The highest inflation in forty years has sent consumer confidence plummeting to its lowest level in three months, forcing many to forgo buying new homes, appliances and cars, according to the conference board. Despite these headwinds, retail as a category is expected to continue to grow, albeit at a slower pace than seen over the past two years. MasterCard
While direct-to-consumer (DTC) digital native brands have excelled during the pandemic due to a number of factors, including lower exposure to real estate, inexpensive customer acquisition costs, and increased shopping online, a different strategy is needed today to be successful. The past eighteen months has seen a rapid shift in performance marketing success due to the rollout of iOS 14. Coupled with ongoing supply chain shortages, recruiting challenges and now, declining consumer confidence, digital native DTC luxury and beauty brands need to consider new avenues for growth:
Explore new retail formats: Identifying smart ways to optimize all consumer touchpoints is another key to success, with controlled distribution remaining a major success factor for most DTC luxury brands. So much so, moreover, that Chanel Beauty recently entrusted fashion company that in the coming years it will move more to a DTC format by reducing its reliance on wholesale partners. The article reports that the luxury beauty giant’s online sales grew 32% last year and it also opened 50 standalone Chanel Beauty stores. Conversely, identifying the right retail partner or location can help digital-native DTC brands acquire new consumers. Pangaia, the digitally native DTC sustainable materials science brand that creates sports wardrobes from its sustainable fabrics, is selectively opening pop-ups around the world for consumers to interact with their products and experiment in real life before buying online.
Test new digital platforms: While the luxury shopping market in the metaverse is still in its infancy, brands such as Balenciaga, Louis Vuitton and Burberry are all experimenting with different formats to understand who the customer is in this new virtual world. Many brands find the unique opportunity to be a Web 3.0 pioneer a compelling proposition for new customer acquisition. Other non-traditional platforms can be just as rewarding. Charlotte Tilbury, a digitally-born cosmetics, skincare and fragrance brand, has immersed itself in the world of electronic gaming by offering masterclasses and other digital events on the gamer streaming platform Twitch. Testing new platforms before they become oversaturated and overpriced allows DTC brands to engage with consumers around the world in an organic and authentic way.
International growth: E-commerce enables borderless shopping, which is especially appealing to young Gen Z and Millennial consumers. Enabling cross-border e-commerce is one of the most cost-effective and efficient ways to brands to develop their business. The key to success, however, is “glocalization”. Local language proficiency, pricing in local currency, promotions scheduled on a local calendar, providing global access with local expertise, and eliminating hidden surprises by offering shipping options that include rates and local taxes are paramount to success. Accepting cultural differences is another key success factor. A digital native, CTZN Cosmetics has mastered glocalization since its creation. Founded by three Pakistani-American sisters who grew up in Dubai and live in London, CTZN’s “nudiversal” colors match all skin tones, have been popularized by celebrities and TikTok influencers, and ship to consumers. in the United States, Europe and the United States. Middle East.
Act sustainably: Pangaia is just one example of a DTC brand that has embraced sustainability, which has allowed it to cultivate a following of loyal consumers while setting itself apart from its competitors. Another is Vegamour, the plant-based hair wellness brand that just received an investment from Nicole Kidman. Vegamour products treat hair, eyelashes and eyebrows growth. He started selling his products on Amazon
Brands that are willing to take risks when the world changes around them often thrive more exponentially than they would have under more favorable and predictable business conditions. DTC brands that are ready to embrace change and seize the opportunity presented by the current economic environment will emerge much stronger and more resilient.