Retail Is Dead, Really Dead.
We’ve known about it for years and have seen it happening all around us. First, it was the big-box retail takeover of rural America that shuttered the mom and pop shops this country was built on. Family run businesses that had been around for years watched helplessly as Home Depot, Walmart and Costco crushed the economic engine that had run so strong for so long. And then Amazon got in the game and proved you could successfully sell books online and the rest is history.
But now, the harsh reality of dying brick-and-mortar retail stores gets even clearer in the cold light of the digital dawn—especially in wake of the ongoing COVID crisis—the final death nail is being driven.
At the writing time of this post, COVID is still real and there’s looting in the streets and riotous protests happening in most major cities around the country because of the terrible events that transpired in the wake of the blatant police brutality in Minneapolis—neither being great for local brick-and-mortar retailers both large and small.
Boutique Brands Takeover Online
All of this is expediting the ongoing online retail revolution, allowing smaller brands to gain a toehold against the big boys and sell directly to their customers. Think of this as their David and Goliath moment—younger, and digitally native everyday entrepreneurs have newfound opportunities to build and grow new digital eCommerce brands that cater to a younger and digitally divided target audience.
What is Direct-To-Consumer or DTC?
Simply put, DTC means selling directly to your end customer. No longer do you need to sell your shoes through a distribution deal with a major shoe retailer or department store. J. Crew, Neimum Marcus and JCPenny ALL filed for bankruptcy in the past 90 days, leaving consumer demand focused on micro brands that are catering to niche-targeted digital audiences.
And the reason this is so important for boutique brands in the online arena is because they own the relationship with the end consumer.
Think About Buying a Pair of Shoes
When was the last time you went shoe shopping? Personally, I like to practice the try before you buy, especially with shoes. Recently, I went to support a local shoe store in SF’s Noe Valley that specializes in the specific type of boot i was looking for (Blundstone’s from Australia) but they didn’t have the exact color I was looking for in my size, so I ordered a pair which they said would take two weeks. I can be a patient consumer when I’m picky about a particular color.
Two weeks later I got a call telling me my boots were in, dropped everything and headed over, parked, paid the meter and went in. I tried on the boots and they felt great, but walking closer to the door with the daylight streaming in, I noticed they were actually not the right color. After being accused by the sales staff that these were indeed what I had told them, I humbly (and incorrectly) apologized for ‘misordering’ and they then had to reorder the Chestnut Brown boots, not Rustic Brown. Two weeks later I was frustrated to have to go back to the store but ultimately received the boots I wanted. I guess I could have made the FedEx driver do the dirty work and sent them back till I had what I wanted.
Is your favorite shoe store really gonna have the exact size, make and model of the latest kicks or, would you rather order them from Zappos and send them back—for free—if they aren’t exactly what you want?
According to the NYT, the US shoe market was $72B last year with a mere 30% of those sales happening online. The article suggests that Nike now accounts for one-third of all the athletic shoe sales in the US and even Nike has turned to direct to consumer sales via its website.
Consumer Behavior Has Changed Forever
And it’s a big deal. We’ve been hearing about it for several months now. Due to the Coronavirus and the shelter-in-place orders, everything is different. As indicated in the chart below, consumers bombarded online grocery and food delivery services like Instacart, Doordash, Uber Eats, up a whopping 91% from the previous year.
Now is a Great Time to Invest in Your Direct To Consumer Strategy
There are 29M SMB’s in America but only 7M Facebook advertisers, of which only 5M or so are SMB’s. That means there are millions of businesses that are not advertising on social media and perhaps many of those are your competitors.
Categories that could be benefit from more social advertising to find new customers are:
But the problem is, to become a savvy and cost effective online advertiser requires experience—expertise, tools and technologies that many SMBS don’t have but are required for companies to build on-ramps to the attention economy for these SMBS.
Save money and reach more consumers while ad rates are low. Because of the Coronavirus, ad spending on Facebook and Instagram have plummeted. According to the WSJ, ad spends on Facebook were down nearly 25% as opposed to a predicted 30% increase. This is good news for micro brands looking to reach new audiences on these two important platforms.
Bottom line is that direct to consumer sales gives you way more opportunities to increase the lifetime value of each customer with continued marketing, customer appreciation campaigns and ongoing brand storytelling. And you get to own that valuable relationship that you’ve worked so hard to build.
The Custom Social Solution
Custom Social leverages proprietary technology and decades of insider industry knowledge to help brands like yours discover new audiences in real time and maximize your ROI. Sign up for a free demo on our platform to learn how you can reach new customers and increase your bottom line.