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C+CT

Why direct-to-consumer brands want brick-and-mortar

December 11, 2019

The direct-to-consumer model may allow retailers more control of touch points and a steady feedback loop of data, but acquiring customers through Google and Facebook ads is expensive, said panelists on Wednesday at the New York Deal Making session titled “The Future of DTC is Female.” DTC is heating up as a brick-and-mortar tenant category, with these retailers seeking to differentiate their brands and to bump sales up to the next level.

Children’s-apparel label Rockets of Awesome recently signed a permanent lease after spending five months testing out a pop-up location in New York City’s Flatiron District. “Our vision was always to be omni-channel,” said founder and CEO Rachel Blumenthal. “The digital age has lowered the barrier to entry and allowed so many people to launch brands. A physical location helps cut through the noise for the customer. I see brick-and-mortar as being a major part of our future business.”

Upscale accessories label Dagne Dover has plans for a physical expansion of its own after testing a pop-up shop in New York City’s SoHo neighborhood. Co-founder and CEO Melissa Mash wants to roll out her “performance bags with souped-up interiors” concept to all major U.S. cities. “It’s important [that customers] be able to test our products in person,” she said. To that end, the locations feature laptops, phones, shoes, hygiene products and even breast pumps, to enable shoppers to test out how things fit.

Landlords will find that DTC brands have unique needs when it comes to negotiating leases. “Landlords need to understand [that] brands like us won’t sign a 10-year lease,” Mash said. “Everything we do is about testing. So, many hold out for 10 years, at least.”

Indeed, more landlords are offering flexible leases that appeal to DTC brands. “Some malls offer something other than a complete cash deal,” said Blumenthal. “Our businesses are based on data evaluation and having flexible responses to testing, so we need more flexibility at the onset.”

By Brannon Boswell

Executive Editor, Commerce + Communities Today

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