Retailers have struggled with how to balance digital sales and having a brick-and-mortar presence. Many companies that started as direct-to-consumer (DTC) digital-only models have made physical stores part of their strategy.
On one hand, that makes sense because many of the items sold by DTC companies are things people want to touch. It's hard to justify spending thousands on a mattress you have never laid on or even shelling out more for a connected fitness device the consumer never got to try.
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Even companies selling smaller-ticket items have realized that people won't buy underwear, eyeglasses, and most clothing without getting to see it in person. That has forced chains like Warby Parker, Third Love, and Untuckit to spend the money on building out a significant brick-and-mortar presence.
In theory, having stores allows these companies to expose their products to customers who then do repeat business digitally. The problem is that opening stores — often in high-end malls or shopping plazas — throws a company's economics out of whack.
You have to sell a lot of glasses, bras, and shirts that don't have to be tucked in to pay the rent for retail stores. If you don't do that. however, you end with no way to expose wary customers to your product.
It's a model that hasn't entirely been figured out and one digital-first DTC brand that moved into brick-and-mortar retail has abruptly shuttered those stores.
Image source: Getty Images
Activewear brand abruptly shutting down all stores
Clothing has always been a very competitive space, but activewear has become especially brutal. Numerous players want to copy the success of Lululemon (LULU) , but that's sort like being a restaurant trying to be the Chipotle of something other than Mexican food.
Lululemon's high prices have convinced others that's there room to compete — and there is — but there are multiple failures for every success. Outdoor Voices, which operates in a similar space tried to differentiate itself by being more of an outdoors brand.
"We’re on a mission to Get the World Moving, because we believe Doing Things — moving your body and having fun with friends — is the surest way to a happy and healthy life," the company shares on its website. "When you let go of the expectation to perform, that’s when the real magic happens. You learn that the joy of the game will always outlast a win. You learn that friends who sweat together, stick together. And you learn that moving creates endorphins, and Endorphins Make You Happy."
That sounds nice, but it hasn't fully worked as the chain has shared that it's closing all 15 of its retail stores effective March 17.
Outdoor Voices gets very quiet
The retailer's decision to close, or at least it sharing that decision, happened very suddenly.
"Employees were notified on Tuesday that stores would be closing and severance was not offered, according to the associates. Calls to other store locations went unanswered or went to voicemail," Retail Dive reported.
For their final day, the company's stores are running 50% off sales. Outdoor Voices will still remain in business as a digital-only brand.
The company's employees were told about the shutdown via a phone call on March 12, one store associate told the retail news website.
"The associate said they were told 80% of the company’s headquarters staff, including the director of retail, has been laid off, and just 10 employees will remain after Sunday. Associates at other locations could not confirm how headquarters staff were impacted," RetailDive added.
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As of the morning of March 16, the Outdoor Voices website remained operational but had no mention of its brick-and-mortar stores closing.
