From ecommerce to bricks and mortar: the new direct-to-consumer trend
Direct-to-consumer retail has seen many changes over the past 20 years. With the digital boom, marketers had to convince direct-to-consumer brands of the benefits of ecommerce with the message: If you want to increase revenue, you need to be online. And it worked – the recent level of growth in online sales dwarves total sales growth (by 7.4 to 1 in 2016).
Digital also opened opportunities for smaller brands and start-ups to sell direct-to-consumer with no (or few) overheads and expenses – all they need is an ecommerce website and something to sell. This freedom to approach retail differently has led to the latest trend in direct-to-consumer retail, which appears to be a reversal of the previous offline to online trend – brands that are doing well online are starting to create a physical presence. Considering the fact that “multichannel shoppers spend three times more than single-channel shoppers”, the brands adopting this trend could be onto something.
Why is DTC so successful?
As traditional retail continues to struggle, with store closures a common occurrence, why is it that direct-to-consumer brands such as Dollar Shave Club and Bonobos have become such big news?
Direct-to-consumer brands do more than just sell. Every step of the chain is kept in their control, from design to manufacturing.Having such close control means that the brand’s vision can be undiluted and offered to the consumer directly and without compromise. The most famous example of direct-to-consumer success is the Dollar Shave club, a subscription brand that was acquired for $1billion in 2016. Nike predict that DTC will increase from £5bn in 2015 to £12bn in 2020, and this has not gone unnoticed by other big brands that are starting to implement and adopt their own DTC marketing strategies.
To focus on the consumer’s needs requires a high level of insight. This can come from surveys, uncompleted transactions and social media. By encouraging engagement with their audience, the brand can keep up with the evolving needs of their customer base and react accordingly.
As the consumer evolves and comes to know exactly what they want, the challenge is to provide it with speed and simplicity. DTC brands focus on delivering this through providing quality products to their niche, but also by providing an excellent experience – which is where bricks and mortar come in…
Back to reality
As with any digital transaction, the ease and simplicity of shopping is key, but to appreciate the quality or luxury elements of a product, it really needs to be experienced in person. Tactile browsing is something that had been lost to the conveniences of digital, but seems to be making a comeback in a new form. While many chains and larger brands are struggling on the high street, DTC companies are revitalising it.
Built as an online-first platform, Matches of Fashion are an excellent example. With each of their three London showrooms sold as “uniquely curated fashion destination”, the consumer can get hands-on with their products and consult with the staff. However, as sales are mainly conducted online, the store can be focused on delivering an experience rather than securing the sale.
Luggage brand Away began in 2016 and quickly began testing pop-up retail. Initially the intention was to use physical retail to build brand awareness, but the resulting positive reaction has not only seen the introduction of permanent brick and mortar locations, but a boost in web traffic of 40% in the area around their stores.
By offering personalised elements in-store, shopping becomes a personal, luxury experience – something that consumers crave. US brands such as Bonobos, ADAY and The Tie Bar all offer appointment shopping with personalised styling. It is no longer just about purchasing goods, but quality over quantity.
Creating an experience
Online shopping is a practical but isolated experience. In contrast, physical stores provide tactile interaction with the products and the personal expertise of staff. This personal contact is a huge benefit of physical stores as it not only helps to drive conversion through upselling, but can help to build insight by answering questions and observing how customers shop – almost a microcosm of the entire customer journey.
As with Away, modern retail is unlikely to be the main revenue stream of companies investing in bricks and mortar. Rather, stores are likely to be treated as a showroom or promotional space in which the consumer can experience the brand, hold events and connect with influencers.
The purchasing habits of millennials are increasingly influenced by social media, with 72% reporting that they buy fashion and beauty products based on things they see on Instagram. With social media so prevalent in today’s culture, a physical store or showroom provides numerous opportunities to be share-worthy.
A Nike innovation to encourage consumers to visit their physical stores is the ability to design custom trainers in store and collect within ninety minutes. The Nike Maker’s Experience, which first began in 2017, allows consumers to design and purchase bespoke products while having an in store experience that simply cannot be replicated online, or elsewhere. Offering truly unique experiences is an excellent way to encourage brand-related social interaction from customers.
Another excellent example of including social media in their experience, US eyewear brand Warby Parker also offer a shareable experience with their LA store, the Green Room. The store plays on Hollywood themes and houses a green screen studio, allowing anyone to come in and record a 15-second film for free and then share their experience on social media.
In many cases, the adoption of omnichannel strategies by traditional retailers has not been a success. Building an online presence has not helped numerous large chains stem the decline in activity and profitability in their physical stores. Until recently, the result of this has been the continuing decline of the high street and increasing dependence on online sales.
While it might seem illogical for online DTC retailers to begin opening physical stores in this environment, by building on online success and making sure that physical stores are a tool to increase brand awareness and sell the company’s values to the consumer in person, DTC is reinventing the traditional high street with the customer, rather than sales, as the focus.
Do you need help standing out from the crowd in the online marketplace? Then give us a call to see how we can help grow your business.
You may also enjoy: