This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →
This is the latest installment of the DTC Briefing, a weekly Modern Retail column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. To receive it in your inbox every week, sign up here.
Last year, home goods brand Parachute underwent a massive store expansion effort, more than doubling its retail footprint.
But this year, the company’s focus has shifted to optimizing its existing store fleet. While Parachute will still be opening a few new stores this year, CEO Ariel Kaye told me that a bigger focus for the company will be driving foot traffic to its locations.
To do so, Parachute is hosting more in-store events, with Kaye calling it one of the company’s “biggest initiatives” this year. This year Parachute plans to hold around 250 events at its stores this year, up from 80 last year. These range happy hours to monogramming activations. Over the past couple of years, many DTC brands have accelerated their pace of new store openings as coronavirus restrictions have lifted and more people have resumed in-store shopping. But now, like Parachute, many of these startups are shifting their focus to how to keep people coming back to their existing stores.
“We’re going to spend some time this year just making sure that we’re optimizing,” Kaye said. “We’ve been doing a lot of stuff internally to just think about how to look at our stores operationally, and make sure that they’re all just really strong and profitable.”
Kaye said that on average, Parachute saw a 20% increase in sales during in-store events. Parachute stores also reported seeing a 40% increase in foot traffic during store events, including a 35% increase in first-time visitors. Kaye declined to share what percentage of the company’s sales now come from its stores. But, she disclosed that Parachute’s online sales conversion rates are 50% higher in cities that have storefronts.
Since opening its first store nearly seven years ago, Parachute has relied on events to draw people to stores, particularly during opening weekend. However, the company had to put many of those events on hold during the pandemic. In 2022, Parachute made store expansions a big priority, going from 10 locations to 23.
Parachute opened its first store in its hometown of Los Angeles in 2016, and many of its early store openings were concentrated on the East and West Coast. But last year, the company started opening more stores across the South and the Midwest, including in Tennessee and Minnesota. In January, Parachute opened its 24th location in Boston, and plans to open at least a few more this year.
Kaye said that Parachute tries to localize its events for each market, but there’s a few tactics that the company utilizes across its entire store fleet. The first is partnering with beloved local brands, particularly during opening weekend. When Parachute opened a store at The Gulch in Nashville last April, the company brought in coffee and baked goods from local restaurants on opening day, and hosted an in-store concert later that weekend to drum up excitement.
In-store embroidery events are also a popular draw, given that Parachute’s core product assortment consists of bedding, linens, towels and other items that customers frequently want monogrammed. Last year, Parachute offered free pet photos at all of its stores in honor of national dog day, and plans to do something similar this year.
Events meant to show off new Parachute collections to interior designers are also a big focus, given the company’s fast-growing trade business.
“Those are typically smaller events,” Kaye said. “But they have a really great impact in terms of building that relationship with those interior designers and trade partners.”
Kaye said that Parachute doesn’t usually offer exclusive discounts for in-store events, but does occasionally offer a gift with purchase, particularly for monogramming events. Parachute also doesn’t typically do paid promotion around in-store events. Instead, the company relies on organic social as well as its email list to promote these activations.
Melissa Gonazlez, founder of experiential retail firm the Lionesque Group and a principal at MG2, said that in-store events can be one way for brands to build customer loyalty because it “provides an opportunity for consumers to get more deeply embedded and immersed in the overall lifestyle” associated with a brand.
The first step, Gonzalez said, for brands considering hosting more in-store events is to identify “what the brand stands for, and what kind of programming supports that.” For an activewear brand, that could entail hosting run clubs and other exercise events. For a supplement brand, that could entail hosting panels demystifying certain wellness topics.
“With the Parachute home as a brand, in particular, there’s such a strong lifestyle message around it that I think is very aspirational,” Gonzalez said.
Hosting in-store events is one of the biggest ways that Parachute is looking to make its physical retail fleet more efficient. Kaye said that Parachute is also constantly evolving its merchandising strategy, testing out different concepts in different locations as the company tries to figure the most optimal physical retail strategy going forward. As Parachute has opened more stores, Kaye said that the company has gotten more data on what the optimal level of staffing and inventory is at each location, and will be applying these learnings accordingly.
“Going from 12 stores to 24, 25 stores is a huge jump. We’ve been learning a ton,” Kaye added.
What I’m reading
- Bark announced that it was laying off 12% of staff last week, coinciding with its third quarter earnings report. In the third quarter, Bark’s net loss grew to $21.3 million, compared to $13.3 million during the same period last year. Its revenue also fell 5% year-over-year.
- Meal startup Daily Harvest also resorted to a fresh round of layoffs after cutting 15% of its staff over the summer. According to Bloomberg, the company targeted a headcount reduction of more than 20% in early February.
- Tonal is weighing its options after burning through a lot of cash. According to the Information, the at-home fitness startup is looking for a buyer, while Bloomberg reports that Tonal is in talks to raise funding that would value the company at $500 million or lower.
What we’ve covered
- Why more food and beverage startups like Marco Ice Cream and Poppi are making Sprouts Farmers Market their first national retail launch.
- DTC holding company Pattern Brands opened its first store in December bearing the name of Poketo, one of its recent acquisitions. Why Pattern Brands sees stores as a way to woo future acquisitions.
- What to know about Shopify’s Winter 2023 product updates, including a new “one-page” checkout and changes to the Shop app.