Photo: Allbirds
Allbirds’ profitable business soars higher as it continues opening stores
Allbirds, the eco-friendlier and profitable online consumer-direct brand best known for its merino wool sneakers, is growing its product line and its customer base by opening stores even in the midst of the novel coronavirus pandemic.
The company, which opened its first stores in San Francisco and Manhattan in 2018, has continued to open new locations in 2020, including its first store on Philadelphia’s Walnut Street reports The Philadelphia Inquirer.
The 2,090-square-foot store in Philly is one of 23 locations stretching from the U.S. to New Zealand, home of co-founder Tim Brown, a former footballer (AKA soccer player) and entrepreneur. Joey Zwillinger, the other co-founder and an engineering and renewables expert, is from San Francisco.
Travis Boyce, head of global retail operations for Allbirds, told the Inquirer that the decision to open in Philadelphia was informed by its online sales data that showed the company’s products had a significant following among local consumers. The Walnut St. location was deemed a good fit, Mr. Boyce said, because the “area has a great mix of shops and is a destination for a wide array of consumers, so it immediately came to mind as the perfect location for our first store in the city.”
Allbirds physical store expansion aligns with a broadening of its product range in recent years, which started with the addition of running shoes to the brand’s all-purpose sneaker. Since then it has added footwear choices, socks, underwear and a range of apparel, including t-shirts, sweaters and outerwear.
With all its growth to date, Allbirds remains committed to taking as little out of the environment as possible by finding new uses for material such as wool. The manufacturing process utilized by Allbirds in making its wool sneakers uses about 60 percent less energy compared to traditional synthetic shoe manufacturing.
The brand is very serious about its ecological bonafides. Allbirds’ co-founders offered to share how they make their sneakers with renewable materials with Amazon.com CEO Jeff Bezos so his company could ditch some of its oil-based manufacturing processes. Allbirds’ SweetFoam process is open sourced, so the free offer wasn’t just for Amazon.
- Allbirds
- Our Story – Allbirds
- Allbirds, known for its wool sneaker, pushes for more brick-and-mortar stores even during COVID-19 – The Philadelphia Inquirer
- Allbirds CEO Joey Zwillinger on the startup’s $100 million round, profitability and SPAC mania – TechCrunch
- Why is Allbirds asking Amazon to do a better job ripping it off? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: What do you think of Allbirds’ continued emphasis on opening physical stores at this point in time? Does the brand have any inherent operational or other advantages or disadvantages as it expands its physical presence?
Poll
BrainTrust
Georganne Bender
Principal, KIZER & BENDER Speaking
Jeff Weidauer
President, SSR Retail LLC
I think Allbirds is making the right move here. While DTC will continue to be their bread and butter, they also recognize the importance of physical stores, and so opening stores in select markets makes perfect sense. Naturally, running physical stores presents new challenges to DTC brands, however management appears to be thoughtful in their approach. Overall, this is a good and smart move by Allbirds.
The fact that Allbirds is opening stores serves as further proof that digital is not completely replacing traditional retail. Stores, especially those of popular brands, have a real role to play in creating experiences, amplifying brands, and showcasing products. For a popular brand like Allbirds, they are an opportunity to expand the audience of loyal fans. Admittedly, store traffic may be suppressed right now but as the virus (one day) abates, that trend will reverse. What’s always notable to me is how much care a lot of these upcoming brands take in their store design, location and layout. It puts many of the more traditional retailers to shame!
Allbirds is offering several great lessons for building a brand. Sustainability + authenticity + quality + generous transparency + honest value = HUGE brand equity + LOYAL customers. SOS (stuff on sale) is not sufficient impetus to leave the couch. They very much remind me of Lululemon in the level of brand loyalty they have quickly come to enjoy.
Allbirds is thoughtful in expanding its retail footprint. The locations are high end in the most prominent cities in the world. Clearly Allbirds has ambitions of becoming a global brand. There is a high risk that it could stretch too thin, and so many geographically diverse locations makes logistics a huge challenge. But overall the growth seem to be controlled and managed well.
