#RetailTrends2020: The rise of D2C

Direct to consumer (D2C) brands will lead retail in 2020. Consumers feel no shame in looking to a competitor if a retailer cannot offer them the right experience. However, D2C brands, have become more than just a shopping outlet. True D2C brands reflect their customers’ culture and mission through an entire omnichannel experience. This omnichannel experience makes a customer’s life that bit easier through creating a seamless shopping experience at the palm of their hands. For example, Nike is a leader in this area. Not only are its marketing campaigns with people like Colin Kaepernick tying it into a cultural movement that resonates with its target audience, but its omnichannel approach reflects this too. Consumers see the marketing on social media, click on the link, purchase a pair of trainers via its personalised app, and then download a second workout app to find tailored training programmes. Collecting data on all of these customer touchpoints is giving Nike a much deeper view of its customers. It’s a positive feedback loop for retail. 

The rise of D2C

We are just at the start of the D2C transformation. By selling directly to consumers, brands can access more audience data to inform the customer experience. From this data, brands can build experiences that are not just based on basic demographics such as age and gender, but create detailed customer personas that look into the life stage and socio-economic background of the consumer. With a tokenised payment solution in place, brands can even use data from past transactions and iterations to understand what a consumer likes, and how they want to shop. Data is integral to creating the right D2C approach, as it is the foundation for more sophisticated marketing techniques, cross-channel experiences and targeted personalisation.

Creating an end-to-end customer experience does not just attract customers for the quick wins, but secures them with a long-term relationship. Taking a D2C approach means customers are brought into the brand and what it stands for, not just a single product it sells. This is the ultimate differentiator when it comes to the brands that will win in 2020 and beyond into the next decade.

Past the price point

Pricing poses the biggest strain on a brand’s relationship with other retailers. The continued decline of the high street has emptied out a lot of big-box retailers, all-too-dependent on cutting prices to secure their sales. Forward-thinking brands no longer see the appeal in selling their products to traditional retailers who use discounting to keep customers coming in. Selling products to these shops can in fact, undermine a brand’s image. Becoming the cheap option will enforce the view with customers that the brand is not worth investing in as its products have little real value. This will result in brands pulling out of trade deals with the likes of department stores and instead focus on their own D2C efforts to not just secure sales, but customer retention too. Ultimately, this is set to be more bad news for big box retailers such as Debenhams who faced their fair share of financial troubles in 2019.

Escalating experiential retail

To combat this shift, high-street stores need to become experience destinations, enabling customers to see, feel, and demo a brands’ culture. For example, tech giants such as Microsoft and Samsung are positioning education centres in target areas for customers to learn about their latest technologies. In doing so, it is not just establishing an omnichannel presence through coming onto the high street but consolidating their purpose and also their utility within the customers’ lives showing value past the purchase of the individual products. High-street retailers would do well to follow a similar approach that is then backed up by a strong online offering. Stores can then become experience and collection destinations, something that consumers are crying out for already.

Ultimately over the next 12 months we are likely to see the continued rise of D2C as more brands realise the value of owning the entire customer journey. No doubt retailers will start to refocus on experience to fight back. However, the longer they leave it the hard the fightback will be. D2C is not a flash in the pan trend, it is here to stay. The rise in the value of data has changed the game and retailers need to react to this if they are to stay relevant in the minds of consumers.