The trend: As more consumers reduce discretionary spending, digitally native direct-to-consumer (D2C) brands are shedding workers and growing their brick-and-mortar presences to keep their businesses viable amid economic volatility.
Losses mount: Even in the best of times, digitally native brands have struggled to turn quick growth into a sustainable business. For example, Warby Parker has consistently posted losses since its IPO in 2019—a troubling sign for a brand that helped popularize the D2C ecommerce model.
Cost-cutting measures: While Carvana, Allbirds, and Warby Parker’s status as publicly traded companies means they have easier access to capital than privately owned brands, they’re feeling the pressure from investors to cut costs.
Brick-and-mortar wins out: At the same time, digitally native D2C companies are plowing money into growing their brick-and-mortar presences, either through dedicated stores or wholesale partnerships.
The big takeaway: The difficulty that digitally native brands face is that scaling a business’s brick-and-mortar presence is an extremely expensive endeavor which may conflict with cost-cutting mandates.
Go further: For more on D2C strategies, read our report here.
This article originally appeared in Insider Intelligence's Retail & Ecommerce Briefing—a daily recap of top stories reshaping the retail industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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