Rent is the new "CAC" (Customer Acquisition Cost).
A decade ago, when many digitally-native retail brands were first launching, an expression was popular in the industry: “Online CAC is the new rent”.
While traditional retailers were paying expensive high-street rent to acquire customers, eCommerce invested in online ads.
But now the expression flipped over: “Rent is the new CAC”.
With more and more brands online, online CAC is getting expensive. So even digitally-native retailers are planning to establish a physical presence, as a way to stand out from competitors and acquire new customers, possibly for cheaper.
In fact, because of the pandemic, rent prices have decreased, but people are gradually coming back to the high street.
We're seeing an omnichannel renaissance of physical retail.
The IKEA case is the most extreme example of this.
Started as a logistics champion, Ikea is now moving to the high street as part of its digital transformation process.
In order to push online sales, the company is planning to open an experiential showroom in central London (autumn 2023).
On top of directly selling small (high margin) items like kitchenware, the shop will allow customers to browse through Ikea furniture and order it online.
This is literally "physical" online customer acquisition! Do you think this trend will last?