Why the Digitally Native Allbirds is Leaning Into Physical Stores

Allbirds may have started its life online, but the footwear brand is investing more heavily in its physical store fleet.

The eco-friendly brand more than doubled its sales via physical stores in 2021, growing 112% to $52 million. The company also opened 13 new stores in 2021, bringing its total store count to 35 stores. These 13 new stores, in places such as North Carolina and California, contributed to almost half (43%) of the total physical retail dollar growth in 2021.

Overall, in-store sales were the biggest driver of growth in Q4, Allbirds CFO Michael Bufano said in a call with investors.

While it is typical for brands to lean into digital channels, many companies are making the leap to a strategy focused on physical store expansions. For example, Rihanna’s lingerie brand Savage X Fenty is opening five stores across the U.S. this year. Digitally native glasses company Warby Parker has also embarked on a store opening store spree in the last few years. 

As COVID-19 cases level off, Allbirds said that store traffic and sales are picking up to pre-COVID sales levels. Allbirds now expects new stores in the U.S. to hit between $3.5 million to $4.5 million in gross sales this year.

To be sure, digital sales are still important for the brand, accounting for over 80% of sales in 2021. However, having a true omnichannel experience is crucial for customer retention. In 2021, omnichannel repeat customers spent 1.5x more than single channel repeat customers at Allbirds.

When it comes to wholesale partners, Allbirds is deliberate in its retailer selection process.

“These partners need to be very brand additive to us,” Allbirds cofounder and co-CEO Joey Zwillinger said in a call with investors. “We’re going to show up in premium locations, even within premium retailers. So this is focused on showing up in front of the right people and meeting a lot of new people.”

In 2018, Allbirds partnered with Nordstrom for a concept pop-up showcasing five new colors beyond the brand’s full range of men and women’s styles. Programs like these, Zwillinger said, that help increase brand awareness and inform consumers about the quality of the brand’s perfomance running shoes.

“In 2022, we expect that sales from these partnerships will be modestly accretive,” Zwillinger said. “And in terms of profitability, the overall impact will be slightly dilutive to overall gross margin and be cash flow neutral to positive as we support these early efforts with a small team internally.”

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