From start-ups to mainstays, online retailers are looking at brick-and-mortar as part of a new strategy.



NEW YORK (TheStreet) - From high fashion brands like Chanel to mainstream chains like Target(:TGT), brick-and-mortar retailers have widely adopted pop-up stores within the last several years.

These miniature shops, which are only open for several weeks before disappearing, boost brands looking to pick up market share in a geographic area they're not already present, especially during the holiday season.

But this year, pop-up stores are serving another purpose -- attracting shoppers to retailers' dot-com initiatives.

Earlier this month, eBay(:EBAY) opened pop-up locations in New York, San Francisco and London. Its London store displayed products available online, allowing shoppers to scan barcodes of items and buy products through mobile phones. In New York and San Francisco, the company set up storefronts with digital screens that included scan-able price tags. Gilt Groupe's Park & Bond pop-up shop

Wal-Mart(:WMT), in turn, started its own pop-up experiment, opening two test stores in California malls designed to promote its Walmart.com brand. These stores, which will remain open until the end of the year, carry a select mix of toys and consumer electronics. Shoppers can also sit down at stations to order and browse additional products from Walmart.com on tablets and laptops.

"These stores will allow customers to have one continuous experience and are a way to bring exposure to Walmart.com and see a different offering from the brand," said Lorenzo Lopez, spokesman at Wal-Mart.

It's not just established retailers that are looking to get into the game, as start-ups have jumped in as well.

Flash sales site Gilt Groupe worked with GQ Magazine to open a two week pop-up store in New York's trendy Meatpacking District for its full priced men's line Park & Bond. The store includes items like denim, new and vintage watches, gadgets and grooming products.

"It was the idea of bringing the online experience to life," said John Auerbach, president of Park & Bond.

Online eyeglass shop Warby Parker has launched a temporary holiday store in a refurbished garage including the brand's retro chic eyewear and a rotating selection of offbeat gifts like customized hats and art-focused books and magazines.

And in New York's Chelsea neighborhood, retail outlet A Startup Store is selling wares from online shops like beauty site Birchbox, contemporary art retailer Artspace and fashion jewelry site BaubleBar.

Yet the question remains, with brick-and-mortar sales lagging e-commerce significantly, why are online players increasingly choosing to go offline?

It's all about convergence, say industry analysts.

"Offline and online must work hand-in-hand in 2012 to be successful," says Marshall Cohen, chief industry analyst for the NPD Group, a consumer research firm.

Brands are also looking for ways to bulk up impulse purchases, which typically are more prevalent in-store than online, Cohen said.

One hurdle that online retailers face has been the inability for consumers to test and try on merchandise, which is solved through temporary physical locations.

Retailers are using pop-up stores to "get a sense for visual merchandising and what the brand stands for," said Sucharita Mulpuru, an e-commerce analyst with Forrester. "It's a sensory experience, from smell, to sight, to hear, to touch -- the Web can't deliver any of those experiences except sight."

So far, the integration of online and offline shopping has been relatively simple with retailers offering features like in-store pick up for online purchases. And while pop-up stores are the next step to digital and physical integration, some pure play e-retailers like Amazon(:AMZN) are even rumored to be looking at permanent brick-and-mortar outlets.

"Brick-and-mortar, e-commerce, mobile and social must be complete and seamless," said NPD's Cohen. "Retailers can't just send out an e-mail and expect shoppers to come into the store."

--Written by Olivia Oran and Jeanine Poggi in New York.



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