Digitally native brands Felix Gray, Ghost Democracy, Goodies, Lett and We The People are among the first tenants in this to-be-opened space. Leases average one year, with the goal of turning them into longer-term occupants.

A Westfield mall is opening a new section of its property with stores specifically for digitally native vertically integrated brands.

The Westfield Valley Fair mall in San Jose, California, is opening The Digital District in March, which will house eight stores for born-on-the-web brands. The stores are on average 1,100 square feet and have an average lease of one year, says Shawn Pauli, senior vice president of leasing operations at Westfield, who declined to reveal the lease length for specific retailers. The store spaces will likely rotate over time with new digitally native brands, Pauli says.

“The goal for the brands in The Digital District is that they are successful and eventually graduate into a long-term lease,” Pauli says.

Digitally native brands that will have a storefront include eyewear retailer Felix Gray, skin care retailer Ghost Democracy, housewares retailer Goodies, apparel retailer Lett and retailer of crowd sourced products We The People.

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“They can use the location to build brand awareness and test and learn new ways to grow their businesses in a meaningful way,” Pauli says.

These brands are among a growing pack of born-on-the-web brands that are opening stores. Within Digital Commerce 360 Top 1000, 54 web-only brands, or 13.7%, operate at least one store.

Plus, many other online-only brands are selling their products in other retailers’ stores. Razor brand Harry’s Inc., for example, announced this week that it will sell its products in Walgreens Boots Alliance Inc. stores—in addition to Target Corp., Walmart Inc., Kroger Co. and Meijer Inc., where it also sells its products.

Ghost Democracy decided to open a store in Westfield because shoppers like to touch skin care products and feel it on their skin, says founder Rex Chou.

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“The consumer journey for skin care can have so many touch points that being able to provide a physical experience can help enhance our digital presence,” Chou says. The mall is a great fit for Ghost Democracy because the space is evolving to be “an experiential destination,” he adds.

The Digital District is a part of the mall’s $1.10 billion expansion, which will encompass 500,000 square feet. Other stores and restaurants will be opened within the expansion throughout the year and into 2021, Pauli says. About 22 million consumers visit the mall each year, he says.

“Digitally native vertical brands are looking to open bricks-and-mortar locations because they provide a better a way to display and demonstrate products, grow brand awareness and engage more effectively with consumers,” Pauli says.

Ghost Democracy plans to drive its existing online shoppers to its store with in-store exclusive offers, Chou says. It also plans to allow shoppers to return online orders to its store, a crucial omnichannel service.

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Of the Top 1000 web-only brands with stores, only 35.2% allow shoppers to return online orders to a store. This is much lower than all Top 1000 merchants with stores, as 68.8% of them offer this service.

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