Clicks to Bricks: How DTC Brands Build Physical Retail Stores That Scale (Growth Files Ep. 11)

A digitally native apparel brand spends five years building a loyal following online. Sales are healthy, the ad numbers work, and the founders finally decide it’s time for a store. A broker finds them a “can’t miss” spot: cheap rent, decent foot traffic, a six-month build-out. They sign the lease.

Eighteen months later, the store closes. The neighborhood was never where the brand’s actual customers lived.

This is the single most common mistake Rebekah Kondrat sees, and it has almost nothing to do with real estate.

In this episode of Growth Files, the CommerceShop podcast on commerce technology and AI, we sit down with Rebekah Kondrat, founder and managing partner of Rekon Retail, an agency that helps digitally native brands launch and scale physical stores:

In This Conversation

• Why the “online is cheaper” logic breaks down once acquisition costs rise
• What Warby Parker’s early bus tour reveals about testing a market before signing a lease
• The COVID era shift that quietly redefined what a physical store is for
• Why month one profitability is a myth, and what to measure instead
• What actually separates brands that scale to hundreds of stores from ones that quietly close
• Where AI and automation genuinely belong on a retail floor, and where they don’t

About the Guests:

From Clicks to Bricks: When Should a DTC Brand Actually Open a Store?

Sathish: Rebekah, thanks so much for joining us.

Rebekah: Thank you so much for having me. I’m really excited to be here. It’s funny, you called Warby Parker a “big brand,” and I started there when they had three stores. I still don’t quite think of them as big, but I suppose a company trading publicly with hundreds of locations counts.

Sathish: That’s the whole arc we want to get into today: how a brand goes from three stores to a real store footprint.

Rebekah: Neil and Dave built something incredible. I still wear Warby Parker glasses myself, actually. I own about 14 frames at this point. It might be a problem.

Sathish: Let’s start there. Many DTC brands begin online because it’s cheaper, easier to run, and scalable. When should they start thinking about a physical store instead?

Rebekah: It depends a lot on the product category. Take Warby Parker. They started online, but very quickly, Neil ended up running a showroom on his own dining room table. Even with a model where customers could get five frames shipped home to try for free, people still wanted to try frames on in person before committing, and ask someone, “does this make my nose look big?” The customer told them, pretty directly, that they needed to be in stores.

Beyond what the customer is asking for, there’s also a business tipping point:

• The brand already has product market fit
• It understands its customer, ideally with a clear customer avatar
• It’s hitting the point of diminishing returns on digital acquisition, whether that’s Meta ads, influencers, or TikTok
• The cost of acquiring a customer is no longer covered by that customer’s first purchase, it now takes two or three purchases to recover that cost

That’s the signal to look at other channels. It could be wholesale, it could be your own store. It depends on the brand, the customer, and how fast you’re growing.

The Biggest Misconception: Know What the Store Is For Before You Sign Anything

Sathish: What do you think founders get wrong about opening a store? Most assume it’s simply a fixed cost. What’s the actual misconception?

Rebekah: There are misconceptions on every side, but the biggest one, and I say this everywhere I go, is that founders think you find a space, lease it, and then figure out what the store is for. I have a saying: know what the store is for before you even go looking for a space, because that decision informs the layout, the size, back of house capacity, customer experience, and flow.

Going back to Warby Parker: before them, the entire optical experience was locked behind glass. An associate had to unlock a case just so you could try on one pair. That added friction and slowed everything down. Warby knew customers needed to walk in and start putting on glasses without talking to anyone first, so they planned the real estate around that: how many frame bays they needed, how big the store had to be, integrated lighting for the bays.

Knowing what the store is for means asking, before you sign a lease:

• What is its purpose?
• What data are we trying to gather?
• What has the customer already been asking for, especially in customer service chats, if we’re online only right now?

Sathish: So do the homework before signing.

Rebekah: It’s less “homework” and more internal reflection. You wouldn’t buy a house without knowing how many bedrooms you need. Have a workshop, get your team in a room with a whiteboard, and figure out what the store is for. Then go find the real estate and sign the lease, in that order.

How Physical Retail Has Actually Changed Since COVID

Sathish: Physical stores have clearly changed over the last decade or two. What’s different in your opinion?

