Online-To-Offline: How Physical Retail Is Reversing A Sales Decline For ModCloth

The retailer sold its apparel online-only for 13 years. But when revenue stagnated, it was time for a new approach.

Founded as an online-only store in 2002, indie-favorite clothing brand ModCloth was a pioneer in the earlier years of etail. But after 13 years of digital sales, revenue was flat year-over-year, and the company’s recently appointed CEO made a controversial call: ModCloth would raise third-round funding and invest it in launching a series of pop-up shops, banking on physical retail to turn things around.

And it worked.

Nearly a year after the July 2015 debut of its first shop, the retailer is hiring again — this new growth comes after a reported layoff of 100 employees before the revamp, according to Internet Retailer — and ModCloth plans to continue doubling down on the brick-and-mortar approach to spike sales. The retailer looks to open permanent physical locations sometime in 2016.

Why It Works

 When Warby Parker blazed the online-to-offline trail, various media outlets asked, “Does Warby Parker need actual stores?” Now, those questions are quieting.

As Matt Kaness, ModCloth’s president and CEO, told USA Today, “[in trying the pop-ups], we discovered small things, the details our customers love. They loved linings in dresses and skirts and they loved pockets.”

 It’s a bit of a cliché, but it’s a true one: Customers appreciate the in-store shopping experience because it provides something they just can’t get on Amazon. Whether it’s “extras” like personal styling or, as Kaness mentioned, the ability to feel and try on the merchandise without the hassle of shipping, there are consumer advantages in physical retail.

As a start, ModCloth has played it safe: The company has dipped its toes into physical retail by running several pop-up stores and “fit shops” in major markets before opening more permanent retail locations. This is a way to test the waters, and the response was largely positive — letting ModCloth know that the time looks to be right to give their consumers the opportunity to experience its products both online and off.

The Omnichannel Angle

Giving consumers the choice between shopping online and offline — and providing a seamless experience through both — is a sign that ModCloth has found success in embracing an omnichannel philosophy.

Even as the popularity of the word “omnichannel” has waned, 2015 was the year that it became an accepted concept that brands need to blend the online and offline world, keeping a coherent presence across channels and devices. Shoppers don’t live their lives in silos; they research products on desktop and mobile, and when it’s time to come to a store, the device isn’t left behind — smartphones are a primary shopping companion for research and comparisons. Stores that understand the multitude of ways that shoppers interact with both online information and physical products are more likely to capture their attention — and their dollars.

Thus far, this looks to be the case for ModCloth, which has resurrected itself from a period of flat growth and layoffs to new hires and increasing investment in popular stores.

As Jocelyn Gailliot, CEO at online-to-offline success story Tuckernuck, put it last fall, “In order to be a successful retailer these days, you need to have a strong omni-presence. This includes selling online, selling offline, and having a brand that is popular on social media.”

About The Author
Lauryn Chamberlain Lauryn Chamberlain @laurynchamberla

Lauryn Chamberlain is the Associate Editor of A New York City based journalist, she specializes in stories related to retail, dining, hospitality, and travel.