Online to Brick-and-Mortar Trend Reaches Small Business Scale

By Small BusinessFOXBusiness

Dave Munson and his Saddleback Leather company have come a long way from their sold-off-the-back-of-a-truck-in-Mexico roots.

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Munson, and his wife Suzette, recently unveiled plans to expand their companies (his Saddleback Leather, hers Love 41) from their cyber space digs into permanent brick-and-mortar retail. In May, the duo and their team will open a 10,000 square-foot space in Fort Worth, Texas. “We wanted to have a flagship destination because we’re only online – and if we didn’t make any money in it, although we obviously really want to, it builds our brand even more and gives us the chance to share who we are (with our customers),” Dave said.

But is that a step backwards – going from online to physical retail?

Using data from the U.S. Census Bureau, the National Retail Federation shows the share of e-commerce sales as a percentage of total retail sales has increased from a little less than 3.5% in January 2008, to more than 6.5% in January of this year. Put another way, that’s an increase from about $35 million in ’08 to more than $80 million spent online at the beginning of this year.

Despite the growth of ecommerce, the entrepreneurial couple says the move is all about reaching the customer, in a physical sense.

“We can see the trend of Internet sales going up every year,” Suzette said. “Every year people are becoming more Internet buyers for Christmas rather than going to jam-packed malls. But we have a dedicated following – and one thing they’ve always desired is a destination where they can put their hands on our products.”

And that’s exactly what they hope to provide.

“Most of our sales are from people who see other people at work with one of our briefcases, or chase people down at an airport to ask, ‘Where did you get that bag?’ It’s even better when people can see our products in person,” Dave said.

Dave began Saddleback in the late ‘90’s after a futile search to find the perfect leather bag. Instead of settling on one he only “kind of” liked, he decided to make it himself with the help of leather makers in Mexico. Fast forward more than a decade, and today Dave’s bags are a hit, and he’s developed a cult following through his online shop. Pleased with their Saddleback success, in 2011, he and his wife decided to launch a second business aimed at giving back to society with the proceeds of sales, and thus, Love 41 was born.

Saddleback’s move to Main Street follows a bigger retail trend nationwide of startups and online stores literally opening up shop (think Birchbox, Warby Parker, Bonobos, Shinola and more).

While the jury is still out on whether moving to physical retail will be a win-win, Dave said he’s optimistic.

“I don’t think they’ll be tighter margins because we pay a significant amount for our website…so if we can sell at the same rate we’re selling online, it’ll be about the same cost…but we think it should increase sales by at least 10-15%,” he said.

A Chance to Interact and Give Back

The move to brick-and-mortar has been one the Munsons have “been meaning to do” for a while, and they’re excited to make the announcement about a decision they said was a relatively easy one. They don’t just want their new store to be a physical version of their online shops, they want it to be a destination. The location in downtown Fort Worth, Texas gives them an advantage, Suzette said.

“When you walk down there, you’ll hear all kinds of different languages because the people there come from all over the world, a tremendous amount of tourists come through there,” she said. “Because it’s hard to compete now with just a store, the good thing is we have product that stands out – but we want our customers to buy an airline ticket because they want to see Saddleback and Love 41 in person.”

The Munsons plan to offer most of the products they feature on their online stores in their physical store – plus new items like waxed canvas from Scotland paired with leather products, perhaps an exclusive bag from Love 41 only in the physical space, and down the line, more home-goods and furniture related pieces.

The couple also plans to add a few extras to the experience including a café, special art handmade by their factory workers with scraps of leather, and, at some point, a live production area so customers can actually see how the products are made.

And one of the reasons they’ve ventured into this new segment of retail is the philanthropic aim of both of their businesses.

Through Love 41, Suzette and her team work with different organizations and agencies for different causes, including one that works with impoverished women who are either HIV positive, former prostitutes, or survivors of genocide. The program teaches them to sew and tailor with the goal of holding a job or business of their own. Through Saddleback Leather Films, Dave works with his full-time filmmaker, Joe Callander, to make fun videos about the production of the products, but also to bring awareness to matters close to the heart: Like Type 1 diabetes – a disease from which Dave’s niece suffers.

Through the store, the duo hopes to further their philanthropic efforts.

“This is going to be an experience,” Suzette said. “We’ll have Rawandan coffee beans there to help employ Rawandan people. We also want to do a mini movie theatre with free popcorn that shows our Saddleback Leather Films projects to really show people what Saddleback Leather and Love 41 are all about.”

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