What Retailers Can Learn from DTC (Direct-to-Consumer) Brands
Direct-to-Consumer (DTC) brands are on the rise. These companies, which sell their products directly to customers without the use of traditional intermediaries like wholesalers or retailers, have disrupted the market with their innovative business models, sharp focus on customer experience, and cutting-edge digital marketing strategies.
From up-and-coming startups to established brands that have embraced the DTC model, their approach has proven not only successful but also instructive for traditional retailers.
So, what can companies learn from retail industry trends that are emerging from DTC brands? Find out where these companies excel and what retailers can do to incorporate these insights into their business models.
1. Customer-Centric Approach
One of the defining characteristics of DTC brands is their obsession with customer experience. By removing intermediaries, these brands maintain direct relationships with their customers, gaining valuable insights into their preferences, behaviours and pain points. This enables them to offer a personalised, seamless experience from the very first interaction, whether online or in person.
Traditional retailers, on the other hand, often have a more fragmented relationship with their customers, especially when they rely on third parties like wholesalers or distributors. To compete with the customer experience provided by DTC brands, they must place the customer at the centre of their business strategies. This involves rethinking the way they gather and use customer data. Personalisation, customer feedback loops, and continuous engagement through email marketing and social media are areas where traditional retailers can take cues from DTC brands.
Investing in tools that track customer preferences and behaviours—such as Customer Relationship Management (CRM) systems and artificial intelligence (AI)-driven analytics—can help retailers replicate the personalised experience that DTC brands are known for.
2. Data-Driven Decision-Making
DTC brands leverage data to make almost every decision, from product development to marketing strategies. Since they control the entire customer journey, they have access to a wealth of first-party data that helps them refine their offerings and create targeted, high-conversion campaigns. Whether it's through A/B testing of website layouts, gathering insights from social media, or analysing customer feedback on product features, DTC brands continuously iterate and optimise based on data.
Brands who operate in traditional environments might not have the same direct access to customer data, particularly if they rely on third-party distributors. However, there are opportunities for retailers to collect and analyse data from their own websites, in-store experiences, loyalty programmes, and social media platforms. They can also partner with data providers or use tools like Google Analytics to gain deeper insights into customer behaviour.
A data-driven approach doesn’t just help with improving marketing campaigns; it can also influence inventory management, product development, and pricing strategies. The more insight retailers have into what their customers want, the better they can serve them and increase profitability.
3. Storytelling and Brand Identity
Inside retail, a key strength of DTC brands is their ability to build strong, relatable brand identities that resonate deeply with their target audience. By telling compelling brand stories, they foster emotional connections and create loyal communities around their products. This is often accomplished through carefully curated content, authentic messaging, and values-based marketing.
Consider brands like Glossier or Warby Parker, which have built cult-like followings by promoting values such as inclusivity, transparency, or environmental sustainability. Their story becomes part of the product experience, and customers often feel that they are buying into a lifestyle or a cause rather than just purchasing a product.
Retailers can learn from this by revisiting their brand messaging and developing a clear and consistent narrative. In an era where consumers are increasingly driven by social values and seek out brands that align with their personal beliefs, storytelling can make the difference between a one-off purchase and a lifelong customer. Retailers should aim to build a narrative that reflects their brand’s mission, values, and unique selling proposition (USP), then integrate this storytelling across all customer touchpoints—whether online or in-store.
4. Agility and Innovation
DTC brands are known for their ability to pivot quickly in response to market retail trends and customer feedback. Their direct relationship with customers means they can quickly gauge reactions to new products, pricing changes, or marketing campaigns, and adapt accordingly. Many DTC companies start as digitally native brands, which gives them the advantage of being agile and able to iterate without the overhead of physical stores or complex distribution networks.
For traditional retailers, becoming more agile may involve rethinking legacy systems and processes that slow down decision-making. Retailers can learn from the agile mindset of DTC brands by adopting a test-and-learn approach to product launches, marketing strategies, and customer engagement initiatives. For example, instead of launching an entire product line at once, retailers could release a small collection and gather customer feedback before expanding.
Moreover, traditional retailers can use digital tools and platforms to launch new initiatives quickly. Many retailers have already embraced e-commerce, but the next step is to use technology to enhance other aspects of their operations, such as inventory management, customer service, and marketing.
5. Community Building and Social Media Engagement
DTC brands often thrive by building strong, active communities around their products. Through platforms like Instagram, TikTok, and YouTube, they engage with their audience in real-time, encouraging user-generated content and facilitating direct communication between the brand and its customers. This creates a sense of belonging and involvement that can foster long-term loyalty.
Retailers, especially those that are still primarily focused on physical stores, can learn from the digital-first mindset of DTC brands when it comes to community building. Social media is not just a marketing channel; it’s a platform for conversation and connection. By engaging with customers through social platforms and encouraging participation through contests, polls, or user-generated content, retailers can foster a sense of community that transcends the transaction.
Additionally, retailers should consider leveraging influencer marketing, a strategy that DTC brands have used to great effect. Micro-influencers, who have smaller but more engaged followings, can be particularly effective at promoting products in an authentic and relatable way. Retailers can benefit from partnering with influencers who align with their brand values and target audience.
6. Sustainability and Ethical Practices
A growing number of DTC brands are putting sustainability at the core of their business models, recognising that today's consumers are increasingly conscious of the environmental and ethical impact of their purchases. Brands like Allbirds and Everlane have garnered significant customer loyalty by promoting transparency in their supply chains and committing to sustainable practices.
Traditional retailers, especially those with complex global supply chains, can often find it challenging to achieve the same level of transparency. However, consumers are increasingly demanding that brands take a stand on issues such as sustainability, fair labour practices, and environmental impact. Retailers can start by making incremental changes, such as offering more sustainable product options, reducing packaging waste, or promoting ethical sourcing practices.
By incorporating sustainability into their core values, retailers can not only meet customer expectations but also future-proof their businesses against shifting regulatory and market demands.
The rise of Direct-to-Consumer brands has reshaped the retail landscape in profound ways. While traditional retailers may face challenges in adopting some of the same strategies, they also have significant opportunities to learn from the DTC model. By focusing on customer experience, leveraging data, building strong brand identities, fostering communities, and embracing sustainability, retailers can stay competitive in an increasingly digital, customer-driven world.
Ultimately, the key takeaway for traditional retailers is to embrace agility and innovation while maintaining a strong connection to their customers. In doing so, they can not only survive but thrive in an era where direct-to-consumer brands are setting new standards for success.
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