Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / Why CMOs Are Rebuilding Brick-and-Mortar for the Digital Native
Transcript
- Lucas: So Warby Parker opened a new flagship in SoHo about three weeks ago. And on the surface, it looks like any other premium eyewear store — warm lighting, walnut shelving, a try-on bar. But the interesting part is what’s missing. Luna: What did they leave out? Lucas: A checkout counter. There’s no cash wrap. If you want to buy, you scan a QR code on the frame display and the glasses show up at your home. The store is designed purely for education and try-on. The transaction happens online, even if you’re standing inside the store. Luna: That’s a pretty extreme take on showrooming. But I wonder — does it actually improve the numbers? Lucas: That’s exactly what I wanted to dig into. Warby Parker has been public since 2021, and their physical stores have what they call a ‘halo effect’ on their e-commerce business. They’ve measured that opening a new store lifts online sales in that zip code by about 15 to 20 percent within six months. Luna: So the store is essentially a marketing expense disguised as a retail location. Lucas: Right. And the CMO is the one making that case in the boardroom now. Because historically, stores were a revenue channel, and marketing was a separate budget. But the new model treats the store as a conversion tool for the digital funnel. The store’s job is to reduce friction — let you touch the acetate, feel the hinge quality, try on twelve frames in five minutes — and then capture your data. Luna: And that data is gold. Warby Parker uses heat-mapping sensors in the store to see which frames people pick up most. That feeds back into their online recommendation engine. It’s a closed loop between physical behavior and digital personalization. Lucas: Exactly. And they’re not alone. I was looking at Glossier’s recent store openings. They’ve started doing something similar — their new Seattle location has no point of sale terminals. Every purchase goes through a mobile checkout that the staff helps you with on an iPad. The staff’s incentive isn’t transactions; it’s how many customers they enroll in the loyalty program. Luna: So the employee shifts from a salesperson to a customer-acquisition channel. That changes how you train them, how you compensate them, how you measure them. It’s a whole org change. Lucas: And it’s happening across categories. I talked to a retail analytics firm called RetailNext, and they told me that in 2025, brands that opened stores with a ‘digital-first’ design — meaning no cash wrap, mobile checkout, heavy signage around QR codes — saw about 30 percent higher customer lifetime value from shoppers who visited that store compared to shoppers who only bought online. Luna: Because the store visit essentially pre-qualifies the customer. They’ve already had the tactile experience, so they’re less likely to return the product. Return rates drop. Lucas: Right. And the CMO can now make a cost per square foot argument that includes online lift. So the store’s value isn’t just the revenue it generates in its four walls. It’s the online revenue in the surrounding area, the data it feeds into the CRM, the reduction in return rates, and the brand equity from having a physical presence in a high-traffic neighborhood. Luna: But not every brand can pull this off. If you’re selling a low-consideration product — like, I don’t know, basic T-shirts — the cost of running a store might not justify the halo. You need a product that benefits from physical interaction. Lucas: That’s the key. The brands that are succeeding with this model — Warby Parker, Glossier, Casper when they were trying it, even Allbirds — they all sell products where fit, feel, or texture matters. The store solves a problem that the website can’t solve. If the website already works perfectly, adding a store is just a cost center. Luna: And that’s where the CMO’s role becomes really interesting. They have to decide: is our store a profit center or a marketing channel? And the answer determines everything from real estate strategy to staffing to tech stack. Lucas: And the CMO is increasingly the one leading that decision, because the line between retail and marketing has blurred. You mentioned the heat-mapping data earlier — that’s essentially a marketing analytics tool embedded in a physical space. The same metrics that a digital marketer uses — click-through rate, conversion rate, average order value — now have physical analogs. Dwell time in front of a display is like time on page. Pick-up rate is like engagement rate. Luna: We should do a whole episode just on the metrics translation between physical and digital. But for now, I want to come back to the Warby Parker flagship. You said no checkout. How do they handle returns? If I buy online and want to return in store, does that work? Lucas: Yes, they do accept returns in store, but the process is still digital. You show them the order confirmation on your phone, they scan it, and the return is processed through the system. They don’t have a cash drawer, so any refund goes back to your original payment method. The store is really just a touchpoint for the broader digital operation. Luna: It’s almost like the store is the physical front end of a headless commerce architecture. The back end is all digital, but the interface is a person and a physical product. Lucas: That’s a great way to put it. And I think the next evolution is going to be stores that not only don’t have checkout, but don’t even have inventory. You try on the display model, and the item ships from a fulfillment center. That’s what companies like B8ta and Neighborhood Goods were experimenting with a few years ago, but now the big brands are picking it up. Luna: So the store becomes a glorified fitting room with a data capture system. That’s a pretty dramatic shift from the traditional retail model where the store was the primary revenue