“Zig when others zag” has to be one of the first principles we all learned in our earliest marketing course. Following that principle has always required a lot of courage and creativity but, at this point at least, it looks like it’s working for Allbirds.
It’s not surprising that Allbirds is opening more stores. For most people, shopping is a fun experience. Going out, physically interacting with the products, and engaging in the full sensory experience that a store can create is part of a fun shopping trip that many shopping-lovers crave and miss.
Both Amazon and Alibaba are expanding offline. Other top online brands will eventually have a growing physical presence too. The difference is, the future of retail stores will use technology to bring the best online features: personalized recommendations, easy navigation, and simple line-free mobile checkouts to make the in-person shopping experience even better.
After all of the “death of retail” headlines it’s refreshing to read about a company that is moving forward with a plan to open new stores.
There is so much to like about the Allbirds Philadelphia location. Using data to place it in an area where the brand already had a consumer following is smart – word of mouth, said to be the number one thing that brings new customers to a store, will be strong. And I love that the location isn’t in a mall or strip center but part of a community.
The pandemic has tethered us to our homes for so long people are craving anything new and unexpected. That’s not to say that fresh goods in familiar stores aren’t important, but a new shopping experience that sells product that are good for the environment is something customers can get behind.
There are approximately 50 shopping areas that still have relevance in the U.S. anymore, and not all are malls — maybe fewer than half are. If Allbirds is careful about store placement decisions (sticking with online customer concentrations) and stay low on store count, they’ll be OK. But the minute they hit 100, look out — just ask L’Occitane.
Despite the alarmist “retailpocalypse” rhetoric, brick-and-mortar will remain a viable part of the retail landscape into the future. Strategically placed stores that add value to the brand experience will always carry an advantage.
While it’s clear that the physical retail store is the greatest form of marketing for a retailer, store expansions should be done pragmatically, strategically, and with a focus on the high growth markets. Digital commerce has experienced a great acceleration during the COVID-19 pandemic, yet we are witnessing digital native firms such as Allbirds investing in opening physical stores and showrooms.
Allbirds’ products have resonated with conscious consumerism trends, and a physical showroom to let customers try and experience the product could pay dividends. As Allbirds expands their product assortments they will be up against similar lifestyle brands, and a physical showroom in select cosmopolitan markets could be a differentiator.
Brands using physical locations aren’t always there to make a profit, although it’s still their goal. Sometimes the physical store is a form of advertising, like a billboard. It’s math. It may help create more brand awareness, which can turn into sales. It would be interesting to know why they have taken this course. I’m sure they weighed all the pros and cons. Their story is good. Their cause is relevant. Their customers love them. I’d have to better understand their numbers to make an informed opinion.
With the price of retail real-estate down and the cost of shipping surging, now is a great time for DTCs to build their physical footprint. Doing this will not only open the brand to a much larger shopping audience, through micro-fulfillment and click and collect, it will help reduce delivery costs for online orders.
According to Gartner, the most valuable customers in retail are those who engage across multiple channels. I think Allbirds’ positioning is spot on. We need to stop thinking about digital and physical retail as an either/or proposition. To really drive growth brands have to engage across multiple channels. This is the reason I avoid “omnichannel” as a term and much prefer “Unified Commerce.” One brand, multiple channels.
Excellent. It’s a perfect time for D2C companies to open brick-and-mortar stores with depressed rents and a pending retail renaissance coming this fall. This will lower Allbirds’ cost of acquisition as their rate and cost of returns. It will also provide the much needed personalized connection consumers want with a brand.
Not only will Allbirds be able to tell their responsibility story but now they will also be able to show it! The only caveat for me would be that the rollout occurs in select community locations under small store footprints.
Allbirds is a terrific company with a focus on both sustainability and fashion. A winning combination today.
I find it interesting that these digitally-native retailers always look to plant stores where they already have an online sales following. It makes sense as a way of mitigating risk. But how about locating them where they are not yet so well-known, as a way of generating needed visibility and brand awareness that then drives customers to the website/app? That would arguably be a more cost-effective approach to customer acquisition than the digital route, given the exorbitant costs of online advertising…