Rebekah: I’ve been in retail for 20 years, so I’ve seen a fair amount of it. There was a lot of talk that retail was dead, that people had discovered they were fine buying everything online and would never go back. That turned out not to be true, and honestly, it was never going to be true.

The COVID Inflection Point

A much larger share of the population became comfortable buying utility items online, groceries, pharmacy orders, things you don’t need to touch or try first.

• Pre-COVID: more of a department store model, already declining for its own reasons around merchandising and product mix
• Post-COVID: people are fine ordering low consideration items online without a second thought
• What hasn’t changed: anything more personal, apparel for an occasion, beauty and skincare, an accessory like glasses, people still want to see and try in person

The Community Shift

Building before COVID but really taking hold with younger consumers:

• Gen Z, and now Gen Alpha, want to be part of something that reflects their values, even while spending their parents’ money
• Outdoor Voices tapped into that extremely well before it eventually shut down
• Alo Yoga has done the same, along with a handful of other wellness and self-care brands

For those brands, the store isn’t just there to introduce the brand, it’s a place for community to return to. That’s the arc: pre-COVID, the COVID inflection point, and now a retail resurgence, especially among Gen Z and Gen Alpha brands genuinely interested in physical space again.

Watch the full episode for the complete conversation on when to open a store, how to structure the investment, and what actually separates successful retail launches from failed ones.

Watch Now on YouTube

The Metrics That Matter Before You Open Your First Store

Sathish: Before a brand even goes looking for a new store, what metrics should they be reviewing?

Rebekah: Once a store is open, there are the standard ones: conversion, average order value. But before you open, it’s more about knowing where your customer already is, and, this will sound strange, where your customer should be.

Your First Ten Stores: Go Where Your Customer Already Is

• These are e-commerce brands, so they already have the data: top ten zip codes, top neighborhoods, age range, psychographic and demographic makeup
• Don’t put a store somewhere just because it’s a cool location with low rent a broker is excited about
• Go where your customer already is. That’s where the store is most likely to succeed, and where you’ll learn the most
• Passionate customers will tell you directly what worked, what didn’t, and what they wish you carried. It becomes something like an incubation lab

Store One: Always Your Own Backyard

• If you’re based in New York, do not open your first store in Los Angeles just because that’s where your customer data points you
• You won’t visit that store every week if it’s not near you, and you need to be there to learn

Stores Eleven and Beyond: Go Where Your Customer Should Be

• Places where your target demographic and psychographic exists, but your brand hasn’t taken hold yet
• You now have confirmatory data from your first ten stores about who your customer actually is, so you’re expanding into adjacent, similar territory

Before you call a broker, answer these questions first:

• What are our top 10 customer zip codes and neighborhoods, based on our own e-commerce data?
• What is the age, psychographic, and demographic profile in those areas?
• What has our own customer service and chat data told us people want from an in-person experience?
• What is the actual purpose of this store: discovery, conversion, service, community, or some mix?
• Would we be excited to visit this location every week ourselves?

Four Wall Profitable: Why a Store Should Never Be a Marketing Write-Off

Sathish: Should a founder go in expecting no ROI in year one, treating the first store purely as a learning experience?

Rebekah: I hear this a lot: “we think of our stores as marketing.” Fine, think of them as marketing if you want, but stores should be four-wall profitable. Full stop. I’ve opened stores where we realized partway through that we’d made a mistake and had to do real work to get it profitable, sometimes 18 months of work, but the goal is always four-wall profitability. It is not a marketing expense. It is not a write-off.

▶ Listen to the full episode to hear Rebekah break down exactly how DTC brands should evaluate their first retail location.

Why Going Where Your Customers Are Improves Your Odds

• You already know there’s a customer base there
• There’s no guarantee in retail, but this is how you stack the odds
• A store should be thought of as a revenue driving channel, not a cost center

What Makes a Store Different From E-Commerce

• Build outs can run several hundred thousand dollars and have to amortize and depreciate over time
• A store might not hit EBITDA profitability for around 12 months, but it should always be trending in a positive direction
• There’s a ramp up period: customers have to discover the store exists before you get the “halo effect,” where momentum builds and ripples outward
• Common mistake: brands spend so much on the initial build out that they get fatigued and skip the marketing dollars needed to get people in the door. Nobody’s coming to your secret store

Someone once described the difference between a store and an e-commerce channel as a cruise ship versus a speedboat, and I thought it was a great analogy. A cruise ship is enormous and moves very slowly. It takes forever to get up to speed, and once it’s moving, it’s extremely hard to stop, because of its sheer mass. A speedboat can accelerate almost instantly, but it burns through fuel fast and runs out of gas quicker because it’s smaller and moving faster. A store is the cruise ship. E-commerce is the speedboat.

