UK Direct to Consumer Retailing Market Report 2024
The return of more premium demand is slowing improving market conditions for many D2C brands.
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Executive Summary
- Opportunities for the D2C market
- Use pop-ups or flagship stores to reach more consumers
- Physical space can offer the personal touch…
- …and create unique experiences
- Create exclusivity through scarcity and limited editions
- Help forge strong emotional connections with customers
- Go the extra mile on sustainability issues…..
- …to stand out against mediocre big business voices
- Market dynamics and outlook
- Market outlook for the D2C market
- Affluent consumers drive the return of premium demand
- Graph 1: financial confidence for the coming year, by income bracket, 2024
- The evolving role of social media
- Sustainability and ethical transparency are key
- What consumers want and why
- Almost six in ten have bought directly from a brand
- Graph 2: purchasing of products via the D2C channel in the last 12 months (net), 2024
- Direct and indirect purchasing is relatively even for most brands
- Graph 3: purchasing of selected brands that sell via the D2C channel in the last 12 months, 2024
- Only a few emerging D2C brands are cutting through on awareness
- Graph 4: awareness of emerging D2C brands, 2024
- Perceptions of obtaining a better price are biggest motivation for buying direct
- Graph 5: factors that would motivate people to buy direct from a brand, 2024
- Good customer service keeps shoppers loyal
- Graph 6: factors that would encourage D2C buyers to continue purchasing from that brand, 2024
- Testimonials and seeing the product key to choice of D2C brands
- Graph 7: attitudes towards shopping directly with brands, 2024
- Leading D2C players
- Successful ways to stand out in a market
- Innovative products finding gaps in a market
- Brands can inspire, and benefit from, the wellness trend
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Market Dynamics
- Online market size and D2C spending
- Growth returning to the online sector
- Graph 8: market size for all online retail sales (inc. VAT), 2019-24
- Online sales to grow by a fifth by 2029
- Rapid growth in D2C sales during the pandemic, but plateauing since
- Graph 9: sum of known D2C retailers’ sales, 2019-23
- Leading D2C retail brands
- Post-pandemic income squeeze has forced many D2C businesses into survival mode…
- …and many businesses have failed
- Graph 10: total number of VAT and/or PAYE based non-store retailers, 2019-2024
- Social media platforms are evolving into shopping hubs
- TikTok is building scale as a true social commerce platform
- TikTok Shop sees rapid growth as social commerce climbs on the agenda
- New customers driving growth at the disruptive players
- Graph 11: fastest growing major non-food retailers and platforms, monthly number of transactions within cohort, 2023-24
- Graph 12: fastest growing major non-food retailers and platforms, monthly number of customers within cohort, 2023-24
- Market drivers
- Day-to-day confidence remains shaky
- Graph 13: the financial wellbeing index, 2016-24
- Perceptions of the cost-of-living crisis
- Graph 14: perception of the state of the cost-of-living crisis in the UK, 2024
- A diverging financial recovery
- Graph 15: expected behaviour changes in the next two months, by financial position, 2024
- Two back-to-back months of volume growth boost retailers’ sales, but market remains tough
- Graph 16: all retail sales (excl fuel), non-seasonally adjusted year-on-year performance, value and volume, 2023-24
- More seasonality returning to online demand
- Graph 17: all online sales, non-seasonally adjusted, year-on-year change in value, 2023-24
- Sustainability concerns rising up the agenda
- AI divides opinion but younger millennials are positive about it
- Graph 18: “I think AI will have a positive impact on my life”, by generation, 2024
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What Consumers Want and Why
- Purchasing from D2C brands
- Nike and Adidas are the most popular brands in the D2C channel
- Direct and indirect purchasing is relatively even for most D2C brands
- Graph 19: purchasing of selected brands that sell via the D2C channel in the last 12 months, 2024
- Retail is important for expanding the reach of D2C brands
- Graph 20: purchasing of selected D2C brands in the last 12 months, by method, 2024
- Most leading D2C brands are failing to engage effectively with women
- Graph 21: purchasing of selected brands via the D2C channel in the last 12 months, by brand, 2024
- D2C brands are missing out on custom from older generations
- A generational divide in D2C purchasing
- Graph 22: purchasing of selected brands via the D2C channel in the last 12 months, by generation, 2024
- Direct purchasing attracts an affluent audience
- Graph 23: purchasing of selected brands via the D2C channel in the last 12 months , by household income, 2024
- Higher earners are the most engaged with other D2C brands too
- Graph 24: purchasing of other D2C brands in the last 12 months, by household income, 2024
- A popular way to shop
- Almost six in ten have bought via the D2C channel
- Graph 25: purchasing of products via the D2C channel in the last 12 months (net), 2024
- Awareness of emerging D2C brands
- Only a few emerging D2C brands are cutting through on mass-market awareness
- