Digitally native brands planning physical stores are starting to outnumber those remaining solely in the digital realm, said JLL executive vice president of global business development for retail Erika Schanke. “For the overwhelming majority of digital natives going into physical stores, it’s not if but when.” The only thing holding them back, she said, is a dearth of Class A space.

“You can only accomplish so much being online,” said Beta Agency partner Rob Ury. “There are products that people want to experience and touch, such as leather, which is a warm and welcoming smell when you enter the store.”

Not only can physical stores create brand awareness, articulate backstory and generate new customers, ICSC research finds that a retailer’s online sales rise an average of 6.9% in a trade area when it opens a store there.

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Space Needs

While some brands shoehorn into showrooms as small as 600 square feet, most DNBs venturing into brick-and-mortar look for 1,000 to 3,000 square feet, though that’s highly dependent on product category, said Publicis Groupe chief commerce strategy officer Jason Goldberg. “Furniture, for example, takes more space than shoes,” noted the co-host of The Jason & Scot Show, a podcast about e-commerce and retail.

A few concepts have gone big, however. Wayfair opened its first large-format physical store in May, in Edens Plaza in Wilmette, Illinois, near Chicago. The two-story, 150,000-square-foot location, which replaces a former Carson’s department store, features 19 departments and employs more than 100. On opening day, Wayfair head of physical retail Adam Katz said the retailer anticipates expanding the format to other metro areas.

Typically, digitally native brands seek top properties with established traffic that are also adjacent to credible brands, Goldberg said. “They’re looking for a site that meets their target demographic requirements and is geographically close to their corporate headquarters” but those two factors can limit choices, he said.

Schanke noted: “If anything, digitally native brands have become a little more strategic and patient in looking for brick-and-mortar opportunities. The limited vacancy remains a challenge.” Should a desirable mall or high street space not be available, some DNBs simply hold off, she said.

While DNBs are signing leases for terms from one to 10 years, their leases are typically shorter than conventional retailers, said Ury.

A Growing List of DNB Stores

The list of DNBs opening stores is extensive. Among them are Kim Kardashian’s loungewear brand, Skims, whose first permanent store debuted in 3,300 square feet in Washington, D.C.’s Georgetown in June. Locations in Austin, Houston, Atlanta and Aventura, Florida, have followed. Canadian modular furnisher Cozey has opened a Toronto showroom and a 12,000 square-foot, two-story SoHo pop-up in New York City, which the retailer said is its hottest digital market.

Figs, which sells scrubs and healthcare-worker apparel, opened its second physical location in September, in Philadelphia. Termed the Figs Rittenhouse Community Hub, it covers more 4,200 square feet on two floors, about four times the size of its one-year-old Los Angeles store. Figs “anticipates expanding this strategy with the opening of additional stores in 2025 and beyond,” it said. The new store lies within two miles of five major healthcare institutions in the Philadelphia area, which has the fourth-highest number healthcare professionals in the U.S., according to Figs.

Online fashion retailer Everlane, known for its self-described “radically transparent” sourcing and pricing, has opened 11 stores and plans 30 to 40 more in the long term, the firm said. Sites include King of Prussia mall outside Philadelphia and Tysons Corner Center outside Washington, D.C., plus several high street locations. Boll & Branch, a luxury bed and bath product seller, has opened eight physical stores and plans another 10 in 2025, the company said. Hands-free footwear brand Kizik is opening 15 stores through 2025, contingent on the success of stores it opened in 2024, it said. Kizik operates a 1,645-square-foot store at Mall of America outside Minneapolis and a 1,812-square-foot store at King of Prussia mall. The brand also is expanding its wholesale business aggressively, it said.

Direct-to-consumer footwear retailer Steve Madden debuted its affordable brand, Dolce Vita, in a flagship store in SoHo in April 2023 and since has added locations in Montreal’s Royalmount, Florida’s Aventura Mall, Georgetown and Austin, Texas’ Domain Northside. Stores range from 1,536 square feet in Montreal to 3,165 square-feet in SoHo.

Ury is working with DNBs Portland Leather and modular furniture seller 7th Avenue to find multiple new spaces for each. Portland Leather has two stores in its namesake Oregon city and a new one in Austin and is seeking spots in the 1,200- to 1,800-square-foot range and outlet spaces of around 2,500 square feet, said Ury. 7th Avenue, which has nine showrooms in the U.S., including West Hollywood and Newport Beach in California, prefers 800 to 1,200 square feet.

Joining Forces

Some retailers are partnering with other brands to open stores. Apparel seller Revolve’s first permanent brick-and-mortar site also featured apparel and accessories from FWRD, another concept owned by parent Revolve Group. The two-story, 3,000-square-foot downtown Aspen, Colorado store evolved after both retailers operated pop-ups in a single Aspen space last December. It drove “substantial sales, brand-building and new-customer acquisition for both,” Resolve said. Collaborations between separately owned retailers are growing, too: Alo Yoga fitness fashion with headphone seller Beats by Dre, TravisMathew golf apparel with Ridge wallets and accessories, and Adidas sneakers and sportswear with Peloton exercise equipment.

