Retailers are dealing with new challenges driven by technological disruption and the ever-increasing expectations of customers who crave personalization and instant gratification. The one trend that’s arguably impacting retailers the most is the emergence of innovative, digital-first competitors.
Direct-to-consumer (DTC) brands have the power to innovate and quickly adapt to new customer behaviors and market conditions. Because they are relatively new companies, they aren’t burdened by the legacy technologies that traditional retailers have to deal with. Companies like Casper, Rent the Runway, and Warby Parker began as online-only brands. But they quickly learned that in order to be in front of customers—they needed to have a physical store presence. After all, despite the undeniable increase in online sales over the past decade, they still only account for 14 percent of all global retail sales.
These DTC brands have been successful with their brick-and-mortar investments because they are not weighed down by the outdated processes and infrastructure that hinder so many older brands. They’ve adopted innovative approaches to CX that utilize modern, best-in-class technology and processes, creating an agile approach to customer acquisition, engagement, and sales tactics across channels.
Here are three ways that traditional retailers can learn from DTC brands, especially as their businesses scale and their store network expands.
Lesson 1 - They’re Fixated on the Customer
DTC founders developed their businesses to serve a very specific audience with a very specific product or service. Their entire business models and go-to-market strategies are designed to focus on a central brand promise, which includes solving their audience’s unique pain points or needs.
For example, the co-founders behind Casper wanted to disrupt the mattress industry. For years, Casper focused on creating stellar mattresses for customers who wanted a good night’s sleep—without the hefty price tag. Social media and other marketing tactics illustrated this mission and today, the product line includes a range of supplementary sleep goods, including pillows, sheets, and sound machines. Data and deep customer understanding fuel short and long-term opportunities for the business, and help them prepare for spikes in product demand. This data is especially valuable as Casper establishes partnerships with retailers like Target and opens its own storefronts.
Rent the Runway is an e-commerce fashion disruptor that creates comprehensive customer profiles that blend browsing, rental, and purchase data with customer information, such as measurements, size, and brand preferences. The company offers different subscription tiers like unlimited rentals and a monthly closet refresh, which add greater insight into consumers’ overall engagement and loyalty to the brand. These tiers, as well as their growing network of showrooms, add another layer of complexity to its supply chain operations. Data from across the organization helps the team understand which items, designers, sizes, and colors are in demand, fueling logistics, merchandising, marketing, and more.
Lesson 2 - They Focus on the Omnichannel “Ripple Effect”
The customer journey is no longer linear. Their behaviors and actions cannot be anticipated or expected. Retailers must be prepared to engage and serve these customers—regardless of where they are in the shopping journey. That is why 63 percent of DTC and 70 percent of traditional retailers are increasing their investment in customer data platforms.
DTC brands have a clear advantage because as these once online-only brands expanded to brick-and-mortar storefronts, they also ensured that all channels and data sources were integrated. Thus, the customer has a seamless experience—especially as they transition from the website to the store, known as the “omnichannel ripple effect.”
Associates are the face of the brand and must have the power to access everything they need to offer the best service—from e-commerce inventory information and purchasing capabilities to individual customer information. That is why Warby Parker equips store associates with mobile devices for quick and easy access to the eyewear brand’s digital properties. The in-store experience is rather traditional, touting floor-to-ceiling displays of different frame shapes, colors, and styles. Associates use mobile devices to access the e-commerce storefront and customer data, especially handy if shoppers complete in-store eye exams and need to update their profiles. Through one handheld device, associates can do everything they need to serve the customer.
As traditional retailers empower associates to drive digital sales, they must consider the omnichannel ripple effect, reassessing how associates are measured and incentivized to drive transactions across all channels.
Lesson 3 - They Embrace Agility Across the Organization
DTC brands have embraced a culture that encourages creative thinking, even risk taking. Many employ a test-and-learn culture that accelerates innovation. They have developed the tech stack and cloud infrastructure to support it. And data is the cornerstone, so teams quickly gauge what works, what doesn’t, and how to respond. For example, disruptive makeup and skincare brand Glossier relies on omnichannel customer feedback and even a branded Slack channel to collect customer data, identify new opportunities for innovation, and decide what content they should create.
Glossier made headlines with the announcement of its new COO, who was with Amazon for two decades. Most recently the VP of Sales and Marketing for Amazon Devices, Melissa Eamer is tasked with expanding the Glossier business, especially as it accelerates production of its highly unique, localized pop-up stores.
Commerce Is at a Crossroads. Make Your Move!
Although many industry figures preached about the Retail Apocalypse, IHL Group research indicates that the industry is actually facing a new and exciting era. For every store that closed another five opened, indicating that retail isn’t dead—it’s just being reimagined.
As DTC brands open more stores and make headlines with their head-turning store concepts, it’s up to you to determine how you can reimagine the brand experience to drive customer interest, engagement, and, ultimately, conversions. Data is your secret ingredient to success. Are you using it to your advantage?
Learn how Oracle CX Commerce has helped DTC brands and established retailers alike reimagine their customer experiences, and why it is a 20-year leader in the Gartner Magic Quadrant for Digital Commerce.
At Oracle, Bob Meixner is a director of product management focused on helping organizations optimize and scale their digital experiences. Bob resides in Los Angeles and when he's not talking about content management, martech, and commerce he can found navigating the boutique fitness studio scene.