Direct-to-consumer (D2C) startups in India are increasingly turning to brick-and-mortar stores to supercharge their growth. While these brands often begin online, physical retail outlets have proven to boost customer trust, enrich the shopping experience, and drive higher sales conversions. Below, we explore how opening retail stores has impacted growth for funded Indian D2C brands – with case studies including Mamaearth, Blue Tokai Coffee, and abCoffee – and share specific numbers demonstrating the benefits of going offline.
Why physical stores?
The debate on the extinction of retail stores with the advent of online e-commerce giants has witnessed the tide of time. While there is no clear winner, the scale seems to be inclining in the favour of the retail market. After burning mountains of cash in online sales, brands are navigating their way into the retail markets, reason: enhanced brand trust & most importantly, customer experience.
1. Tangible Presence Builds Credibility: A physical storefront signals that a brand is established and trustworthy. When customers can see, touch, and feel products in person, it creates a deeper connection and reinforces brand authenticity . This tangible experience helps D2C brands build stronger trust with consumers than online-only interactions can offer . In fact, research shows a “halo effect”: opening a store leads to a 37% average increase in the brand’s web traffic in that region, indicating higheroverall interest and awareness .
2. Immersive Customer Experience: Physical outlets let brands control the in-store ambience and provide hands-on service, elevating the customer experience. Shoppers can try products, get personalized advice, and enjoy instant gratification by taking purchases home immediately. Many D2C brands use their stores as experience centres – for example, Blue Tokai Coffee differentiates itself through a unique café experience that resonates with customers, not just selling coffee but letting customers savour the brew and atmosphere . This kind of experiential retail strengthens emotional connections and encourages repeat visits.
3. Community & Loyalty: Offline stores also serve as community hubs. Brands can host events, workshops, or simply encourage customers to linger, fostering a loyalcommunity. For instance, speciality coffee startup abCoffee strategically places outlets in corporate parks and neighbourhoods to create local coffee hubs, and partners with cultural events to engage with the community . The result is a remarkable 61% customer loyalty rate – nearly double the industry average – demonstrating how a great in-person experience drives repeat business.
Experiential Retail’s Role in Driving Conversions
Brick-and-mortar stores not only build trust but also deliver higher conversion rates and sales per customer through experiential shopping:
1. Higher In-Store Conversion & Spend: Shoppers browsing in a well-designed store are far more likely to buy than those casually scrolling online. As a case in point, menswear D2C brand Snitch found that its six new physical stores are converting 50–60% of walk-in visitors into buyers, versus just 3–4% conversion on its website . Additionally, customers tend to spend more in-person – Snitch reports 2–3× higher Average Order Value (AOV) at its stores compared to online orders . This dramatic lift in conversions and basket size underscores how an engaging offline experience (product trials, instant support, store ambience) can significantly boost sales.
2. Engaging All Senses: Experiential retail appeals to senses that online shopping cannot. Whether it’s a skincare brand offering testers and consultations, or a coffee chain with the aroma of fresh brews, these experiences create emotional triggers that drive impulse purchases and upselling. abCoffee, for example, emphasizes quick service with quality brews at its tech-enabled coffee kiosks – a model that encourages impulse stops for a cup of coffee. The brand has earned a 4.6-star customer rating on delivery platforms,reflecting the consistent satisfaction from its on-ground service quality . Satisfied in-person customers often translate into positive reviews and increased online orders as well.
3. Omnichannel Synergy: The offline-online integration is key. Many Indian D2C brands use stores not only to sell, but also to allow online order pick-ups, returns, or to sign up customers for their apps and loyalty programs. This omnichannel approach means the conversion-driving benefits of stores extend to digital channels too. For example, when a D2C beauty brand opens a new outlet in a city, it usually sees a spike in local online traffic and orders due to heightened brand visibility . In summary, experiential retail doesn’t cannibalize e-commerce – it fuels it, by converting more people into customers and increasing their lifetime value.
Success Stories of Offline Expansion in India
Several funded D2C startups in India have demonstrated how offline expansion translates to tangible business growth. Below are real-world examples, with metrics, showing the payoff of launching physical stores:
Mamaearth: Omnichannel Reach Strengthening Growth
Mamaearth, a personal care D2C brand, initially built its ₹1,000+ crore business online but has aggressively expanded offline to sustain growth. The company now embraces an omnichannel model: it opened its first exclusive store in 2021 and quickly scaled to 100 Exclusive Brand Outlets by late 2023 .
These branded stores span major cities (Delhi, Mumbai, Bangalore, etc.), bringing Mamaearth’s toxin-free products closer to consumers. Moreover, the brand has placed products in over 1.7 lakh (170,000) general trade and retail touchpoints across India – from pharmacies to beauty shops – massively increasing its offline visibility.
This physical push has started to pay off. Mamaearth’s presence in stores helped it capture market share in key categories; for example, its face washes and shampoos gained 125 basis points of market share in offline retail YoY as of Sep 2024 . The company’s Chief Business Officer noted that expanding across existing and new cities is a key lever of growth, underlining that **strengthening offline go-to-market capabilities is now a top priority for the next phase of growth]. In short, offline retail has gone from contributing only ~10% of revenue in Mamaearth’s early years to becoming a significant revenue driver today, validating the move to brick-and-mortar. The opening of the 100th store was hailed as a “testament to the brand’s commitment to making Mamaearth products accessible offline” – a strategy expected to boost sales further by reaching consumers who prefer in-store shopping or discovering the brand in malls.
