With so many retail winners from 2015 attributing success to well executed multichannel strategies, some experts have been predicting the death of pure play retail. While we disagree with that diagnosis, there is an ever-growing body of evidence to suggest that the race to achieve scale online leaves room for only a few survivors. Even as the proportion of retail sales made online continues to grow, the sales ceiling for pure players creeps lower.

Make no mistake; launching an online brand is a relatively low-risk, highly scalable strategy that has seen the likes of Rapha, Birchbox and Warby Parker achieve admirable success. However, the reality is that the cost of building awareness and acquiring customers online is high, as are the costs of shipping and logistics. Whilst top line growth is as simple as turning on the advertising taps, few pure players have published significant profits, even as growth has plateaued. Competition for visibility in online marketing channels can only be described as aggressive, with little residual channel equity once the taps are turned off.

So why do businesses continue to pursue growth as a pure player, rather than look to new channels? There is often a tendency for marketers to focus on the routes to market that are the most measureable and for investors to see ROI as a function of revenue, rather than profit, during growth stages. As we know, the path to purchase is no longer linear, with consumers interacting across multiple channels along their journey. This leads to the wider benefits of new store openings often being underestimated, which in turn causes cross-channel expansion to be overlooked.

What the three brands mentioned above have in common is their decision to move offline following proof of concept and early growth. At Pragma we have observed an immediate and sustained impact on website traffic resulting from a new store opening. Detailed analysis shows that the physical presence of a store acts as an ‘always on’ awareness channel for a brand and drives improved website ranking in local search results; the PR generated from the store opening, particularly for pilot stores, drives further improvements to search visibility and social audiences; and store visitors who choose not to purchase increasingly transact online at a later time. This a case of ‘the whole being greater than the sum of its parts’.

The continued desire to physically interact with products is well documented, as is the growing popularity of click and collect, yet viewing stores as a marketing channel presents another practical and compelling argument for offline expansion that should not be overlooked.

Jacob Gascoine-Becker