{"id":47392,"date":"2018-07-31T14:41:32","date_gmt":"2018-07-31T21:41:32","guid":{"rendered":"https:\/\/www.esri.com\/about\/newsroom\/?post_type=wherenext&p=47392"},"modified":"2021-12-17T08:57:13","modified_gmt":"2021-12-17T16:57:13","slug":"is-direct-to-consumer-a-ticket-to-growth","status":"publish","type":"wherenext","link":"https:\/\/www.esri.com\/about\/newsroom\/publications\/wherenext\/is-direct-to-consumer-a-ticket-to-growth","title":{"rendered":"Growth Insights Series: Is Direct-to-Consumer a Ticket to Growth?"},"author":501,"featured_media":0,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"sync_status":"","episode_type":"","audio_file":"","castos_file_data":"","podmotor_file_id":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","itunes_episode_number":"","itunes_title":"","itunes_season_number":"","itunes_episode_type":"","_links_to":"","_links_to_target":""},"categories":[1001,791,971],"tags":[24752,55412,24742,22772],"department":[476812],"wherenext-category":[],"industry":[],"class_list":["post-47392","wherenext","type-wherenext","status-publish","format-standard","hentry","category-commercial","category-digital-transformation","category-location-strategy","tag-brands","tag-growth-insights","tag-manufacturers","tag-manufacturing","department-business-growth"],"acf":{"short_description":"Some enterprising brands are choosing to sell and market directly to consumers, using location intelligence to guide their way.","pdf":{"host_remotely":false,"file":"","file_url":""},"flexible_content":[{"acf_fc_layout":"content","content":"Selling through a middleman is so old school. \u00a0In search of growth, brands and manufacturers are taking their messages right to consumers and selling direct, some for the first time. By engaging consumers on their own terms, online as well as in brick-and-mortar stores, brands are delivering personalized shopping experiences.\r\n\r\nSpurred in part by the example of agile young brands such as retro clothier ModCloth and mattress upstart Casper, many established manufacturers and consumer-packaged goods companies are interacting directly with consumers. Brands including Lay\u2019s, Dyson, M&M\u2019s, Levi\u2019s, and CoverGirl are opening everything from stand-alone, in-retailer, and pop-up stores to showrooms and e-commerce sites. Most emphasize shareable, fun experiences that can\u2019t be had anywhere else: \u201cCreate your own potato chip flavor!\u201d or \u201cTry on makeup in the beauty play-room!\u201d\r\n\r\nTop apparel brands including Ralph Lauren, Under Armour, Nike, and Steve Madden are now seeing an increasing portion of their revenue coming from direct-to-consumer (D2C) channels.\r\n\r\nCompanies going D2C are adopting long-standing retail techniques, including the use of location intelligence<\/a>, to target the right consumers, validate placement of brick-and-mortar stores, identify the best sales partners, understand the competition, and assess market potential."},{"acf_fc_layout":"content","content":"Many brands are also engaging customers in personalized experiences through loyalty programs, which have evolved far beyond simple discount offers. NikePlus members, for instance, can shop at certain Nike locations before the store opens to the public. Members of Dyson\u2019s Owner Rewards program can call a VIP hotline for product support and visit Dyson service centers for complimentary preventative maintenance. Through such programs, brands benefit from increased loyalty and earn the potential for greater spend as they gain a better understanding of customer needs.\r\n\r\nWith its direct pathway to consumers, D2C affords brands more control over customer experience and helps them gain insights while reaping the profits traditionally earned by distributors and retailers. Nike<\/a>, for example, recently enjoyed a stock price surge as analysts touted the company\u2019s D2C success.\r\n\r\nIf other manufacturers can get D2C right, revenue growth is within sight. That\u2019s important, as the retail landscape continues its move away from traditional formats. Take Warby Parker, which disrupted the way consumers buy eyeglasses when it came online selling D2C in 2010. The upstart achieved profitability<\/a> in 2017, raised another $75 million in funding, and is reported to be on its way to an IPO.