Why a Warby Parker flagship retail store is a big moment for online brands (video)

A few years ago when I floated the idea that Amazon (s amzn) would one day experiment with the idea of a retail store in order to project the Amazon experience, it was universally ridiculed. I am still standing behind that idea, especially now that Amazon has created a slew of Amazon-branded products: Kindles of many types, possibly a phone sometime in the future, Amazon video and music services and most importantly Amazon publishing. Google (s goog) might be eying a move into brick and mortar store, too. This show-rooming trend is going to gather momentum in years to come.

And while Jeff Bezos thinks about the retail experience, some of the younger, more nimble and fashionable online brands are ready to experiment. The first one — Warby Parker, the online eyewear company that is challenging the existing giant Luxotica, which in turn has started copying Warby’s online tactics for its brands like Lenscrafters. The upstarts from New York are not taking it lying down and have just opened their first physical flagship store (beyond its showrooms) at 121 Greene Street in Soho district of New York.


But this isn’t just another retail store, co-founder Neil Blumenthal told me in a conversation a couple of weeks ago. Instead, the company is using sensors, Wi-Fi and other new technologies to understand how people use its retail space, taking that data and marrying it with its online sales trends and other information. As a result it can come up with unique business trends that not only lead to more interesting pricing models but also help give its design and sales teams vital intelligence.

“It is very clear to us who we are,” Blumenthal said. “We are a lifestyle brand that sells chiefly to consumers. It is a hundred year old concept and we use the same traditional metrics, because there isn’t really any fiddling with the business model.” So how should one value Warby Parker? How about like Michael Kors, Blumenthal countered. (The stock market places a value of $11.4 billion on Michael Kors fashions, about 22 times next year’s ending March 31, 2014, earnings of $2.45 a share, or 4 time sales of about $2.83 billion.)

Warby Parker wants to go where no online brand has gone before — toe-to-toe with offline brands. And while the business might be traditional, there is nothing traditional about the Warby Parker approach. The company is slowly bulking up its data group and now with three years of data plus a deeply ingrained design aesthetic, Warby Parker can do things non-Internet native companies like Luxotica can’t do — just yet. (It is one of the reasons we love these guys and invited them to speak at our RoadMap conference in 2012, where the company first talked about its offline-online philosophy. To learn more about RoadMap 2013 see here)

Warby Parker is building the next generation retail experience for a quantified society, one that marries the digital and the physical, data and emotion. I wouldn’t be surprised if 121 Greene becomes the destination for offline companies looking to think differently.

Neil is convinced we are going to see more brands jump from online to offline, giving the old guard some serious headaches. I agree with him and if I wasn’t in love with what I do, I would be building such a business. Blumenthal, who recently raised a boatload of money and signed up folks like J. Crew CEO Mickey Drexler, feels that the recent trend of venture capitalists backing away from commerce is just plain silly.

“More people are talking online today than yesterday,” he said. “There is a lot of money to be made in e-commerce and we are a company that is going to do that.”

Here is my video conversation with Neil, captured on my RX-1 without the help of a mike. 😉