With the pandemic-induced e-commerce boom subsiding slightly, some Canadian brands that grew substantially in an online-only world are now meeting customers where they shop: in-person.
Footwear company Vessi and mattress firm Endy gained popularity with a direct-to-consumer online business, but now both are opening physical locations in the Greater Toronto Area this week as more consumers head back to malls for their shopping needs.
“The majority of customers still buy footwear in a physical space,” Terra Cochrane, president and chief operating officer at Vessi, told BNNBloomberg.ca in a recent phone interview.
Cochrane pointed to a “return to retail” after the pandemic e-commerce surge that Vessi wants to seize upon.
“If we're looking to grow Vessi, and we're seeing that growth (in retail), we do need to improve our access, we need to be available to customers when they're shopping for shoes, which is that physical touch.”
Recent research shows in-person shopping is making a comeback. A survey from the Retail Council of Canada showed 81 per cent of back-to-school shoppers would buy their supplies from a brick-and-mortar store, nearly double the 2022 numbers. A January 2023 survey from Totum Research showed both rural and urban Canadians prefer in-person shopping.
After opening its first store in Burnaby, B.C. in 2022, Vessi is now opening its second retail location at Mississauga’s Square One Shopping Centre on Nov. 7. Before that, the footwear company sold exclusively online after launching in 2018.
Mattress seller Endy, which began operating online in 2015, is opening its first location in CF Sherway Gardens in Etobicoke, Ont., on Nov. 8.
“The part that I'm most excited about is that we're going to be bringing the unique Endy experience from online-only to folks in the physical store,” said Alexandra Voyevodina-Wang, Endy president and general manager.
Endy's new retail location is seen in this rendering. (Endy)
Much like Vessi, Endy is noticing customers are more interested in in-person shopping coming out of the pandemic.
“I think folks were so immersed in online shopping throughout the pandemic, that coming out of pandemic, there are a lot of shoppers who do want to feel and touch and go back to experiencing things in the physical space,” Voyevodina-Wang said.
“It's always been in our DNA to put the customer first and it feels like we are not going to be putting the customer first if we don't give the second group of people at least a first place where they can kind of have a physical interaction with a product.”
This comes as Bushbalm, a women’s skincare company headquartered in Ottawa, announced its plan to expand into Canadian retail, indicating that the company sees its future in brick-and-mortar.
‘RETAIL IS HERE TO STAY’
Retail analyst Bruce Winder says the companies making the shift to retail are unique in that consumers in those industries are more inclined to try the products before they buy.
“Some categories like mattresses and footwear are really made to be touched, try on, lay down on, et cetera, so it's part of the consumer decision-making process and they need to do that to get consumers to make the purchase,” he said.
For Endy and Vessi, the expansion represents a shift to “omnichannel” retail, meaning making their products available through online sales, wholesale retail, and at their own brick-and-mortar locations.
“I think retail is here to stay,” Cochrane said. “I think there was some hypothesis during COVID that e-commerce was going to dominate, but it's just not the case. Consumers still prefer retail.”
“E-commerce is absolutely going to see growth, but I think omnichannel is the only way forward, to be honest.”
While upfront costs are higher with traditional retail, Vessi has found there to be some unforeseen benefits to opening their own store.
“We have fewer returns because people are getting fit correctly,” Cochrane said. “Our average order values are actually higher because the sales staff are able to support entire conversion of the sale.”
Additionally, Winder said direct-to-consumer brands can create a “halo effect” in the market if the store does well, meaning people’s opinion of the brand improves if they know a store is successful.
“In certain markets, it gives the whole sales – both online and offline – a bump in that market,” he said.
CHANGING BUSINESS GROWTH PATTERNS
Cochrane suggested a trend may emerge for new businesses to focus on starting out direct-to-consumer then moving to brick-and-mortar once established, as the barrier to entry online is much lower and brand recognition from online sales can help the brick-and-mortar store succeed.
“Part of a new brand entering retail is that you have to prove yourself before the landlords will give you a good spot,” she said. “You have to be able to prove to the landlords that you're a good tenant or a valuable tenant to them.”
Winder also sees more businesses focusing online first, then adding a traditional retail option.
“If you go and open up a store, it's pretty risky,” he said. “You've got this sunk cost in rents, or things like that, and you really don't know what the brand is going to sell and your awareness is very low, but if you can trade online for a little while, you get that brand awareness and you also offer a proof of concept.”