\r\n\r\nA Wealth of D2C Options <\/strong>\r\n\r\nTraditionally, manufacturers and brands have relied on intermediaries\u2014distributors and retailers\u2014to sell products to customers. While some first-movers embraced D2C years ago, the cost of entering the consumer market has dropped significantly thanks to online shopping. The trend of brands creating D2C channels, both online and in physical locations, keeps growing. A modern geographic information system (GIS) plays a key role in helping brands plan their strategy for D2C channels. Brands use GIS-powered location intelligence<\/a> to understand customer personas; see where promising concentrations of those core personas live, work, and spend time online; assess where and when to open brand stores rather than sell through a partner; understand the competitive landscape in certain locations; and gauge market potential.\r\n\r\nThese are some of the D2C channels manufacturers\/brands are exploring:\r\n\r\n \t- Self-branded stores<\/strong>. High-profile brands\u2014Tesla, Amazon<\/a>, CoverGirl<\/a>, furniture catalog retailer Ballard Designs<\/a>\u2014that have never ventured into traditional retail are now taking the plunge. Securing real estate carries risk, especially in urban areas where commercial space is tight and rents are high. But location intelligence contributes to growth by helping companies choose the locations most likely to be visited by their core customers.<\/li>\r\n \t
- Store-within-a-store. <\/strong>This option lowers risk by allowing the manufacturer or brand to leverage the infrastructure of an existing retailer. Notable cases include Dyson, Samsung, and Microsoft at Best Buy (which has forged an impressive turnaround in recent years<\/a>). The retailer benefits by outsourcing store presentation and, in some cases, department staffing. Levi\u2019s recently opened a major in-store shop called the Levi\u2019s Tailor Shop<\/a> inside Nordstrom Men\u2019s Store NYC\u2014two retail concepts in one (read on for more detail).<\/li>\r\n \t
- Pop-up\/pilot stores. <\/strong>Temporary shops, often tied to an event or season, provide another way to lower the risk of a long-term real estate commitment. Vintage-inspired clothing site ModCloth<\/a> has its first pop-up in San Francisco with other US locations coming soon.\u00a0Club Monaco<\/a>, owned by Ralph Lauren, is another clothing brand using the pop-up format to show off consultative and experiential shopping opportunities.<\/li>\r\n \t
- Showroom-only stores. <\/strong>Brands are using the showroom format (traditionally used by furniture stores and car dealers) to let consumers get a feel for merchandise and then opt for home delivery. In this way, brands avoid the expense of warehousing inventory while encouraging experimentation. Established brand Kohler<\/a> joins clicks-to-bricks e-tailers Boll & Branch<\/a>, Madison Reed, Bonobos, and Warby Parker in this trend.<\/li>\r\n \t
- E-commerce. <\/strong>Online stores are now a legacy D2C format. Brands must have them, even for goods that would previously be unthinkable to ship, such as mattresses. An e-commerce site is table stakes for manufacturers, and many are experimenting with other D2C options in pursuit of new growth.<\/li>\r\n \t
- Social media.<\/strong> Closely related to e-commerce, many brands including Nordstrom and Tiffany & Co. are using social media sites, including Facebook and Instagram, to promote products and drive prospects with a direct link to buy via their e-commerce site. Tiffany uses these platforms to showcase celebrities who wear its high-end jewelry.<\/li>\r\n<\/ul>\r\nA More Personal Spin on Shopping <\/strong>\r\n\r\nWhen going D2C, it is not enough to merely provide consumers with a direct path to buy. The experience must offer something more\u2014unique products, exclusive access, added convenience, a \u201cwow\u201d factor. Brands are using data-driven commerce<\/a> to understand what their customers want, tailor experiences to their tastes, and place those experiences where customers are known to visit."},{"acf_fc_layout":"sidebar","layout":"standard","image_reference":null,"image_reference_figure":"","spotlight_image":null,"section_title":"","spotlight_name":"","position":"Right","content":"