Blog post

The Halo Effect – the link between digital and physical

Here's how the halo effect benefits retailers.

  • Topic
    Retail trends

A single-brand strategy that spans several channels is key to the success of almost any brand. At the heart of this strategy is the realization that brick and mortar often serve as the hub of the brand’s ecosystem, driving sales online and vice versa.

A report by the International Council of Shopping Centers based on a selection of more than 800 retailers and 4,000 consumers presents what’s known as the “halo effect”. The report shows that when a retailer opens a new store, online traffic increases by a third and the brand as a whole receives a boost. This link is demonstrated even more clearly for forward-thinking, digital, and vertical brands. By the same token, the report indicates that online traffic drops when a store closes.

How the halo effect benefits retailers

It’s no surprise that retailers which have evolved from being solely e-retailers to also having brick and mortar stores have benefited from the halo effect. A physical presence benefits the brand as a whole, regardless of whether the monetary transaction takes place in store or online. Brick and mortar give consumers the opportunity to touch and feel products, to speak with a product expert, and to gain the entire brand experience which increases the conversion rate and keeps return rates down.

As the retail industry slowly but surely begins to understand the correlation between a digital and a physical presence, evidence of its competitiveness is growing. Proof of this can be seen among digital domestic retailers that have realized the benefits of opening a number of stores and now plan to open even more over the coming years. One of these pioneers is the American eyewear retailer Warby Parker, which has gone from being an e-retailer to having more than a hundred physical stores that now make up more than half of the company’s revenues.

Brick and mortar stores are a brand-builder

Another aspect of the halo effect is the sense of a brick and mortar store as a media platform, the way a fashion magazine is for the fashion industry. To this end, brick and mortar stores will serve just as much as brand-builders as sales channels. As this phenomenon expands, the retail industry will need new metrics for physical commerce, as its values can no longer be measured purely in terms of sales figures.

Understanding the critical link between a physical and a digital presence is vital when contemplating store closures. From a channel-centric perspective, many retailers will convince themselves that they need fewer and smaller stores as the business moves online. Yet from a holistic customer perspective, it’s easy to see how this silo thinking will have the opposite effect. After realizing the damage store closures could cause, more and more retailers are choosing not to go with the crowd.

The better a brand’s understanding of the overall customer journey and the importance of every element of the experience, both digital and analog, the better a brand’s chances of winning the battle for consumer attention and loyalty.


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