We have observed the entrance of direct-to-consumer electronic and fashion retail brands over recent years, but now they are here, they will usher in the next stage of growth for digital retailers.
Koio, a direct-to-consumer leather sneaker brand is a relatively new high-end sneaker brand is looking to get in on the new retail wave. The brand focuses on making nice shoes available at a relatively lower price while maintaining high-quality products.
Launched in late 2015, the business saw 400 percent YOY growth in 2017. The company has also started launching pop-up shops, with one in NYC and another in Los Angeles.
Direct-to-consumer technology brands have continued to learn from traditional retailers, first by recognizing the potential in e-commerce and now by opening retail outlets to complement their online presence. Brick-and-mortar is now a key part of their strategies, with footprints that vary from a handful of stores to 200 retail outlets. In many cases, the brands have come to see brick-and-mortar as an essential piece of their business model, albeit with very different goals for their retail store design concepts.
Tivoli Audio is an audio electronics company that does business with individual consumers and companies all over the world.
And they do so by using a sort of “hybrid” approach to fulfilment. While Tivoli Audio operates direct-to-consumer, when doing so is logistically sound and profit is optimal. The team also doesn’t shun the more traditional approach to distribution and fulfilment altogether. Instead, Tivoli Audio forges partnerships with distributors and wholesalers in areas in which true D2C operations just aren’t plausible.
Direct-to-consumer brands have taught pure-play brick-and-mortar retailers that the e-commerce experience is just as important to their strategy as shopfront branding and the retail environments they design. That has led to a blurring of channels and even traditional brick-and-mortar retailers like Best Buy, in the US and Currys PC World in the UK have evolved strong e-commerce channels.
This trend has also prompted consumers to look directly to brands for product, rather than to the retailers they often sell-through. That's perhaps best evidenced by Nike's commitment to its Direct strategy, which came to a head with the announcement that it would stop selling on Amazon.
The purpose of store design and change
It isn't simply a trend; it's become a necessary investment strategy. Campbell Rigg, CEO at Campbell Rigg International, the London based brand and design agency says, “That direct-to-consumer brands are being pressed into opening brick-and-mortar locations because the cost of customer acquisition when operating solely online is so high".
And as consumer habits evolve, companies are searching for ways to evolve their store branding, interior design, format planning and merchandising to best serve customers' needs.
Click and collect delivers convenience
While click and collect are not new retail concepts, they continue to help the profitability of retailers that can deliver product logistics and speed.
Buy online and pick up in-store services may benefit traditional brick-and-mortar retailers, by cutting down on last-mile expenses and turning stores into a competitive advantage over online retailers, including Amazon. We note that the retailer's costs drop when customers utilized to click and collect in-store.
Reinvigorate the customer experience through design and branding
Here are 4 trends for 2020:
Attract “CEO and management leaders” and energize employees
Work with retailers to innovate merchandising display and drive value
Increase the company’s return on invested capital by growing brand awareness
Environment consideration through recycling efforts and giving people access to technology
Best Buy’s and Currys PC World’s commitment to long-term improvements in the core fundamentals of their business models give them a competitive advantage. These companies recognize the importance of differentiating their retail brands, goods and services through the customer experience, investing in talented employees, and, creating value for shareholders through improvements in return on invested capital.
Best Buy and Currys Pc World Stores create value.
Apart from technology retailers growing online presence, Best Buy’s stores provide consumers with important physical interaction with products. This fact is not lost on Amazon, which has been testing out concept retail stores following the acquisition of Whole Foods. Amazon now publishes its store sales, which signals that the segment is material to Amazon’s business.
Retail stores can serve as warehouses and distribution centres, as Best Buy uses its store inventory to fulfil online orders. Additionally, physical stores allow consumers to purchase online and collect in-store, and not have to wait for products to be shipped to their home.
For manufacturers, a retail presence is a key to ensuring their products get the sales they need to be successful.
In a clear sign of the importance of physical stores, Amazon and Best Buy recently announced a partnership to sell TVs powered by Amazon’s Fire TV operating system in its stores and on its website. Best Buy will also be the exclusive retailer of these TVs on Amazon.com.
As the exclusive retailer on Amazon.com, Best Buy eliminates the common concern that their stores exist solely as a showroom to online retailers. Now, consumers can see, use, and test these TVs in-store and, should they choose to purchase online, Best Buy still records the sale. Additionally, Best Buy has the opportunity to sell consumers on additional products that integrate with Amazon’s Fire TV and Alexa capable products.
Our internal process of renewal, allows us to continually benchmark and write about the best in class branding and design in many market sectors across the globe. The majority of images in this article have been taken from the web and are attributed to other brand consultants. With the exception of Currys PCWorld where the Campbell Rigg Agency created the brand identity and store interior design.
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