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Traditional Stores As An E-commerce Strategy

By Cece Nunn, posted Nov 18, 2016
Alan Murphy sells shoes in his Coastal Kicks store on North Front Street and through his website. (Photo by Cece Nunn)
Even if he wanted to, Wilmington business owner Alan Murphy couldn’t sell his products-- solely online.

“The way sneaker manufacturers work, most if not all of them won’t really let you just do online only,” said Murphy, owner of Coastal Kicks at 271 N. Front St. in downtown Wilmington. “If you think about it, that makes sense because if you’re a manufacturer and you sell online as well, if I’m online and you’re online I have access to your own customers. But if I sell in a store, that way you reach customers that you wouldn’t have reached any other way.”

While the popularity of online shopping has long been seen as a threat to brick-and-mortar businesses, some specialty stores in the Cape Fear region and across the U.S. count physical locations as assets. In Murphy’s store, much of the inventory consists of hard-to-find fashion sneakers and other kinds of shoes.

“Pretty much anybody in Wilmington that knows about our store knows we’re going to do the stuff that you’re not going to find in Foot Locker, that you’re not going to find in Rack Room [Shoes], so they’ll come in here just looking for something different,” Murphy said.

Outdoor Equipped, a store across the street from Coastal Kicks at 272 N. Front, started out as an online-only business selling apparel for outdoor and athletic activities via outdoorequipped.com and Amazon.com. Before opening a brick-and-mortar store downtown two years ago, Outdoor Equipped had already grown into a multi-million-dollar company.

“From our standpoint, we started as an online business. We didn’t get into brick-and-mortar with the intent that we were going to make a whole lot of money [from the store],” said Chad Hankinson, a Wilmington resident and president and CEO of Outdoor Equipped. “We got into brick-and-mortar to be closer to the customer and to really give back to our community because we were in a nondescript building in a warehouse at the airport. Nobody knew who we were.”

Hankinson said most of the time, he works in an office not far from the registers inside the store, leaving the door open “so that I can see the customer and I can understand the buying behavior. I go out there and I talk to customers, and at the same time, I’m running the internet business so that I can understand the strategies of how to make ourselves different compared to normal online, dot-com companies.

“I think it’s the combination of those that give us a huge advantage.” Outdoor Equipped had revenues of $38 million last year, mainly online, surpassing the goal officials had set for the company. This year, the firm is on track for $50 million in revenues.

“I think the reason that we have grown as much as we have and will continue to grow is because we have a very successful online business, but we also understand the customer at a level our competitors don’t because they don’t have brick and mortar,” Hankinson said.

That doesn’t mean Hankinson, who started the company with his brother, Mike Mayo, around 2010, plans to open a second physical storefront.

“I don’t know that another store in Wilmington is going to give us any more information than we already have” about customer buying habits and preferences, he said.

At Coastal Kicks, which started out in a physical storefront before Murphy opened a virtual one at coastalkicks910.com, online sales boost the business as a whole.

“Since we do both, online somewhat helps me. Like some of the higher-end shoes that we get won’t even be sold in Wilmington. I’ll put them on the shelves, but they’ll end up going to Houston, they’ll end up in Hawaii. They’ll go to California because we sell stuff that apparently isn’t available in an awful lot of places, so that’s pretty cool. It works,” Murphy said.

About 90-95 percent of Murphy’s inventory at the store is also online, so he works to entice local customers to stop by Front Street.

“I try sprinkle like little jewels in here to give incentives to come in the store … And since we do stuff that isn’t really available anywhere else, it kind of creates a sense of urgency,” he said.

For Outdoor Equipped, the brick-and-mortar location has helped with continuous efforts to provide customers with the highest-performing brands, Hankinson said.

Athletic and outdoor apparel brands want it all, he said.

“They want to be represented well on a website; they want to have the kinds of revenue that a good website generates, but at the same time they want to be in a brick-and-mortar store being represented well, where customers passing by can see the brand, where a customer can come into the store and try it and get on the treadmill and do different things,” Hankinson said.

While consumer spending has been up overall in recent months, and all retail sales are expected to increase over the holidays, some larger and national chain retailers continue to struggle compared to online-only sellers.

“Kmarts, J.C. Penneys, Sears, even Walmart – they have this massive cost, this massive infrastructure,” Hankinson said.

A few large brick-and-mortar chains likely will survive if they can successfully combine an online presence with store and warehouse inventory, he said.

But technology and Amazon.com have revolutionized retail and will continue to do so, Hankinson added.

“In my opinion, you haven’t seen anything yet. It’s at the very beginning of the disruption,” he said.

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