As many direct-to-consumer brands learn, there is no one size fits all growth strategy. After all, there are so many channels and touchpoints available that can help brands acquire new customers, test new markets, and expand their reach. To find their own path to growth, brands must select the combination of components that best suits their message, product set, and target audience.
“So many DTC brands start where a founder saw a niche in the market based on their own personal experiences,” said Nikki Baird, vice president of strategy at Aptos in an interview. with retail touchpoints. “But just because they had a great initial idea doesn’t mean they’re the de facto target market. When attracting an audience, they need to make sure they are following who interacts with them. Niches make great starts, but they don’t make great businesses – you have to be bigger than that.
DTC brands therefore need to determine what their audience/customer expansion options would be once they get started. When planning their growth strategy, DTC brands can choose to:
- Increase distribution channels by means such as wholesale partnerships;
- Develop their product assortments;
- Use marketing channels; and
- Build a community of like-minded consumers.
Use data to unlock expansion opportunities
Before implementing measures beyond the DTC model, companies need to know their customers. As the simultaneous shift toward consumer privacy and the move away from third-party cookies continues, brands are going to need to intelligently leverage data to better understand their consumers and forge more strategic (and unique) paths to growth.
Most DTC brands begin this process with an asset in the hole – invaluable first-party data and a deep understanding of their current customer base, especially if those customers are part of a like-minded community. “Brands are going to create their own first-party data, and DTC brands are advantaged because of their origin – they capture this information online from the beginning,said Michael Della Penna, chief strategy officer of consumer intelligence agency InMarket.
Opening physical stores can kick-start DTC growth
underwear brand Third love is on track to grow its physical presence through 2022 and into 2023. The digital native brand was founded by Heidi Zak in 2013 to provide personalized and precise bra fitting experiences. While the brand’s brick-and-mortar venture was initially halted due to the COVID-19 pandemic, the brand has successfully expanded into other categories, including activewear, while plans for physical stores have been put on hold.
Now with four ThirdLove physical stores open, Veronique Powell, vice president of brand strategy and operations, noted in an interview with Retail Touch Points that ThirdLove will open at least four more locations by the end of 2022, in Washington, DC, Dallas, Boston and Scottsdale, Arizona. This growth trajectory is expected to continue as ThirdLove plans to open another 12 to 16 additional stores in 2023. Working with retail developer and operator Leap to define its physical strategy, ThirdLove’s personalized and omnichannel customer journeys are paying off; the company saw higher year-over-year e-commerce growth in postal codes within five miles of its stores.
“Integrating our in-store shoppers into our digital marketing feeds has been very important and very valuable,” Powell explained. “And ensure that if they choose to receive marketing messages for us, they are really suitable for [these] buyers, and they are located appropriately where they are in terms of the purchase journey. And then doing bounce offers and in-store events and just having the opportunity to really continue to connect with her beyond the purchase.
Attract consumers with experiential physical stores
Destination for online fishing enthusiasts Catch Co.which was founded by Ross Gordon in 2012, started with a subscription model of lures and tackle named Mystery Tackle Box, and 10 years later, the brand remains true to its mission of “saving people from within”. The brand has built its Karl’s Bait & Tackle e-commerce platform and transitioned to a physical presence in June 2022 with the opening of its first experiential physical store in Fort Worth, TX.
The 2,500 square feet space is based on a model that applies e-commerce style analysis to the physical store via a partnership with the SaaS platform RetailNext. In one week of the opening, Catch Co. exceeded its sales targets of 200%.
Catch Co.’s director of retail experience, Teeg Stouffer, noted that the brand’s digital experience is pervasive throughout the in-store experience.
“You can’t learn much about the product from the package – lures are little works of art,” Stouffer said in an interview with Retail Touch Points. “We removed the hooks and placed each lure on a board on the wall where you can grab it, pull it down, shake it, hear it, smell it and watch the details. But we’re digital natives, so that experience is also digitally embedded. There’s a screen just below, so when you pull out a lure it starts a video of what it looks like underwater and teaches you how to fish with it.
The store was designed to let customers “choose their own adventures,” according to Stouffer, with “product path” maps that guide them through their purchases. “If you want to be helped, so much the better; otherwise you draw a card and it has a message at the top like “New to fishing” or “Buy a gift” or “Do you want to learn how to power fish”, and it walks you through the store and helps you choose things get by without having to deal with another person if you don’t want to,” Stouffer said. Integrating digital components throughout the store allows customers to have an independent journey that more closely mirrors an online experience, while still having access to physical products and knowledgeable associates.
A second Karl’s Bait & Tackle brick-and-mortar store opened in Minneapolis’ Mall of America earlier in October, confirming the brand continues to embrace omnichannel retail.
Building a DTC brand beyond borders
Reaching an international customer base is a major milestone for any brand. furniture salesman Terrier is bringing its mix of e-commerce and showrooms to Canada after almost six years to sell its customizable and modular pieces.
“We discovered that Canadian customers were looking for high-quality, sustainably-made products with a focus on convenience and comfort,” said Stephen Kuhl, CEO and co-founder of Burrow in an interview with Retail Touch Points. “Customer feedback guides everything we do; from the products we choose to finalizing our physical retail store locations. We knew there was an appetite for functional, fashion-forward furniture in Canada, so once we figured out how to provide fast and free shipping and delivery to Canadiansit made sense to expand across North America.
Burrow’s model follows neither a pure DTC nor a traditional brick-and-mortar model. The brand lets customers explore its offerings online or at its physical showrooms in New York, Boston, Atlanta and Los Angeles, where they can meet with in-house design experts. Customers can choose to order online or with an expert at the showroom and have their furniture delivered to their doorstep. Kuhl noted that with this formula, Burrow plans to expand to at least ten total number of slots over the next of them years.
“Furniture is a highly considered purchase and an important investment,” Kuhl said. “People want to be able to touch and feel fabrics, test comfort, and really imagine what a product will look like in their own home. We’ve created an omnichannel experience that combines brick-and-mortar retail stores with an intuitive, easy-to-navigate website. This simplifies the entire purchasing process.
DTC brands can leverage the power of strategic wholesale partnerships
Online supplement and multivitamin brand Ritual launched its own physical location in Venice, California in early 2022 after launching an online-only business in 2016. Ritual also began selling on Amazon in June 2022, reaching more than $1 million sales during the first 60 days, but he still had more growth in store.
On September 21, 2022, Ritual entered into an exclusive retail partnership with whole foods. The brand is one of many in the CPG and wellness spaces that are prioritizing wholesale partnerships to venture into brick and mortar and activate a new lever for growth.
“To truly earn and grow our brand awareness, we need to meet our customers where they are, in all aspects,” said Katerina Schneider, Founder and CEO of Ritual in an interview with Retail Touch Points. “They need to be able to discover and trust us as easily offline as they currently do online.
While the national Whole Foods partnership is a promising path for Ritual, the brand has had to align its merchandising with the demands of a brick-and-mortar retail customer.
“We had to completely rethink our packaging and how we bring the depth of education we are known for into a physical space,” says Schneider. “To address this issue, we have designed new single cartons which we are launching with our expansion into Whole Foods which feature much of what you find on our website – striking images of our product technology, details of our key third-party certifications and our traceable ingredient sourcing. Additionally, they are made from 100% post-consumer recycled paper, giving materials a second life rather than going to landfill.