Sathish: Has any store you’ve worked on ever been profitable in the first month?

Rebekah: Absolutely not. I had a founder once tell me they wanted to be profitable in 30 days, and I told them, don’t hire me if that’s what you’re expecting, because it isn’t realistic.

Why Month One Profitability Is a Myth

• Nike opening in a market with global brand recognition is a very different situation from a new brand’s first store
• For a genuinely new brand, even with strong e-commerce traction, making 30, 60, or 90 day profitability the actual goal will cripple that store quickly

Better Early Metrics Than Raw Revenue

• New versus existing customer mix walking into the store
• Average order value in-store versus online (human interaction drives upsells, the same way a fitting room associate keeps bringing you things)
• Event engagement: are sales during an event actually higher than a normal Tuesday would be?

What Separates the Brands That Scale From the Ones That Quietly Close

Sathish: Some brands open two stores and shut them down. Others, like Warby Parker, scale into the hundreds. What separates them?

Rebekah: Warby launched stores at a very different moment. They started with the Class Trip, a school bus gutted and retrofitted into a mobile glasses shop, driven around the country and parked for weeks or months depending on permitting. That data told them where to open permanent stores, essentially a pretest before ever signing a lease. That worked because DTC brands opening physical stores was still genuinely new at the time. Bonobos had just started. Everlane opened stores after publicly saying they never would. Now it’s an expectation, not a novelty, so that exact playbook probably wouldn’t repeat the same way today.

What’s Actually Universal

• The brands that succeed are the ones genuinely intentional about knowing their customer: where they are, who they are, how to talk to them
• I don’t love the word “fail” here. Testing a store and having it not work doesn’t mean retail isn’t for you, it means you learn and probably try again
• If you open somewhere because the lease is cheap, the customer base may not be there at all, or it may be so thin and underdeveloped that it takes enormous effort to get anyone through the door
• Brands that struggle are usually the ones that thought “there’s a space available, let’s take it” without being intentional about fit

Principles Over Playbook: A Framework for Retail Success

Sathish: Is there a system, or a set of best practices, that you’ve seen consistently work for brands with the same intention, to succeed with their stores?

Rebekah: People ask me this constantly: is there a playbook, Rebekah, that you can just hand someone as a PDF and their stores will succeed? I’m sorry to say, much like profitability in 30 days, that doesn’t exist. What I believe in strongly instead is principles over playbook, because principles keep you malleable while a playbook goes stale.

Principle 1: Go where your customers already are, starting with your own backyard. Use your e-commerce data (zip codes, demographics, psychographics) to pick your first ten locations, and put store one somewhere you’ll actually visit every week.

Principle 2: Know what the store is for before you look at real estate. Define its purpose and customer journey before you ever call a broker.

Principle 3: Build MVP operations from day one. Know your inventory levels and have a tracking process, even a spreadsheet. A disorganized back of house becomes a disorganized customer experience.

Principle 4: Define the customer experience on purpose. Don’t stop at register training. Write down the human discovery process: welcome, discovery questions, recommendation.

Principle 5: Test, iterate, and stay agile. Consumer behavior keeps shifting across generations. Principles adapt. Playbooks go stale.

The Most Common Mistakes When Scaling Past Store One

Sathish: What about brands scaling rapidly, say from one store to 10, 20, or 25? What mistakes show up at that stage?

Rebekah: There’s a time and a place for rapid growth. Warby Parker was opening 20 to 25 stores a year at one point, and there’s nothing wrong with that pace.

Mistake 1: Treating Every Store Like It’s the First

• No codified operations manual
• No baseline employee policies: dress code, vacation policy, the basics
• No consistent design language or concept: materials, flooring, lighting, paint colors
• What’s repeatable should be documented, even if you tweak it later. Your first store is always expensive. Every store after that should be a lot less expensive, if you’ve built the systems to support it

Mistake 2: Rushing Because of Investor Pressure

• This mostly happened a few years ago, especially right before COVID, when private equity or venture capital came with a mandate to “use this money to open stores.” Retail specific VC money is much harder to come by right now
• Brands under that pressure would sign whatever lease was available just to hit a deadline, abandoning the principle of going where the customer actually is
• That’s often where you see stores close within a few years, or at the end of their lease term

Local Marketing: How Much Should You Actually Spend?