Multiple DNBs have clustered brick-and-mortar stores on a stretch of Bleeker Street in New York’s West Village using Leap. Among them are Baobab, Frankies Bikinis, Joyfolie, Leset, Neom, Little Words Project, Ring Concierge and Set activewear. Leap helps online retailers open, manage and operate physical stores and locate likely customers. It typically holds the leases and then subleases to DNBs.

The Los Angeles area’s eclectic Abbot Kinney Boulevard is home to another cluster. Among the dozens of DNBs and direct-to-consumer concepts along the street are sneaker brand On, Farm Rio, Todd Snyder, Colorful Standard, sustainable concept store The Circular Library, Intimissimi and Nahmias. They join earlier digital-to-physical brands: Away, Warby Parker and Everlane. Most Abbot Kinney spaces range from 650 square feet to 2,500 square feet, Ury noted.

Digitally Native Headwinds

There have been headwinds. DNBs that operate physical stores and could face bankruptcy include Sleep Number, Rent the Runway and Peloton, according to an October 2024 report from Health Merchant Services that cited CreditRiskMonitor.

Other are putting on the brakes. Digital Brands Group said in January 2024 it planned to open as many as 50 stores funded by internal cash flow. It has yet to debut the inaugural store it announced for Texas’ Allen Premium Outlets. Its brands include Bailey 44, Harper & Jones and Sundry. Dallas-based Neighborhood Stores — which offered rotating collections of online brands like D.S. & Durga, Draper James and Primary — last year shuttered its four stores in Plano, Texas; Austin; New York City; and Newport Beach. Forma Brands — parent of Morphe, Jaclyn Cosmetics and Bad Habit — emerged from its January 2023 Chapter 11 bankruptcy later the same year with new private equity owners, including Jefferies and Cerberus. Jaclyn Cosmetics announced last month it’s shutting down.

“In general, brands that think of their go-to-market channel as a defining strategy, much less a competitive moat, don’t tend to work,” said Goldberg. They’ll find the tactic “isn’t likely to make them a winner by itself.” Other DNBs, said Schanke, have been overzealous in their growth or didn’t successfully leverage customer data.

In 2024, Placer.ai took a look at the progress of three digital natives that were early brick-and-mortar sensations, Warby Parker, Away and Allbirds. For Warby Parker, which opened its first store in 2013, sales increased 24% in 2024 over 2023, part of a string of annual successes derived from “perfecting the in-store channel” and “infiltrating the retail customer journey,” said Placer.ai. Allbirds is a stop on shoe-shopping trips, but customers don’t view it as a destination retailer, Placer.ai said. The chain, which opened its first physical location in 2018, closed 15 of its 60 stores in 2024. Away, which struggled mightily after luggage sales sank during COVID, recovered in 2024, adding new categories like soft-sided luggage and updating core products.

There are other obstacles. Unproven DNBs struggle to gain the acceptance of landlords at top centers. Well-funded, venture-capital backed brands could be considered national credit tenants, but that’s rare, said Goldberg. “New brands opening their first stores rarely have the brick-and-mortar operational rigor required to become a multisite operator,” he said. “If a brand is new, landlords at premium centers will want to make sure they’ve been open for multiple seasons and with plans for long-term growth.”

A prospect may have to demonstrate strength of brand to the landlord in a competitive battle with other DNBs and small tenants, Schanke added. “The best test for a landlord — and usually for a tenant — is a pop-up at a center’s location,” she said.

From a landlord’s point of view, while bankruptcies aren’t uncommon among DNBs, there’s plenty of demand from other DNBs waiting to fill any vacated supply, said Ury.

Future Still Bright for Rising DNB Concepts

Look for far more DNBs to dot the physical landscape in the coming years, particularly as developers add new space, Ury said. The escalating cost of internet advertising continues to drive digital merchants to invest in physical stores to achieve growth, he said. “They’d rather spend those tens of thousands of dollars on the retail space.” And look for even greater innovation as the e-commerce and physical worlds meld to offer new levels of brand engagement that can’t be replicated online, he said.

Consumers “no longer think of channels, just shopping, and shoppers now think of the physical store as an extension of their digital experience,” noted Pymnts’ 2024 Global Digital Shopping Index report. These “click-and-mortar” customers desire the same digital experience in stores as they do at home, giving preference to merchants offering in-store digital assists, it said. “Nearly four in 10 consumers now fit the click-and-mortar profile, making it the fastest-growing shopper segment worldwide.”

Increasingly, DNBs are finding growth via other avenues; mergers, co-branded deals, brand partnerships with established retailers, and pop-ups. Adore Me lingerie, for example, was bought by Victoria’s Secret. Casper bedding inked a wholesale deal with Mattress Warehouse, and Glossier cut one with Sephora as it strives to regain market share post-pandemic.

While the coasts have seen most DNB store expansion, major noncoastal markets like Phoenix, Chicago, Las Vegas, Denver and Minneapolis have grown significantly as DNB targets, and secondary cities like Charlotte and Nashville are under increasing consideration by these brands, said JLL’s Schanke.

Which brands will make it? Goldberg stated: “In the end, brands that have a connection with their target customer and excel at meeting those customers’ needs will endure and grow. Brands that chase trendy tactics to appease investors likely will not.”