E-tailers expand beyond cyberspace, open storefronts

CHICAGO — When Threadless set up its T-shirt-design business on the Web in 2000, operating a bricks-and-mortar store was the last thing on its 20-something owners' mind.

How times have changed. One of today's most cutting-edge online retailers is opening its first store this summer in Chicago, the first of up to four stores planned nationwide in the next two to three years.

It is not alone. A growing contingent of online retailers are opening bricks-and-mortar stores, establishing a physical place where shoppers can see a face, touch the merchandise and talk to the sales clerks.

It's a nascent movement — Amazon.com and eBay are still firmly planted in the digital realm — but one catching on as online shopping matures and merchants look to build their brands.

"Our first thought was that's really not what we do," said Jeffrey Kalmikoff, chief creative officer at Threadless parent SkinnyCorp. "For us, the focus is on the Web site."

But, after mulling it over, Kalmikoff and his crew decided a physical store could draw more people to the Web site and reach shoppers who might not otherwise hear of Threadless.

For most online retailers, the reason to step out of cyberspace boils down to a few longstanding retail customs: observing and talking to shoppers, testing products and reaching new customers.

Indeed, U.S. online retail sales passed the $100 billion mark in 2006, yet accounted for only 4.7 percent of total retail sales, according to JupiterResearch. It forecasts the sales, at least in the next several decades, will not account for more than 10 to 15 percent of total U.S. retail sales.

"We still live in a world that values the physical over the virtual," said Reinier Evers, founder of Trendwatching.com, an Amsterdam-based company that tracks consumer trends.

Notice sought

"Online brands want to be seen and want to be part of the real world to add some reliability and realness to their brands," he said. "And it doesn't hurt to be where most consumers are still spending their money."

Online bridal-shoe retailer Melissa Pins Bergetz never envisioned opening a bricks-and-mortar store. Nonetheless, the owner of BlueTuxShoes.com, opened Blue Tux Boutique in March in Chicago.

"I didn't realize how much I was missing until we actually did it," she said. "It's great to get customer feedback so we can change designs and create new products. As we add new things, it's a great immediate test."

Setting up a bricks-and-mortar shop is expensive. Putting up a Web site can be done with relatively inexpensive off-the-shelf software.

"There are a lot of mom-and-pop shops online because it's just expensive to open a store," said Sucharita Mulpuru, a technology analyst at Forrester Research in New York.

Not to mention, merchants can set up shop online with merely a dozen items, Mulpuru added. Walk into a store that has only 12 items and "people will say, 'What is this?' "

Not so fast, said Chris VanDyke, CEO of Nau, an outdoor-apparel startup in Portland.

Nau has a store at Bellevue Square, one of its four being launched nationwide this year that aim to marry online and offline shopping.

The boutique carries just enough merchandise to allow shoppers to try on items and gauge the fit. The idea is to encourage shoppers to research and order Nau's products from computer kiosks in the store.

In turn, Nau keeps overhead low by shipping the purchases from a central warehouse directly to shoppers' homes.

Threadless, too, plans to make its store "super-nontraditional retail," Kalmikoff said.

The store will incorporate elements of an interactive art gallery, he said. The high-tech experience is likely to include a quick-change of sorts, where the physical store environment transforms several times a day.

Internet influence

Perhaps most telling is JupiterResearch's prediction that by 2011, almost half of all retail sales nationwide will be transacted through or influenced by the Internet.

"The influence online shopping has on offline shopping is extraordinary," said JupiterResearch analyst Patti Freeman Evans.

Consultant Lauren Freedman recalls the early days of online retail, when dot-com gurus struck fear into bricks-and-mortar stores.

"The venture capitalists said there will be no catalogs and no stores," said Freedman, president of Chicago's E-tailing Group. "But they had never been shopping, so they didn't know.

"The bottom line is, the portability of a catalog won't go away, and the tactile component of a store will always exist," Freedman said.