source. Lucas: And it forces a different kind of marketing leadership. If you’re the CMO at a company like Warby Parker, you’re not just responsible for ad campaigns and brand messaging. You’re responsible for the in-store experience design, the digital integration, the data flow from physical to online. Your job is now architectural. Luna: You know, this reminds me of something I read about Nike’s House of Innovation stores. They have these ‘scan to try’ features where you scan a QR code on a shoe, request your size, and it gets delivered to a fitting room. All the data goes into their membership system. The store is essentially a data collection engine. Lucas: Nike’s been doing this for a while, and they’ve said that members who engage with the app in-store spend about 40 percent more than non-members. So again, the store is a channel for customer acquisition and data enrichment, not just a place to sell sneakers. Luna: So where does a CMO start if they want to move in this direction? What’s the first step? Lucas: I think the first step is to stop thinking about the store as a separate P&L. You have to build a model that attributes online revenue to the store’s existence. Warby Parker does this by looking at zip codes. You can do it with geo-experiments — open stores in some markets, don’t open in others, and compare the total revenue in each. That gives you the halo. Luna: And once you have that model, you can make a different kind of real estate decision. You might open a store in a neighborhood that isn’t profitable on its own, but because it drives online sales to the surrounding area, the combined return is positive. Lucas: Exactly. And that’s a cmo level conversation because it’s about customer behavior and marketing attribution, not just lease terms. The CFO will want to see the unit economics, but the CMO is the one who can explain why the store’s value isn’t captured in four-wall EBITDA. Luna: It’s interesting that you bring up the CFO. Because I think the CMO’s ability to make this case depends on having really good data infrastructure. If you can’t tie a store visit to an online purchase, you’re just guessing. Lucas: And that’s where many brands fall short. They have the store, they have the website, but they’re not connected. The customer has to be the same across both. That means a unified CRM, a loyalty program that works in-store and online, and a data layer that captures in-store events and matches them to digital profiles. Luna: So it’s not just a marketing project. It’s a technology project, an operations project, and a people project all at once. Lucas: Right. And I think that’s why you’re seeing more CMOs with titles like ‘Chief Experience Officer’ or ‘Chief Growth Officer’ — because the role now spans all those functions. If you’re a CMO who only thinks about advertising, you’re going to struggle in this environment. Luna: If these marketing conversations have sparked something you’ve actually used at work or even just thought about differently, that’s exactly why we make the show ad-free. We keep it simple because listener support makes it possible. Lucas: Yeah, it’s a small thing that has a big impact. If you’ve gotten value from episodes like this one, consider supporting the show at buy me a coffee dot com slash fexingo. It helps us stay independent and focused on the details that matter. Luna: And speaking of details — we were talking about how stores are becoming data engines. Let’s come back to that heat-mapping data. What are CMOs actually doing with that information once they have it? Lucas: Great question. So one thing I’ve seen is brands using in-store heat maps to inform their product assortment online. If a particular frame color gets picked up a lot but doesn’t sell well online, they might adjust the photography or the description. Or they might create a ‘most tried-on’ carousel on the website. It’s using physical behavior to optimize digital content. Luna: That’s smart. It’s like A/B testing, but with real-world interactions. Lucas: Exactly. And the same data can be used for personalization. If a customer tries on a specific frame in store, and then later browses online, the site can surface that frame and recommend similar ones. It’s the same logic as retargeting, but based on physical behavior rather than clicks. Luna: So the store becomes a richer signal source than digital. Because in-store behavior is more deliberate. Picking up a physical object requires more intent than clicking a link. Lucas: Right. And that’s why the CMO should be pushing for this integration. The data is more valuable, and it’s proprietary. Third-party cookies are going away, but your own store data is yours forever. Luna: That’s a powerful argument for building physical retail, even if the economics are tough. The data asset alone might justify the investment. Lucas: I think we’ll see more legacy retailers try to retrofit their stores to capture this data. But it’s harder to do with an existing store that has a cash wrap and a traditional layout. The new entrants have an advantage because they can design from scratch. Luna: So the message for CMOs is: if you’re opening a new store, think of it as a marketing channel first, a sales channel second. And if you have existing stores, start thinking about how to retrofit them to capture data and drive online conversion. Lucas: And measure the halo. That’s the part that really changes the conversation with the CFO. If you can show that a store drives $2 of online revenue for every $1 of in-store revenue, suddenly the store looks a lot more valuable. Luna: It’s still early days for this model. I’d be curious to see how it evolves over the next couple of years, especially as more brands get comfortable with the idea of a store that doesn’t sell anything. Lucas: Yeah, I think we’ll look back at the traditional store as an artifact of a time when digital and physical were separate. The CMO’s job now is to erase that line.