Retail Strategy

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.

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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.

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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.

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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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What the Great Wealth Transfer Means for Retail
What the Great Wealth Transfer Means for Retail 1440 428 ASG

The great wealth transfer is underway. It’s a monumental shift of financial power from the Boomer generation, who, by 2030, will all be over the age of 65, to their children and grandchildren (Millennials and Gen Z). Investopedia estimates the great wealth transfer will result in $59 trillion moving to younger generations. Others estimate that number to be more than $70 trillion. With that, it’s considered the “largest redistribution of wealth in human history.” But it’s not just about the money; it’s the combination of money and the power shift (political, social, and economic) that will follow.


Influential Events

Millennials (born 1981-1995) and Gen Z (born 1996-2009) children lived their youth and early adult lives through tumultuous times. From growing up in wartime to living through economic distress to literally coming of age in the midst of a pandemic, the experiences of these generations are significantly different from the Boomers before them. Gen X, born 1966-1980, while older, still experienced some of the same circumstances as Millennials – crushing student debt, housing inaccessibility, etc. Because these generations have not followed the typical Boomer path of going to college, getting a job, buying a house, and having a family at the same ages and stages, their role as consumers have been different from the start. With their expected inherited wealth, we need to begin mapping their trajectory as consumers to be able to meet their needs.


Frugal and Conscientious

When considering how these consumers came to age, brands will need a different approach from what they used with Boomers or Gen X. Younger generations hold a different position on money, which has changed the dynamics within Millennials and Gen Z. In both cases, they’re more frugal, more cautious with their spending, and more intentional about where and with whom they spend their money.


Millennials as Consumers

Millennials are about to have the most money they’ve ever had, but they grew up in the worst economic conditions since the Great Depression. Most Millennials don’t currently own a home, and 18% believe they will always rent. According to Investopedia, despite being the largest generation by population, only 17% of total homeowners are Millennials, and only 42% of Millennials were homeowners at age 30, compared to 48% of Gen X and 51% of Baby Boomers at the same age. This is a notable shift as brands look to consider redefined needs to support the home environments of these consumers.


Reaching the Millennial Consumer

Because of their life experiences, Millennials make spending choices that feel can feel unpredictable at times to retailers. The generation is also quite diverse – a quarter of Millennials speak a language other than English as their primary language, and more than a third are non-white. The same marketing that was so effective on Boomers will not resonate with Millennials. So how do you reach them?

Deliver a Consistent Experience. If there was ever a time to ensure a consistent brand experience between mobile and in-store, this is the generation that demands it. More than 90% of Millennials own and use smartphones; this is the OG digital native generation. They expect instant information, easy access, and consistency across channels. They value trust indicators and appreciate access to real humans. Personality, transparency, and responsiveness are key.

Engage Authentically. Whether you’re writing content for a blog, posting on social media, or advertising, be authentic. As a whole, this generation wants to know you get them, understand their needs, and contribute to improving their lives and life experiences.

Be Where They Are. The greatest opportunity for brand awareness lies within where Millennials spend their time. From binging Netflix to watching YouTube and scrolling social media the online world is a direct avenue to connect with this audience. 

Tap the Influencers. Virtually all Millennials – 97% – read reviews before making a purchasing decision. They’re more likely to trust a brand that has been recommended by another consumer – even a stranger – over trusting the brand itself. Make sure you make your reviews and recommendations are easy to find online. Even when they shop in your stores, which they love to do, they’ll look first online to see what others say about you.

Focus on Lifestyle Choices. Millennials are not moving through stages of life the same way previous generations. Attract Millennials not by focusing on where they are in life, but instead by how they identify socially or through the causes with which they identify.

Be Transparent. Millennials are paying attention, and looking for brands that show – through action – that they care about the same things they do – and they’ll pay more for it. They want to know if you support important causes, make ethical business decisions, and how you incorporate sustainable practices. 


Reaching the Gen Z Consumer

Gen Z was born into a never-ending war that turned into a never-ending pandemic. The youngest Gen Z consumers, who are now in middle school, to the oldest, who are early-career professionals, have shouldered the worst of the education experience and most of the job loss during the pandemic. Reaching them is a complex and difficult mission, as they’d rather save money than spend it. So how do you connect your brand to Gen Z?

Have Purpose Beyond Profit. CSR might be a nice-to-have with older generations; with Gen Z, it’s your lead. Your purpose needs to be something more than profit. Maybe it’s revolutionizing the way you manufacture something so that it protects the planet, or maybe you donate a portion of what you make to a worthy cause, but it’s the “why,” not the “what,” that will turn Gen Z into loyal consumers.

Foster the Entrepreneurial Spirit. Gen Z has no interest in the typical corporate structure, and they don’t believe in the kind of job security they’ve never seen. That may explain why 72% of teens want to start their own businesses. Showcase your own entrepreneurial spirit and innovation to attract them – and demonstrate your care for your employees.

Engage Authentically. Like Millennials, Gen Z has no time for canned responses or generic marketing. They want authentic engagement and interaction that feels personal. These are purposeful consumers, not accumulators.

Don’t Waste Time. Gen Z is the TikTok generation. They want small, consumable pieces of content, and that translates to marketing, too. What can you do to get their attention in 8 seconds or less? Because that’s all the time you have. According to Kantar, 83% of consumers browsing TikTok say seeing trending content has inspired them to make a purchase.

