Retail Dive: Top 6 Direct-To-Consumer Trends for 2022
2021 was a year of growth for the Direct-To-Consumer (DTC) industry, but it also brought with it new challenges. With the pandemic still running rampant worldwide, retailers will have to find new ways to navigate yet another turbulent year. Given the ever-growing competition in the market, it is imperative that retailers keep up with the latest trends. Here are just 6 of them that are worth mentioning:
Deals and Partnerships
A wave of companies went public last year, via initial public offering (IPO), direct listing or de-SAPC transaction. Included in the list were Warby Parker and Allbirds, which are 2 popular DTC darlings. Meanwhile, big names like Supergoop, Beyond Yoga and Sweaty Betty were also inking deals to be acquired last year. Consequently, we can also expect a higher number of exits as DTC brands mature.
Even though shoppers are getting used to e-commerce and shopping online, generating stable profit solely online is still a big challenge for DTCs. Many of them, including Warby Parker, Rent the Runway, Lulu’s and Casper’s have struggled around profitability. However, this does not mean that there is a shortage of brands managing their cash flows well. Solo Brands, for instance, reported a net revenue of $2.1 million in the latest quarter. Similarly, activewear brand Vuori has also been profitable since 2017.
While DTC brands started out online, many are now looking to expand their physical presence. In addition to being an additional marketing medium, physical stores can help reduce the costs of online advertising for brands. Last year, Allbirds and Fenty were making plans to open more brick-and-mortar stores. Some businesses have also opted for partnerships with retail giants such as Walmart, Target and Nordstrom to diversify their distribution channels.
Wholesale and DTC Balance
Recently, several big brands including Nike, Adidas and Under Armour announced their intentions to increase the ratio of DTC sales. Since the profitability of moving to DTC is often questioned, some brands have opted to partner with traditional retailers for wholesale deals, to boost their physical presence instead. Finding the balance between DTC and wholesale will be a big question for brands to focus on in the next year.
Holding Companies’ Support
Joining a holding company is a favorable next step for many matured DTC brands. This is a win-win deal as brands can access more resources for the next development stage and the umbrella company can also extend its reach to customers and add more income sources in the future.
iOs Update Adapation
Apple’s iOS 14.5 was launched last year with stricter policies for AppTracking. Apps will need permission to be able to track or access to the device’s advertising identifier. As DTC brands lean heavily on 3rd-party data and online advertising, this is a big challenge in tailoring and monitoring their marketing strategies. To adapt, brands are returning to old-fashioned forms of marketing like SMS, email or print.Source: 6 DTC trends to watch in 2022
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