You’ve probably heard all about how the high street is taking a beating from online retailers. Well, in a surprising trend reversal, we’re now seeing major e-commerce brands expanding into physical spaces.
From Amazon’s growing network of stores to Gymshark’s growing portfolio of flagships stores and Warby Parker's nationwide expansion… Digital-native brands are embracing brick-and-mortar at an unprecedented pace.
This shift presents a significant opportunity for property developers and landlords who understand what these digital-first retailers require from a site. Let’s explore why this is happening and how you can capitalise on this new trend.
We’ve been hearing about the demise of the high-street for years. Traditional stores were closing in droves and e-commerce was booming. Yet today, we’re witnessing a more nuanced evolution where the distinction between online and offline retail is blurring.
Several key factors are driving this trend:
Digital advertising costs have risen dramatically. According to industry data, customer acquisition costs (CAC) for e-commerce brands have increased by over 60% in the past five years. Physical stores offer an alternative customer acquisition channel with different economics.
As online marketplaces become saturated, physical spaces allow brands to create distinctive experiences that can't be replicated digitally.
Retailers have discovered that physical stores boost online sales in surrounding areas. Data from several digital-native brands shows that opening a physical location typically increases online sales by 20-35% in that region.
Amazon's physical retail strategy includes:
Amazon's approach demonstrates how physical retail can complement a digital ecosystem, provide convenient pickup locations, return options, and brand engagement opportunities.
Gymshark, a juggernaut in the fitness and overall e-commerce space, opened its first flagship store on London's Regent Street in 2022. The 18,000 sq ft space goes beyond traditional retail:
The store has become a community hub for fitness enthusiasts, reinforcing brand loyalty while attracting new customers.
More recently Gymshark have expanded with locations in Westfield Stratford, White City, Bicester Village and even Dubai Mall.
Eyewear brand Warby Parker has expanded from pure e-commerce to over 200 physical locations. This transition happened after discovering that customers who engaged with their products in person had:
The physical stores work in harmony with their digital presence, offering eye exams and immediate product availability while maintaining the brand's distinctive aesthetic.
Physical retail offers a depth of customer experience that’s impossible to replicate online:
Allowing customers to touch, try, and experience products addresses a key limitation of online shopping. For categories where tactile interaction matters like apparel, furniture, and technology, physical retail provides significant value.
Despite advances in delivery speed, nothing beats the thrill of immediate purchase offered by the in-store experience. Digital brands are leveraging this advantage by ensuring optimal inventory in physical locations.
Well-trained staff can embody brand values and create connections that chatbots and email support cannot match. Many digital-native brands emphasize staff expertise and authentic engagement over traditional sales approaches.
The most innovative e-commerce brands are reimagining stores as:
These spaces prioritise experience over inventory, featuring:
Showrooms require less space for stock storage so you have more square footage for customer engagement.
Brands like Rapha (cycling) and Lululemon (athleisure) have created spaces where customers gather around shared interests:
These community-focused approaches build brand loyalty beyond transactional relationships.
Some physical locations function as three-dimensional brand advertisements:
These spaces generate social media visibility and press coverage that extends their impact beyond immediate visitors.
The e-commerce to physical retail trend is creating opportunities for property developers and landlords who can meet these brands' unique requirements.
Digital-native brands typically prioritise:
High-visibility locations in major cities remain attractive. Particularly for flagship experiences. Brands like Glossier and Allbirds target fashion-forward districts with high foot traffic.
Many digital brands prefer locations near complementary retailers that attract similar customer demographics. This creates mutually beneficial retail ecosystems.
E-commerce retailers use customer data to select physical locations. They often choose areas with high concentrations of existing online customers. Property developers with access to demographic and footfall data have an advantage in attracting these tenants.
E-commerce brands typically seek:
Modular spaces that can be reconfigured for events, product launches, and seasonal changes.
Advanced infrastructure for digital integration, including:
Facilities for click-and-collect, returns processing, and last-mile delivery operations, often requiring back-of-house space configured differently from traditional retail.
The digital-to-physical shift is also changing lease expectations:
E-commerce brands often prefer shorter initial commitments with extension options, allowing them to test physical retail concepts before making long-term commitments.
Revenue-share models that align landlord and retailer interests are increasingly popular with digital-native brands.
Temporary spaces allow e-commerce brands to test physical retail with minimal commitment. Properties that facilitate pop-up retail attract brands at the beginning of their physical expansion.
For developers looking to capitalise on this trend, several approaches can identify promising opportunities:
Using platforms like Searchland to analyse demographic data, transport links, and competitor locations can identify areas ripe for digital-native retail expansion.
Following funding announcements and strategic plans from growing e-commerce brands provides early indicators of physical retail ambitions.
Many department store spaces and larger retail units can be reconfigured to accommodate multiple digital-native brands, creating engaging retail destinations.
New retail developments should incorporate the flexibility and technical infrastructure required by online brands, even if current tenants are traditional retailers. More information on sourcing prime retail sites can be found in this article.
The high-street is still struggling, but the idea of the “death of the high-street” is overblown. What we’re seeing is the evolution of the high-street. The successful retail environments of the future will blend digital convenience with compelling in-person experiences to create spaces where consumers want to spend time. These spaces will be more focused on relationships, not just transactions.
This trend represents a significant opportunity for property developers and investors. Understanding the unique requirements of online brands looking to branch into brick-and-mortar will mean big profits for those trying to capture this growing market segment.
Ready to identify prime locations for the next wave of digital-to-physical retail expansion? Book a demo with Searchland today to discover how our comprehensive property data platform can help you pinpoint ideal retail development opportunities across the UK.