Why Legacy Labels Still Want to Be DTC Brands

Major brands are shifting their focus to direct-to-consumer (DTC) sales, prioritizing their own stores and e-commerce platforms over traditional wholesale channels. This is because DTC allows for more control over pricing, data collection, and brand experience. Levi's is a prime example: although overall sales dipped slightly, their DTC sales grew 8%, reflecting their strategy to have 55% of sales come from DTC channels by 2027.

This trend coincides with struggles in multi-brand retail. Department stores are closing locations and facing activist investors, while luxury e-commerce platforms are experiencing difficulties. As a result, brands are taking control by opening their own stores and improving online shopping experiences.

However, DTC isn't perfect. Customer acquisition costs can be high online, and established brands aren't immune to these challenges. While some DTC-first brands have even begun selling wholesale again, success in DTC can still lead to significant payoffs. Strong brand marketing that drives customers to both online and physical stores is crucial, and offering a wider variety of products beyond hero items can also boost sales. Ultimately, a successful DTC strategy requires a balance - leveraging the benefits of DTC channels while acknowledging the importance of a well-rounded omnichannel approach.

Source: BOF

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