How D-to-C Brands Are Redefining the Brick-and-Mortar Experience

It’s that time of year when we start seeing new year sales forecasts roll in and determine which brands will and won’t be retail winners. While some “winners” are easier to predict, I believe there will be a twist this year. In 2020, the retail winners will be direct-to-consumer (D-to-C) brands, many of which most consumers are just starting to hear about.

While there have been plenty of headlines about the “retail apocalypse,” D-to-C brands aren’t being deterred by them. In fact, they’re actually opening stores to grow their customer base behind their authentic brands with unique points of difference. These companies are winning with their premium brands, high-quality products, and customer-focused mentalities. Their omnichannel approach helps differentiate them from other retail categories by enticing shoppers both online and offline. In fact, a recent study showed that D-to-C shoppers, also known as “Disruptor Brand consumers,” comprise 48 percent of all U.S consumers.

With traditional retail 1.0 brands closing stores, we’ve seen a shift to D-to-C brands looking to scale their customer bases by opening physical stores. Take Hudson Yards in New York City, for example. It has a whole floor dedicated to digitally native and experiential brands called the “Floor of Discovery,” housing brands like M.Gemi, Mack Weldon, Rhone, and more.

So what are winning D-to-C brands doing differently with their physical stores that’s enabling them to grow their businesses and build their customer bases? A few things:

• Customer experience focused: Winning brands in retail are laser-focused on customer experience. Today, consumers have the choice to shop online or in-stores, so winning retail stores must be personalized, frictionless and enjoyable.
• Memorable experiences: A store should make a shopper feel something and offer a memorable experience that not only drives conversion but also builds loyalty and a community. In winning stores, customers can not only touch, feel and try on products, but also have their questions answered by passionate store associates — and they're able to connect with their social networks by posting pictures on Instagram.
• Mitigating risk: The future of retail, especially for newer D-to-C brands, will largely be based on creating stores that are more efficient, with less long-term liability. Today, winning stores are not only smaller, but they also forgo the high-priced luxury chandelier and instead invest in brand-building assets like a digital screen.
• Data driven: Brands and stores need to continue to leverage first-party data (often a brand’s e-commerce data) to make more informed decisions on store locations, product assortment, marketing and more. And the data collected from the store should be leveraged to optimize and roll out new experiments, just like a software or tech company would do.
• Leveraging partners, tools and platforms: Winning D-to-C brands don’t lose sight of what they do best: create differentiated products, be innovative, and build long-term relationships, all coupled with an efficient supply chain. These brands know that they don’t have experience in developing or operating a physical store, so they leverage platforms similar to how they use Shopify for their e-commerce storefronts. Brands work with third-party partners so they can continue to focus their time, money and resources on their brand and business.

Brands that are driving growth are now realizing that in order to continue to scale their businesses and add new customers, while still minimizing customer acquisition costs, physical stores are a key tool. And to win, newer brands must look at brick-and-mortar different than the retail 1.0 brands before them. They must put the customer experience first and think about retail as an efficient, data-driven growth channel.

UNTUCKit, Away, and Casper are just a few great examples of brands that are doing this well — so much so that they continue to open new stores. As more shoppers get immersive and memorable experiences at these types of stores, I believe more brands will follow. This is why I believe that new D-to-C brands you’ve probably never heard of will be the retail winners in 2020.

Amish Tolia is co-founder and co-CEO of Leap, the “retail-as-a-service” platform of choice for emerging brands, enabling digital brands to rapidly launch high impact experiential retail stores more quickly and without taking on the typical risks of physical store development themselves.