Sathish: You mentioned marketing needs to support a new store. Is there a specific percentage of budget you’d recommend for local marketing?

Rebekah: I don’t have a hard number, because it comes back to that same first question: every brand is different.

• Clients who get most of their discovery from TikTok need to be on TikTok
• Clients whose customer base skews older need to be on Instagram instead
• Brands the size of Nike can afford to be everywhere. Brands with limited bandwidth need to pick a channel or two

Know where your customer actually is first, and let that inform the marketing budget, not the other way around.

Bringing Apple and Starbucks Level Customer Experience to a Two Store Brand

Sathish: You’ve worked with Starbucks and Apple, both known for obsessive customer experience. Can a brand with one or two stores realistically bring that same level of experience, or should they focus elsewhere first?

Rebekah: Absolutely, and it’s not as hard as it sounds. Apple employs an entire team of instructional designers, you don’t need that. Most brands train employees on the register and the product, here’s the feature, here’s the benefit. What usually gets left out, because it doesn’t really exist in e-commerce, is the human discovery process.

The Discovery Process Worth Writing Down

• Welcome the customer in
• Ask a question or two to understand what they’re looking for
• Figure out if they’re shopping for themselves or someone else
• Figure out if they’re in a rush or have time for a fuller experience
• Recommend accordingly

That process can live in something as simple as a written customer experience document every new employee gets walked through. It comes down to having a real, clear brand personality: if your brand were a person, what would they be like? That’s what the in-store experience should feel like.

Retail’s Turnover Problem: Why Culture Has to Be Written Down

Sathish: Is this harder in retail specifically, given how much employee turnover there tends to be?

Rebekah: Culture is created by people, so if turnover is high, that’s exactly why documentation matters. The last time I looked at Gallup’s survey on the state of the American workplace, frontline retail and hospitality tenure was something like six months on average. Store manager tenure was a bit longer, closer to two years, still short compared to a typical corporate tenure.

What a Founder Should Actually Do

• Don’t feel like you need to hire a six figure VP of retail poached from Nike right out of the gate
• Do hire an experienced frontline general manager who knows how to hire and train
• Build real lines of communication between the store and headquarters. A Slack channel nobody watches doesn’t count
• A codified customer experience document lets a store manager train someone new in an hour or two of role play, instead of reinventing onboarding every time

Matching Your Store Design to Your Actual Brand Identity

Sathish: DTC brands also want their website experience to translate into the store. How should that blending actually happen?

Rebekah: DTC brands usually already have a fairly fleshed out visual identity because they started as websites: logo, logo lockups, brand kits. They also already understand who their customer is. Feeding that existing brand and customer data directly into the store design process matters more than people think. Some brands worry that giving a designer too much information boxes them in creatively. It’s actually the opposite, hand over everything you know so the designer can build something genuinely tailored.

I worked with one brand whose website leaned distinctly feminine: light colors, soft pastels, mostly imagery of women. For their physical store, they wanted something masculine instead: wrought iron fixtures, harder lines. I asked them directly, if I shopped your website and then walked into your store, would I recognize it as the same brand? They said, “you’re right.” When we dug into their customer data, the split was close to even, maybe 51 to 52 percent female, nowhere near as skewed as their branding implied. That launched a bigger conversation about whether their brand identity should be more neutral. Staying open to learning something new about your customer during the design process, rather than assuming you already know, is genuinely valuable.

Where AI and Automation Actually Belong in a Physical Store

Sathish: What about technology like beacons that detect when a customer with an abandoned cart walks into the store? Is that something brands should implement, or is it too much of a privacy concern?

Rebekah: I’m very online myself, so my instinct is “they probably have my data already anyway,” but that’s exactly why the answer depends on knowing your customer. Some customer bases will genuinely be uncomfortable with that kind of tracking, others won’t think twice. Understand your specific audience’s tolerance before you implement anything like that.

Where AI Genuinely Helps

• Speeding up low value interactions like checkout: name, email, address, in four seconds instead of a human typing it all in, similar to Shopify’s Shop Pay
• Predictive inventory allocation: “you sold more tank tops this month last year, let’s stock more this time”

Where It Shouldn’t Go, at Least Not Yet

• Replacing a human sales associate. I want a person to answer “does this look okay?”
• A robot bringing clothes to a fitting room. Roughly 70 percent of apparel purchases still happen in a physical store, and that human interaction is part of why

The Future of Retail: Emotional Connection, Not Robots

Sathish: How do you see the future of retail shaping up with all these technology changes?

Rebekah: It’s interesting watching my own kids. My Gen Alpha daughter is currently wearing wide leg jeans and a flannel shirt, basically what I wore in middle school, a reminder that trends circle back. I don’t think retail is heading back to the heyday of the department store, that era has permanently evolved, but I do think the kind of deeply personalized service you see in a show like The Marvelous Mrs. Maisel, where staff know a customer by name and preferred lip color, is exactly what Gen Alpha is drawn to.

I was at a conference in early May and lost count of how many times founders used the phrase “emotional connection with customers.” The next decade of retail leans back into that emotional, service driven connection, just executed differently, more communication through channels like WhatsApp or text, wherever younger customers already are.

Sathish: Do you see robots eventually working the floor, restocking shelves, that kind of thing?

Rebekah:

• Utility retail (pharmacies, grocery stores, convenience stores): sure, a robot stacking soup cans is fine
• Specialty and boutique retail, where most DTC brands live: no robots on the sales floor
• Fulfillment and warehouses: more robotics is coming, we’re already seeing it with companies like Amazon, but it stays invisible to the customer for a while yet. We’re not at the Jetsons level

The Roadmap for a DTC Founder With Limited Capital

Sathish: Last question. If you were advising a new or midsize DTC founder with limited capital who wants to open a store, what’s the roadmap?

Rebekah: Start with the principles we’ve already talked about: know where your customer is, know what the store is for. That foundation doesn’t change regardless of budget.

Ways to Control Build Out Cost

• Look for a second generation “vanilla box” space that already has walls, paint, flooring, and decent lighting, so you’re mainly just fixturing it
• Find a landlord willing to offer a tenant improvement allowance to cover some or most of the build out, more common in malls than on the street, but not impossible to find on the street
• Don’t compromise on the actual location just because a deal looks good. There’s usually a reason it looks that good

What Build Outs Actually Cost

• Vanilla box approach: around $40,000
• Mid-range build: around $300,000
• High end build: up to $5 million
• Most DTC brands land closer to the lower end

Sathish: Is there a revenue size where this approach really starts to make sense?

Rebekah: Based on the past five or six years, the sweet spot is somewhere between $10 million and $100 million in revenue. That’s not a hard rule, but past $10 million you typically know enough about your customer, have enough data, and likely have real product market fit. Maybe you’ve even tested a pop-up or a shop-in-shop with a retailer like Nordstrom already. At that point, you’re ready to sign a real lease and build a real store.

What DTC Founders Must Do Before Opening a Store

1. Mine your own e-commerce data first. Pull your top 10 customer zip codes, along with the age, demographic, and psychographic profile behind them, before you talk to a single broker.
2. Open your first store in your own backyard. You need to be able to visit it every week and learn from it directly.
3. Write down what the store is for. Purpose, customer journey, and what you’re trying to learn, all before you sign a lease.
4. Build MVP operations and a design language you can document. Even a simple inventory spreadsheet and a documented customer experience script make every store after your first meaningfully cheaper and faster to open.
5. Plan for four wall profitability, not a 30 day miracle. Track new versus existing customer mix and in-store AOV lift early. Full profitability takes time, but the direction should always be positive.

Thinking About Your First (or Next) Store?

• Ready for the retail side? Rebekah and the Rekon Retail team work with digitally native brands on the clicks to bricks transition: strategy, build out, and operations.
• Not sure you’re ready yet? CommerceShop’s growth audits can check the prerequisites first: whether your acquisition costs have crossed the tipping point Rebekah described, and whether your customer data is organized enough to answer “where does our customer already live.”

A conversation like this can help you get clear on:

• Where your existing customers actually live, and whether your first ten store locations are obvious once you look at the data
• Whether your digital acquisition costs have already crossed the tipping point that makes a physical channel worth exploring
• What “four wall profitable” realistically looks like for your specific category and price point