Case Study – Blue Tokai Coffee: Offline Expansion Brewing Revenue
Homegrown coffee roaster Blue Tokai Coffee offers a compelling case study of offline expansion accelerating business growth. Founded as an online coffee bean seller in 2013, Blue Tokai began opening café outlets to give customers a first-hand coffee experience. This omnichannel strategy has exploded in recent years. In the last 18 months, the brand added 70 new cafés across 8 cities, more than doubling its store count . Presently, Blue Tokai operates over 110 outlets nationwide, including experiential coffee bars with live brewing and even roasteries on-site. The impact on revenue has been substantial. Blue Tokai’s net revenue jumped over 70% year-on-year to ₹127 crore in FY2023 , a surge attributed largely to its expanded café footprint and the high footfalls it generates. The co-founder and CEO, Matt Chitharanjan, revealed they have crossed ₹400 crore in annualized run-rate and are targeting ₹1,000 crore in the next three years on the back of aggressive offline growth . He noted that “most of the growth is coming from offline expansion, through our outlets” , as out-of-home coffee consumption is rising much faster than in-home consumption . Simply put,each new Blue Tokai café not only adds direct sales (each outlet averages ₹2–3+ crore annual revenue according to industry reports) but also bolsters brand recognition, driving online beansales and subscriptions. The company’s goal is to open ~80 stores per year going forward and reach 200 cafés in the next few years . Blue Tokai’s success illustrates how a D2C brand can leverage experiential retail (coffee tasting, cafe ambience) to build a loyal community and dramatically scale revenue. Its investor backing – from A91 Partners and others – further grew as the offline strategy proved effective .
abCoffee: Scaling a D2C Coffee Chain through QSR Outlets
Newer startups are also using offline-first models to disrupt markets. abCoffee, founded in 2022, is a tech-enabled speciality coffee D2C brand that chose to expand via quick-service retail outlets from day one. In just 20 months, abCoffee achieved a remarkable 25 outlets (“decks”) across India , and it isn’t stopping there – another 25 outlets are in the pipeline, targeting 50 stores by April 2024 and 150 by the end of 2024 . This frenetic expansion has been fueled by the brand’s mission to make premium coffee accessible everywhere at honest prices . By placing compact kiosks in corporate parks, high streets, and malls, abCoffee meets consumers where they already are, capitalizing on foot traffic and convenience.
The growth outcomes are impressive. abCoffee has built the highest-rated coffee chain presence (averaging 4.6 stars on food delivery platforms) and enjoys extremely high repeat patronage – a 61% customer loyalty rate that far exceeds industry norms . This loyalty translates to steady recurring revenue from its store network. The brand’s offline success has also attracted eager investors: Nexus Venture Partners led a recent $5 million round, valuing abCoffee at about $15 million – tripling its valuation in under six months . Notably, Nexus’ interest was driven by abCoffee’s efficient tech-integrated stores and the opportunity they see in physical coffee chains taking on established players . By focusing on grab-and-go outlets and strong community branding (e.g. sponsoring local events), abCoffee demonstrates how a D2C startup can rapidly scale through offline stores, using them to build brand awareness and lock in customer loyalty. Its trajectory – from 0 to 25+ stores and venture-funded growth in under two years – underscores the powerful growth lever that brick-and-mortar retail can provide even for a digital-native brand.
Key Takeaways
Opening retail stores has proven to be a catalyst for growth among India’s D2C startups. Physical outlets enhance brand trust by offering credibility and engaging, in-person experiences that online channels cannot fully replicate. These stores have become crucial touchpoints for customer acquisition and retention – driving higher conversion rates, larger basket sizes, and even boosting online sales through the halo effect. The experiences of Mamaearth, Blue Tokai, abCoffee and others show that an omnichannel strategy can unlock new customer segments (including those who prefer offline shopping), build stronger brand communities, and ultimately scale revenue faster. While launching stores comes with operational challenges, the measurable uplifts – from significant revenue jumps (e.g. 70%+ for Blue Tokai) to substantial offline sales contribution (e.g. ~50% for mature D2C brands) – make a compelling case for offline expansion as a growth strategy. For funded D2C startups eyeinglong-term success, the Indian market increasingly rewards those who blend the convenience of online with the trust and tangibility of offline retail.
Sources:
- Ginesys Blog – Why are D2C Brands Going Offline?
ginesys.in - Economic Times – D2C brands step up offline presence
m.economictimes.com - Business Standard – Mamaearth Q2 reports
business-standard.com - IndianRetailing – Blue Tokai Coffee Roasters Growth
indiaretailing.com - Startuppedia – Blue Tokai to Open 80–90 Stores Annually
startuppedia.in - Indian Retailer – abCoffee 25th Outlet News
indianretailer.com - Economic Times – Tech VCs Invest in AbCoffee
m.economictimes.com - Adgully – Mamaearth 100th Store Milestone
adgully.com
