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 →
Right now, direct-to-consumer startups have to hope for the best but prepare for the worst, and nowhere is that more evident than within their brick-and-mortar divisions.
In what feels like an eternity ago but was only around mid-March, most direct-to-consumer brands that sold non-essential goods shut down their physical stores, with tentative plans to re-open them in two to three weeks. Now of course, they all remain closed with no re-launch date in sight.
When it comes to the big relaunch, there are a few questions that brands will have to figure out answers to, even though no one knows what the right answer is. The first of course is when should stores re-open. The second is what changes to make to store itself, as well as their merchandising and product assortment, in order to make people excited to come back to stores. Lastly, they have to figure out how to make store associates and customers feel as comfortable as possible.
Most of the executives I spoke with this week said that they don’t anticipate being able to re-open their stores until the summer. “I think people are preparing models [in which stores] will open as early as July and as late as October,” said Logan Langberg, principal at Imaginary Ventures, which has invested in Camp and Everlane.
But it’s absolutely critical that when stores re-open, DTC brands are ready. Many DTC brands have said that their stores are their most profitable sales channel, and are also critical to helping online sales grow in particular cities. As such, startups can’t afford to let their brick and mortar business crumble.
“My guess is there is probably a three- to six-month period after stores open where people are just getting acclimated to the new normal,” Langberg said. “If stores open tomorrow, the average consumer is not necessarily going out to a store, waiting in a long line, going into a packed mall. That behavior will take some time.”
The biggest challenge is that startups are likely going to have to cater to two different sets of customers: one of which is dying to go back into stores and is happy to resume shopping and attending events just like they did before the coronavirus outbreak, while the other is going to be very nervous about being in crowds again and wants re-assurances that stores are taking the necessary steps to keep customers and employees safe.
Nate Checketts, co-founder and CEO of Rhone said that the company is trying to figure out how to enable contactless payments when its four stores re-open, as well as how to “enable customers to come in and plan ahead,” so they can get what they need quickly. Actions that would have previously been a given — like running a paid marketing campaign encouraging people to come back to stores once they re-open — are also being questioned.
The company has discussed launching one-on-one shopping appointments, in order cater to customers who don’t want to be surrounded by a lot of people in stores, but doesn’t want to force customers to book that.”The tricky thing about that, is let’s say that you do move to that model, are you then saying to customers who walk by and do want to come in, that the only way you can shop is by booking a concierge service and a one on one service,” Checketts said.
Catherine Pike, director of retail at Southern California activewear brand Vuori, told me during a ModernRetail+ talk this week that her team is also talking through how to make sure that both store associates and customers feel as comfortable as possible when stores re-open. If customers don’t feel safe, then they won’t want to re-visit stores, but perhaps even more importantly, if employees don’t feel safe, it will rub off on customers and they won’t have a great experience in-store.
But, Vuori is also trying to look on the bright side, by taking this time to look at how they can make their stores better when they re-open. Vuori is discussing how to add some element of customization to its stores when they re-open, like allowing people to customize product in-stores, or creating individual offers for customers to redeem in stores. Vuori is also discussing how to add more “touch and try” experiences in store, as people don’t really have an opportunity to try out product now when they are shopping online.
“When we amplify what people have missed about brick and mortar…that will drive people back in store,” Pike said.
Hot sauce brand Truff launched an app last week where users can buy hot sauce and view cooking videos, in order to cater to customers who are doing most of their cooking at home these days. While not every food and beverage brand is launching an app these days, there’s no question that many of them are experiencing an uptick in sales right now, and as such are looking for ways to build a more direct relationship with their customers. Truff co-founder Nick Guillen said the company was thinking about launching an app already this year, but officially decided to commit resources to building it last month. In eight days, thousands of people have downloaded the app. Guillen said that sales have remained pretty steady compared to the growth that Truff was seeing earlier in the year, but that its product has been selling out more quickly at wholesale partners’ stores, including Whole Foods.
Stat of the week
Lingerie brand Adore Me said that it saw a 70% increase year-over-year in revenue on April 15 — the day that many Americans received their stimulus checks. It’s not the only company claiming that it saw a stimulus bump. A number of DTC marketers also posted on Twitter saying that they saw an increase in conversion rates the same day. Interestingly, Adore Me also said that two of its top-selling items on April 15 were some of its most expensive bras.