CREATING BRAND RESILIENCE DURING A COST-OF-LIVING CRISIS

A deep dive into how investing in DTC offers long-term growth opportunities in turbulent times...by Julie Austin

?Rising operating and marketing costs, disrupted supply chains, labour shortages and the long-tail impact of the pandemic: the retail industry has been battered by yet another year of economic twists and turns.?????

?And with the winds of a global recession firmly on the horizon for 2023, most retailers are now also having to reconsider their growth strategies with squeezed consumer finances and a “cut back economy” front of mind.??

?It is tempting to think DTC (direct-to-consumer) should be the first channel on the chopping block if you’ve been an avid reader of media this year. After all, it’s hard to not be swayed by stories such as Retail Brew’s ‘Supply-chain chaos slows DTC growth: report’.?

?But our love for a click-bait headline often fails to divulge all the intricacies of business. For brands with a strong value proposition, selling directly to consumers continues to be a powerful way to drive profitable growth, in my opinion. ??

?Whether it’s accessing a brand’s full range in one place, more competitive pricing or discovering new products, there are many reasons why people are choosing to shop directly from brands. Plus, at a time when shoppers are more open to trying new brands and feelings of disloyalty are increasing, DTC offers undeniable benefits to brands that are not as readily available via the more traditional channels of retail or marketplaces.??

So, let’s delve into three reasons why ?having a strong DTC proposition within your channel mix ?can help brands become more resilient to the oncoming economic challenges...

1. Gain unparalleled customer insight??

?First-party data is like gold dust. Brands with a strong DTC presence, therefore, have a huge advantage as the model is built upon nurturing direct relationships. Knowing your customer is not only a short term advantage to be able to segment and target communications but is the way long term relationships are built, reducing your acquisition costs and creating brand advocates not just purchasers. ?

Yes, data can be purchased from retailers and marketplaces, but it’s often expensive to access – and not always available in real time.??

?With DTC, the data is all yours. Whether it’s insight into how people consume your content, the pain points that lead to cart abandonment or how your retargeting strategy can be improved, first-party data provides unmatched, accurate insight to make considered, but swift, business decisions.??

?Plus, access to this insight to make those decisions is only going to increase over time. The general population is not only becoming increasingly concerned about how their data is being used, encouraging them to turn more and more to ad-blockers, but third-party cookies will also be phased out in the next couple of years.??

2. Showcase your brand personality from screen to doorstep??

?Armed with an intuitive understanding of who their customer is, DTC brands can create highly personalised brand-led experiences, incorporating opportunities to cross-sell and upsell. However, the real benefit of these experiences is that they can run concurrently for one shopper without alienating other shoppers who have different preferences.?

?Similarly, retailers and marketplaces often impose structural limitations on brands – whether it’s the category items are sold in, or the size of opportunity they are willing to take on. This means there can be substantial restrictions on how a brand’s personality is showcased in these channels.???

With DTC, brands are unconstrained by such factors. You control how your brand is presented – at every step of the journey. Whether it’s a choice of payment providers, delivery updates in your brand tone of voice, items arriving in exquisitely presented packages, or even a celebration of your customers on your social channels, there are numerous touchpoints to create loyalty.????

?And with Retail Economics highlighting that experience is still a key part of the value chain, despite squeezed budgets and growing economic concerns, it’s important to note that in an age of heightened expectations, people will always remember how brands make them feel.??

3. Incubate future growth?

?Recessions don’t last forever. However, when the right time will be to enter new territories, bring different products to market or extend existing ranges can be difficult to ascertain.??

?This is where the agility of DTC comes into its own.??

?Without the need to commit to space (digital or physical) months in advance, or align with retailers’ seasonal requirements, brands can bring their DTC products to new, or existing, markets at a much faster pace. And if audience insight has identified unexpected locations where there is a viable selling opportunity – but more traditional partners don’t have strong retail footprints – DTC can help fill this void.??

Plus, DTC offers brands the ability to get instant feedback from customers – whether that’s on products, packaging or marketing. This allows brands to test products before investing in large production runs. Such a nimble approach is particularly relevant for more established brands that want to identify patterns and predict future sales before committing to more traditional retail routes.??

?Making intention bets for long-term growth??

?It's no secret that brands must establish and maintain good relationships with their customers if they want to retain them. And against a backdrop of shoppers already making changes (or planning to make changes) to their purchasing habits, retailers need to pursue innovative approaches to achieve long-term resilience.??

?DTC, your digital flagship shop, is THE channel that helps brands do just that.