• Business Insider

Fabletics expands its brick-and-mortar operations

E-commerce company Fabletics, which sells women’s athletic wear and accessories, will nearly double its brick-and-mortar locations in 2017.

The company plans to open 12 new stores, which would increase its total number of brick-and-mortar locations to 30.

Fabletics was founded as an online-only store in 2013, but has been rapidly expanding its offline presence.

Its president publicly hinted at further expansion of brick-and-mortar locations early in 2016, saying that more store locations would help the company respond to changing consumer habits. Those changing habits are fueling the investment by retailers in building out omni-channel services that provide seamless customer experiences both online and offline.

Fabletics joins a growing list of e-commerce sites that are looking to expand or introduce brick-and-mortar locations. Those sites include Birchbox, Casper, and Bonobos. Rent the Runway, an e-commerce startup famous for its high-end dress rental service, announced earlier this week that it would use funding from a new financing round to help it expand brick-and-mortar locations after it signed a deal to open showrooms in Neiman Marcus store locations. The biggest e-commerce player of all, Amazon, also hinted at its brick-and-mortar ambitions when it opened up a convenience store in Seattle earlier this year that featured no cashiers or checkout lines.

Traditional brick-and-mortar retailers will continue to expand their online efforts as online retailers look to build out robust brick-and-mortar operations. This trend will also be driven by the small share of overall retail sales coming from e-commerce. Consumers still do the vast majority of their shopping at brick-and-mortar locations for a variety of reasons, so online retailers want a piece of that market. Meanwhile, legacy brick-and-mortar retailers want to tap into the rapid growth happening in e-commerce as brick-and-mortar sales face sluggish growth.

Luxury shoppers are highly coveted customers for brands and retailers, so it would behoove companies to provide a positive customer service experience in order to strengthen brand loyalty.

The top 10% of U.S. household earners (those taking home $120,000 or more annually) account for approximately half of all consumer expenditures.

This demographic’s growing preference for online shopping is changing the face of luxury retail, and it has significant implications for how brands target luxury consumers.

  • Discretionary spending among the wealthy is growing faster than for the average US consumer. Discretionary spending among those earning $120,000 a year or more is expected to increase 6.6% in 2016, reaching $406 billion, according to YouGov. Among the top 1%, it's expected to rise 10%. By contrast, discretionary spending for the average US consumer dropped 1% between 2014 and 2015.

  • Wealthy consumers are expected to spend the most next year on fashion, travel, and dining. Among these categories, spending on fashion (specifically, apparel, accessories, and handbags) will grow the most, increasing 6.9% to $37.4 billion (roughly 9% of total discretionary spending).

  • Luxury brands are over-allocating ad spend to print media. The seven largest US luxury brands collectively spent $133 million last year on holiday ad spending, 57% of which was allocated to magazine ads, according to the Shullman Research Center. But among luxury shoppers, recall rates are higher for digital ads.

  • There are signs that luxury shopping is less brand- and status-oriented than it once was. Luxury shoppers, like the average consumer, enjoy the convenience and low prices of online retailers like Amazon vs. shopping via official brand sites. Luxury shopping may become even more price-sensitive as millennials age.

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