struggled, DNB leaders such as Vuori, Allbirds, Everlane and Warby Parker all saw significant growth in quarterly visits per venue. Many of these brands also underwent significant expansions, but the increase in visits per venue reveals that many of the DNBs are seeing more crowded stores despite the increase in number of overall venues. The success of these brands in operating stores that consumers want to keep visiting — even in times of economic headwinds — suggests DNBs are particularly well positioned to take advantage of the diverse benefits of offline stores.


Digitally native brands are known for their sophisticated use of customer data. DNBs can study the data generated by their ecommerce channels to identify their audience and consistently tweak their messaging and promotional offerings to reach their ideal consumer base. Does moving to brick-and-mortar locations make it more difficult for these companies to reach specific audiences? Or do physical stores actually allow DNBs to reach a wider range of shoppers while keeping its target audience engaged?

Warby Parker is perhaps one of the earliest and best-known DNBs to move offline. The eyewear chain began as an online affordable glasses retailer in 2010 and quickly recognized the benefits offered by brick-and-mortar stores. The company opened its first physical location in 2013 and has since grown to include more than 200 stores nationwide, with the chain reporting consistent foot traffic increases YoY.

From the start, the vision-care chain created a new niche by positioning itself as a lower-priced eyeglasses brand that maintained the sense of prestige and exclusivity of much fancier labels. Recently, the company has introduced some higher-priced eyecare products — all while maintaining its aura of affordability.

And foot traffic data reveals that the company’s emphasis on affordability is not deterring higher-income visitors. Between third quarter 2022 and third quarter 2023, the share of wealthier families living in Warby Parker’s trade area grew significantly. This trend indicates that Warby Parker’s physical locations are successfully attracting a market segment with major spending power, which could help explain the brand’s continued success.

While some DNBs are growing their reach among wealthy families, others are attracting larger shares of younger consumers. One such brand is Vuori, a San Diego athleisure company that began by selling men’s activewear at yoga studios before pivoting to a direct-to-consumer ecommerce model. Like Warby Parker, the brand has leaned into offline expansion. The company’s first store opened in 2021, and Vuori has set its sights on opening 25 stores a year, with the eventual goal of operating 100 stores by 2026.

The chain currently operates 48 stores. Diving into the demographics of these stores’ trade area reveals they attract an outsize share of singles and individuals from non-family households, and the share of this segment in Vuori’s trade area is growing over time.

Opening physical stores doesn’t just allow DNBs to sell to audiences they’re already reaching online. Instead, brick-and-mortar venues can help retailers branch out to new customer segments the company may be missing on its ecommerce channels.

For example, Alo Yoga, a favorite among celebrities and influencers, has positioned itself as a go-to for Gen Z and Gen Alpha. But digging deeper into the captured and potential market of the brand’s store fleet indicates that Alo Yoga stores actually attract a large share of older visitors, specifically “sunset boomers,” defined as “well-off boomers near or at retirement age living in picturesque locations.”


Some digitally native brands choose to build massive store fleets and establish a network of brick-and-mortar sales channels that rivals the original ecommerce business. But others choose to establish a more modest offline presence focused on cultivating strong customer relationships, enhancing brand awareness and facilitating product engagement. And analyzing visit data to the first store of a DNB brand with a limited offline presence shows the strong demand for DNBs’ physical venues.

Rothy’s, a DNB founded in 2012, sells eco-friendly, comfortable and fashionable footwear. The shoes were a massive success, and the company opened the first of its 13 stores in 2018, and in September 2023, it opened its first store at the San Francisco Premium Outlets mall in Livermore, Calif.

So far, the Rothy’s outlet has met with significant success, as visitation data reveal the store pulls in five times more visits per square foot compared with other footwear retailers in the same shopping center. Rothy’s trade area was also among the largest trade areas for stores in the outlet mall, indicating that Rothy’s visitors were significantly more likely to travel far distances to visit the Rothy’s outlet than other nearby shoe stores.

Rothy’s first outlet’s impressive visit metrics highlight the tangible excitement that physical stores can generate and reveal how even a limited offline presence can help DNBs promote brand engagement.


Certain DNBs such as Warby Parker choose to establish a significant offline store fleet, and some, like Rothy’s, open a few strategically placed locations. Others go a different route — turning to pop-ups to gain some of the advantages of a brick-and-mortar presence without the long-term investment. Pop-ups allow companies to dip their toes into the physical retail waters by offering DNBs a low-stakes way to amplify their market presence, engage with customers and trial a potential permanent offline move.

Kim Kardashian, billionaire media personality and businesswoman, launched her wildly successful SKIMS shapewear and clothing brand in 2019. The brand, which hopes to open its first physical store in Los Angeles in 2024, has hosted several pop-ups to significant success.

One way to assess the impact of pop-ups is to analyze the location intelligence data for the host venue. In 2023, SKIMS’ recent pop-up at Rockefeller Plaza between May 16-29 drove a major traffic spike to the Channel Gardens in the Plaza, where the pop-up was located. The crowd that came to check out the pop-up not only experienced SKIMS products first-hand and enjoyed an immersive brand experience, SKIMS visitors likely boosted visits at nearby businesses as well. And SKIMS location in the popular New York City hotspot meant passersby who were in the area also got exposed to the brand and its offering — underscoring the mutually beneficial relationship between pop-up stores and their hosting venues.

While digitally native brands begin online, pivoting to physical retail locations can help increase reach across a wider customer base. And there are many different strategies that DNBs can employ to reap the benefits of physical retail, including establishing large store fleets, strategically opening a few venues or even just operating temporary pop-ups. Whatever the method, leaning into the potential of brick-and-mortar stores can help companies increase brand awareness, drive audience engagement and ultimately sell more products.


The article was excerpted from a report. Download the complete report here.

For reprint and licensing requests for this article, Click Here.

Forgot your username or password?