DTC has been a buzzword (or acronym rather) for quite some time. Digitally native DTC brands tout sleek websites, well-targeted ads, incredible customer service, and compelling convenience. This model took flight in the last decade. Warby Parker and Dollar Shave Club hit the internet in 2010 and 2011 and quickly gained speed. Then came the Aways, Caspers, and Glossiers of the world (all three of which earned unicorn status in early 2019). These brands recognized a need for physical retail quite quickly. In 2018, digitally native brands were set to open 850 stores over the following five years.
Now, the ballooning effect of online shopping has been exacerbated. While some of these brands were successful in years past, many struggled mightily throughout COVID-19. A lot has changed in the digitally native market, and the jury is still out on the longevity of some of these brands, but the need for physical space that existed pre-pandemic will remain.
Below are a few “case studies” published before the pandemic and now.
The Digitally Native Brand Builds a Real Estate Portfolio.
The Digitally Native Brand Enters an Existing Real Estate Portfolio (read here for how these partnerships can be mutually beneficial).
Lately, we see “direct-to-consumer” swirl around headlines in untraditional ways. However, unlike the examples above, we see a shift where the conventional and experienced brands attempt to capture the successes of the DTC model. DTC sales currently make up 35% of Nike’s sales. Last week, Nike notified that they would cut ties with seven wholesale accounts in an effort to escalate the proportion of DTC sales even further. Nike will continue to sell in Dick’s Sporting Goods and Shoe Carnival to maintain relationships with “strategic partners.” Similarly, Adidas made a call for DTC last month when it announced a four-year plan, dubbed Own the Game, that aims for DTC sales to make up 50% of sales by 2025 (up from 40% in 2020).
It has interesting, to say the least, to follow an ever-changing retail landscape. Whether shopping online or in-person, from a digitally native brand or a mass merchant, the need for physical retail space will remain a common denominator. We look forward to following the direct-to-consumer evolution of companies like Nike and the new DTCs on the block.