Path to In-Person: A DTC Guide

7 DTC Brands to Watch

7 DTC Brands to Watch 1440 428 ASG

It’s an exciting time to be in retail. For DTCs, the opportunity to redefine their purpose and connect with customers on a whole new level has led to a surge in DTCs opening physical stores. Here, we take a look at some DTC brands to watch – those that have already made the leap into physical stores and those who may be in the near future.

“Direct-to-consumer, digital-first, pure-play, or whatever you want to call this new breed of breakout brands, for them, the physical footprint is about customer acquisition, building loyalty, and increasing eCommerce sales. Utilizing their online data assets, they’re focusing the in-store experience on a high level of service and brand engagement. With that, traditional retail metrics like sales per square foot are being replaced by new measurements that take into account multiple channels working together.”Chute Gerdeman

Take Note of these DTC Brands

Article – Launched in 2013, DTC furniture company Article grew profits by 45% in 2021 by opening regional fulfilment centers and focusing on last-mile delivery network. “We’ve decided to take final-mile delivery to the next level with ADT [Article Delivery Team]. In-house delivery gives us a tighter feedback loop which helps us iterate on the process and create experiences people look forward to,” said Aamir Baig, Article’s CEO, in a Chain Store Age interview.

Tecovas – Founder, Paul Hedrick turned his passion for good-looking cowboy boots that were actually comfortable to wear into a business that was named by Business Insider as one of the 25 DTCs to watch in 2022. Paul Hedrick, founder and CEO of Tecovas, said in an interview with FN, “Our focus is – and will always be – on building the most beloved heritage western brand in the world, and this round of funding will only help us further drive towards that vision.”

Vuori – With a commitment to sustainability, ethical manufacturing, and community, Vuori is a standout brand for a number of reasons. After receiving an infusion of capital and completing a successful expansion in the U.S., Vuori recently announced plans to expand into Europe with their own physical locations as well as through partnerships with companies like Costwold Outdoor in England. “2022 is going to be Vuori’s biggest year yet, and we look forward to sharing much more in the weeks and months ahead,” Vuori founder and CEO Joe Kudla said in a statement.

Gymshark – Launched by a 19-year old in a garage in Birmingham, UK in 2012, Gymshark’s online presence today is nothing short of remarkable. The company now has five regional offices and was featured in an article last year about their transition to a billion dollar fitness company.

Rhone  – CEO and co-founder Nate Checketts of Rhone was an early visionary in recognizing the importance of developing physical retail locations for his performance-driven clothing and the company has enjoyed growth and success as they expand, being named one of the top 12 men’s athleisure brands in 2022.

Knot Standard – Recognized for their unique blend of fashion and technology, Knot Standard is not only expanding their own physical presence with showroom locations across the country but also selling its technology to retailers to create their own custom clothing offering.

Thuma – Launched in 2018, Thuma is on a mission to revitalize the modern-day bed through timeless design and smart manufacturing. Their success is reflected in the fact that they’ve been named the top bed frame to sleep on by Architectural Digest and Insider.  Thuma has also been named one of the top home and appliance DTCs to watch by IAB. This is definitely a brand to keep an eye on.

As the cost of customer acquisition continues to climb with increasing digital ad costs, more and more DTCs will likely consider new ways of fulfilling the needs of existing customers while also attracting new ones. Strategically located physical locations is a huge opportunity for many DTCs.

DTC Eyewear Store

Developing a DTC Retail Strategy: Q&A With Carrie Barclay

Developing a DTC Retail Strategy: Q&A With Carrie Barclay 1440 428 ASG

The advantage to DTC brands opening physical locations is clear, but if you’re a digital-only DTC considering opening your first location, how do you know where to go? What kind of strategy should you use?

Having worked with notable DTC brands like Warby Parker, Tonal, Purple, and Lovesac, we asked ASG President Carrie Barclay to share some insight on what works and where to start.

Q: It seems a bit daunting to transform from digital-only to incorporating physical locations. How do you advise DTCs just getting started?

Carrie: Initially, it’s important to keep an eye on your investment. This means choosing locations beyond New York City, where the costs are more manageable and data is more relevant. A clustered or regional approach to launching physical stores can be smart. Rather than spread across the country, many DTCs may opt to open a location or several near where they are headquartered. They can physically check in on the stores; see what’s happening; gauge client response and make adjustments to their physical store strategy before expanding further.

