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12 September 2019

Network Effect Research

Research finds half of a brand’s online sales attributed to brand exposure in their physical stores.

Australian designer fashion label Bec+Bridge was founded in 2003, but it wasn’t until 2018 that the company opened its first physical store in Westfield Bondi Junction.

For the first 15 years of its life Bec+Bridge was an online operation with brand representation in David Jones and selected boutiques, but as the business matured founders Becky Cooper and Bridget Yorston decided that the brand needed a dedicated physical presence.  In the past year they have grown their store presence to a further two locations, at Mosman on Sydney’s North Shore and also in Brisbane.

“If you think of any fashion brand you think of the lifestyle and you think of the store experience, and I think we were missing a bit of that,” says Yorston.

“Having the stores has really enhanced our brand and has helped us better understand the Bec+Bridge girl and grow customer advocacy.

“The physical and the online channels work together to drive the growth of the business, and also cater for unique customer behaviours and needs as our brand’s growth trajectory drives multi-generational customer profiles.

“Some customers, for example, will come into a store, try on a dress or jacket, and instead of taking it home will then order from us online, sometimes from their smartphones while they are still in-store. Others will do their research online and then go into a store and collect their purchase.”

According to David Lamond, Scentre Group’s Director of Research, the Bec+Bridge customer experience is part of a wider convergence phenomenon in retailing known as the “network effect”.

This is the cumulative impact of multiple physical stores, complemented by online channels, to heighten consumer exposure and awareness of the brand which inspires and motivates the customer to purchase.

In the network effect, the physical store is not just a place to make a purchase. It is an advertising and marketing platform which reinforces the brand in the mind of digitally sophisticated and connected consumers who are seeking retail inspiration and fulfillment across multiple channels. And they expect the experience to be frictionless.

Lamond says companies like Scentre Group are getting better at quantifying the network effect. Retailers are increasingly understanding that just because someone doesn’t purchase something when they are in the store doesn’t mean that a purchase is lost.

“The network effect reflects ‘see now, buy later’ behaviour, and there is strong evidence that the presence of each store will have a positive effect on the other stores, and raise the sales of all stores,” he says.

The network effect manifests in three outcomes: entering one store improves the chances a customer will buy from another location, or buy later online, while even seeing a store can be effective in generating ‘buy later’ behaviour if the store has good exposure.

Scentre Group has conducted proprietary research based on whole of market transaction data which quantifies this effect.

The research found that 50% of a brand’s online sales are attributable to recent exposure to their physical stores.

“The research reinforces that by having the right online presence, and the more seamless and frictionless the transition between the two, the better for the brand,” said Lamond

“The consumer needs constant reminders, so the more times they see the brand and are able to interact with it, the more influence it is going to have.

“Sophisticated modern retailers understand that they need a holistic investment strategy where the physical and online channels can complement each other.”

This has certainly been the experience for Bec+Bridge, and Becky Cooper says the stores have allowed them to have more control over the brand presentation, and how it is delivered as an experience to the specific needs of their customers.

Asked for her advice for any other online brands thinking of opening a physical store, she says: “It’s only been a brand enhancing experience.

“It doesn’t take away from online, it grows online and they work together.”

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