Be a Brand They Can Believe In. For Gen Z, consumption for consumption’s sake is offensive. Conservation, sustainability, and respecting privacy are extremely important. “When I think “cool” I imagine companies that do great things for customers/employees or beautiful/unusual products.” – Female, 17, UT, Urban

Emphasize Experience. Gen Z seek out meaningful and memorable experiences, not just products. They have a “you only live once” attitude in which they will prioritize fun over sacrifice.

Be Impeccable with Your Brand. Gen Z has a high standard for what they want their personal future to hold. Brands with purpose win in the long run, and we’ve seen the power of consumer resiliency.

Most brands are accustomed to equating spending to the Boomers, who currently control over 60% of the money in this country. As the great wealth transfer begins in earnest, the entire shift and mentality of the receivers will be unlike anything we are familiar with. This shift represents invaluable opportunities for companies to listen and pay attention.

Eager for more insights about retail? Check out how some retailers are Minding the Retail Gap between pandemic and high performance.

Redefining Flagship Retail
Redefining Flagship Retail 1440 428 ASG

Flagship retail stores have historically been the beacon of a brand—an iconic entity with grandiose energy. But as we continue to rethink retail in today’s ever-changing and quickly evolving environment, it presents the opportunity to reevaluate the flagship experience and our approach to store design.

If you think about the essence of a flagship store, it has meant something larger-than-life, experiential, immersive, or even exclusive. Often, we relate this to store sizes like Krispy Kreme in Times Square, Hermès in Paris, Nike in New York, or the glass cube at Apple Fifth Avenue. When you strip away the square footage, it really implies a “special experience,” either with an exclusive, localized product (The Big Apple Doughnut), personalized service, or unique offerings associated with geography. So, if we can let go of this perception of flagship relating primarily to size and connect it more to the unique experience – then we get to the heart of what flagship retail means.


From High Streets to Side Streets

Retail succeeds when it responds to consumer needs, and today’s consumers want to stay closer to home when they shop. They want to be catered to and want anything but homogeny. Gone are the days of being inside any mall in America and finding the same set of stores. Consumers want something that reflects the energy of their neighborhood.

“Consumers want and crave variety, diversity, and choice. You can maintain a national footprint and effectively leverage regional and localized design. Bringing these strategies to scale can be a differentiator for retailers who want to thrive, not just survive.”
– Carrie Barclay, President, ASG

The importance of diverging from homogenized retail is one of the key factors in retail design success today. Consumers have gained a new appreciation of home since the start of the pandemic. Similarly, when retailers begin to understand their own unique importance in the local community, they then become part of the social fabric of the community.


Embracing the Flagship Experience at Scale

Now is the time to refocus the meaning of flagship retail to symbolize a unique and localized experience for the consumer. In other words, we believe that the flagship experience shouldn’t be limited to just the launch of a design as it appears in Times Square, but it can also be a thoughtful, customized, and unique design in every neighborhood.

Your brick-and-mortar locations are not just transactional. They are valuable opportunities to connect with your customers and showcase your brand, values, and commitment. Every store design is an opportunity to provide local customers with an integrated, immersive, and unique experience with your brand.

Eager for more insights about the retail experience? Check out how some retailers are Minding the Retail Gap between pandemic and high performance.

Transforming Retail Fulfillment
Transforming Retail Fulfillment 1440 428 ASG

The menace of ecommerce giants, such as Amazon, has been looming over brick-and-mortar stores for several years now. However, the threat is not as real as brick-and-mortar retailers are led to believe. Amazon capitalized on a functioning business model, and consumers are in love with convenient shopping and fast shipping. However, brick-and-mortar retail is capable of many strategies that the ecommerce industry is desperate to tap into.


Brick-and-mortar retail is dead? Hardly.

Consumers still love to browse in store, explore assorted products, and feel items in their hands before purchasing. The biggest challenge that brick-and-mortar retailers face is being able to maximize the value of the retail location. What can your store offer beyond that which can be purchased online? Consumers demand instant gratification, but what that looks like varies from shopper to shopper, and even moment to moment. Physical stores are an essential piece of an omnichannel strategy, and the ability to offer diverse product choices and delivery preferences will change how retailers do business.


Change the supply chain.

The traditional model ignores the crucial connection between the manufacturer and the retailer. Until recently, retail fulfillment has been a component of purchasing that remains rather independent. However, this reliance on drop-shipping is how consumers are lost. Colors and sizes vary depending on location, and without consolidating distribution channels, mistakes are common. Consumers want to be able to order online and pick up in store, because in-store delivery for certain items may be days faster. Others see items in stores, but an in-store app or kiosk may offer a more desirable color that can be shipped to homes. Fulfillment within brick-and-mortar retail demands collaboration to meet the changing demands of consumers.


Leverage real-time inventory

The most important aspect of retail fulfillment and required collaboration is a real-time inventory. Business associates and consumers should easily be able to track shipped items, as well as notify a customer if an item they are interested in is truly available. Even ecommerce giants have struggled with issues such as requested items on backorder and websites not updated at the time of purchase. This results in frustrated customers and incomplete orders. Over time the overall brand can be damaged.  Be mindful of your inventory movement and shipping and invest in a digital infrastructure that will allow your omnichannel strategy to flourish.

The key is to create a seamless and consistent customer experience that not only improves efficiency but also meets demands. The customer experience, not the product, is the most important factor. How you fulfill your promise to the consumer relies on more than just shipping, which is why brick-and-mortar retail is far from dead.

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