Q: What do DTCs have to consider in order to expand?

Carrie: It will really depend on the brand’s ability to scale. They have to think about logistics and distribution. A great example of how to do this well is Primark, a European company that opened a distribution center in Pennsylvania in order to support the stores they are opening in the northeast.

DTC Apparel Store

Q: You’re a fan of pop-up stores. Why?

The pop-up is the equivalent of a fancy customer intercept survey. You can gather a lot of customer data with very little investment to determine whether or not it’s a good location, what kind of traffic you can expect, and what your product mix should look like. Pop-ups have increasingly become an effective way to test a market and make sure it’s a good fit for your brand before getting too heavily invested in the location.

Q: How do you determine which path to take when opening physical stores?

Carrie: You need to use the data to make strategic decisions about your brand. Data will help you answer the questions you need to think about as you go physical. Do you build out your own retail shops across the country or test pop-ups in certain high-traffic areas? Do you sever ties with the retailers who carry your brands or focus on a hybrid solution that allows your brand to partner with retailers even as you build your own branded stores? The answers to these questions will differ for each brand, but the data is always there. The important element is being able to analyze and overlay market insights and match them with business goals.

Q: Why do you think DTCs need physical stores?

Carrie: We know customer acquisition costs are not sustainable with digital-only, so that’s a big reason behind the push we see among DTCs to open physical locations. But at the end of the day, it’s not about having a physical store or a website or an app or two-day delivery or a great return policy. It’s about being where your customers need you, when they need you, how they need you. It’s about being the brand they trust – because you meet your sustainability promises, you are accessible when they’re ready to shop, and you’re convenient. Physical stores increase trust in your brand, can put you in your customers’ neighborhoods and can give your brand enormous growth opportunity when done right.

Want to learn more about implementing a data-driven DTC location strategy? Explore our proprietary platform, ASGedge, where we combine tailored real estate data with industry expertise to inform confident retail decisions.

Popular Retail Storefronts for Location Strategy

What’s Driving Today’s DTC Location Strategy?

What’s Driving Today’s DTC Location Strategy? 1440 428 ASG

Capitalizing on physical locations is a huge opportunity for DTC brands, but you can’t just throw a dart at a map and expect results. As DTCs open physical locations around the country, they can ensure a bigger likelihood of both pulling in existing online customers and attracting new customers with a comprehensive location strategy – and that strategy must adapt to the changing retail consumer, who shops closer to home and expects more from brands to earn loyalty.

The Cost of Credibility

DTCs were leaning into the retail landscape before the pandemic. Not only is the cost of customer acquisition too high to be sustainable for a digital-only brand, but the ability to build trust and customer loyalty to retain customers is challenging.

“Roughly one-third (34%) of US consumers surveyed stated they don’t trust retailers with just an online presence.” – Morning Consult

“Consumers inherently trust brands that have a physical presence over those based solely online. In a recent report by global data intelligence company Morning Consult, roughly one-third (34%) of US consumers surveyed stated they don’t trust retailers with just an online presence. Meanwhile, 68% trusted retailers with just a physical store, and 73% trusted retailers with both a physical and online store.” – Chute Gerdeman

A Location Strategy Shift

According to data from Yelp, new business openings increased 14% in year two of the pandemic. However, where those businesses are opening is changing. “Boston, Seattle, Los Angeles, and New York City saw the largest decreases in new business openings during Delta and Omicron variant waves. Meanwhile, Atlanta, Dallas, and Detroit bucked the trend with an increase in the number of new business openings during the arrival of the Delta and Omicron variants.”

Successful DTCs are shifting away from large hubs like New York City. DTCs are choosing locations where the cost of doing business is more manageable – locations like Florida, Texas, and Tennessee. They’re also following their customers. According to Modern Retail, the pandemic-motivated exodus from big cities has spurred DTCs to follow them to mid-sized cities like Austin and Dallas. Even DTCs locating in large cities like New York City are straying away from 5th Avenue and instead opening shops in places like Dumbo (Brooklyn) and the Upper East Side.

