Retail Lessons from DTC challenger brands

Direct-to-consumer (DTC) brands are shaking up entire categories. It’s now nearly impossible to find a single product category left unaffected by the arrival of this new wave of challenger brands. Even categories that have been stagnating for decades are finding themselves being disrupted.

So how can your brand win in retail against this new breed of small, but fearless DTC brand?

Here’s my five top tips:

Reclaim Core Category Benefit

DTC challenger brands don’t compete on latest features and don’t shout about their new, added-benefit functionalities. They bring the focus back to the core customer need instead. They innovate and build their businesses based on a simple question: what’s the single most important reason people shop my category?

Think Mahabis. The brand has taken on the most mundane category in the world – slippers. They are reclaiming the purest reason to buy a pair of slippers – comfort.

That’s how they describe the design process behind making their product: “endless reduction till we find something that no longer needs the complexity of explanation.”

They might be using innovative processes and materials to manufacture their products but it never takes centre stage in their comms.

Premiumize by Limiting Choice

Traditional brands tend to grow by endlessly expanding their portfolio of products. Challenger DTC brands do the opposite. They drastically reduce their portfolio. They recognise that simplicity is premium. They focus on selling only a handful of different products, and many start out with just one. Having a limited range shows confidence in the product and allows them to focus on a simple set of messages.

Harry’s offers only one cheap(ish) razor which, when up against high prices and clunky designs from shaving giants like Gillette, stands out as the premium one.

Embed Home Trial into the Purchasing Process

By law, all brands have to offer a return policy. However, they are almost always used as a return’s mechanic when there’s a problem, rather than an opportunity to enable product discovery. Challenger DTC brands empower people to try their products at home, in the natural way they would use them.

The “Home Try-On formula” from Warby Parker is simple yet genius: 5 pairs, 5 days and the customer only pays for the glasses they decide to keep. Simple.

Demo Your Products in a Meaningful Way

Traditional brands treat retail channels as an opportunity for expanding their distribution and for optimising the best transactional experience. Challenger DTC brands establish physical presence as a way for consumers to discover products in a meaningful way, not just to buy them. They turn physical stores into must-visit destinations which often need to be booked and paid for in advance.

Casper’s Dreamery is a destination designed with the ambition to help people sleep better. On arrival customers are given pyjamas and are invited to a Sleep Pod for a 45-minute nap on a Casper mattress.

Keep Control Over the Experience

There is a clear pattern for expansion of challenger DTC brands. They establish a strong presence online, create distinctive retail experience across pop-ups and own stores and then replicate it through third-party retailers.

DTC brands grow their footprint with impressive consistency. Their determination to control the experience means that when working with third-party retailers they do it on their own terms. Impressively, DTC brands are reversing the conventional dynamic. It’s not the brand aspiring to be listed with a top mass retailer, but instead, it’s the mass retailer that’s aspiring to partner up with the brand.

Over the last couple of years, US retailer Target has listed numerous formerly online-only brands including Casper, Harry’s, Barkbox, Quip and Native. They have all managed to achieve the impossible – keep their distinctive, bold identities and protect their unique, boutique feel within a big box store housing hundreds of brands.

Justyna Pospychala, planning director, MullenLowe Open

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