Popular Mall Storefront for Location Strategy

Today’s digitally native brands don’t mind a little competition, so don’t be surprised when you see several DTC brands clustered in the same location. High traffic and concentration outweigh any negative. The key is really positioning yourself where the consumer can do more than one thing – where they can cross-shop. That’s why top retail destinations like Easton are appealing.

The Devil Is In the Details

It’s critical to start with customer data when developing a location strategy. Luckily, DTC brands often have a more intimate understanding of their digital customer, and that insight can provide a lot to leverage. However, what’s important to remember is that the online customer isn’t always an exact match to the physical customer. Having a physical space creates new awareness, so being able to understand, recognize, and accept there might be a shift is an important consideration.

Popular Retail Storefronts for Location Strategy

Using data to identify key retail location opportunities, DTC stores need to go where their customers are. Brands tend to think of New York first, but it really limits your capability to test, measure, and learn. With a high tourist and commuter mix, the metropolis is atypical to other major markets, limiting planning for stores two, three, and four.

Combine all that with its lack of affordability–even with the lowered rents and flexible leases we’re seeing–you’re paying a lot for a location, which means potentially less investment available for design. That’s why we’re seeing more DTCs focus on launching their first brick and mortar in places like Nashville and Austin- they’re more affordable, have a better customer mix to help predict and inform future stores, and give you more to invest in design so that you can get it right.

Want to learn more about implementing a data-driven location strategy? Explore our proprietary platform, ASGedge, where we combine tailored real estate data with industry expertise to inform confident retail decisions.

DTC Brands Lean Into The Retail Landscape

DTC Brands Lean Into The Retail Landscape 1440 428 ASG

Given the cost of customer acquisition and the increase in competition, DTC brands have shifted their strategy, focusing on experiences where the brand story and consumer connection matter more than just building mailing lists and driving people to buy online. The pandemic helped accelerate that shift – as consumers spent more time at home, DTC brands have had the chance to tap into social conversations and fulfill many emotional and essential needs.

From Ecommerce to Experience

DTCs are using their digital native savviness to put themselves where their customers are – not on a website, but in social media (think: DTC brands like Dr. Squatch on TikTok) and in video games (think: Marc Jacobs in Animal Crossing). More than anything, however, DTCs are beginning to focus on opening physical locations – either standalone or in collaboration with existing stores (think: Bark’s partnership with Walmart).

In-Store Shopping Demand Drives DTC

People are ready to shop again in-store, and DTCs are responding. According to Shopify’s recent Future of Commerce report, 32% of brands said they’d be establishing or expanding their use of pop-up and in-person experiences, 31% plan on establishing or expanding their physical retail footprint, and 40% of brands said offering experiential retail will be a top priority in the next year.

“Increased retail vacancies have created an opportunity for a new wave of digitally native brands to experiment with physical retail. The surge of brands into offline channels means retailers must focus on creating engaging and memorable experiences to win foot traffic.” – Shopify

Standing Out to Stand Alone

On a recent trip to Austin, TX, we visited the premier, open-air retail development, Domain Northside, which has one of the largest DTC physical presences in the US. We visited every single store in the shopping district – legacy retailers’ side-by-side emerging DTC brands. Cover the signage though and we couldn’t have told you who was who or what made them unique. A surprisingly cookie-cutter DTC experience for brands that have notably played hard to cut through the noise online.

“Brand building is helping attract and retain customers. Businesses are overcoming the competition by investing in brand building, which increases customer lifetime value, boosts conversion rates in the short term, and attracts out-of-market buyers in the long term.” – Shopify

The Experience Factor

A physical presence means more than four walls. From the right location to on-brand execution and a memorable experience, the equation takes as much consideration and strategic planning as the day the DTC was born. Missing the mark moving from digital into physical could lead to two unfortunate outcomes:

  1. DTC brands misreading the brick and mortar performance based on a failed execution (proper development of the branding, etc.), and
  2. Developers undervalue the DTC’s capabilities in a physical environment and begin to discount them or pass them over for new opportunities (i.e., they will be left on the bench).

Digitally-native brands making their first foray into physical retail have an opportunity to leverage the customers they’ve nurtured and developed online, and expand their brand awareness to new customers. It’s an exciting time to think about getting physical if you’re a DTC brand.

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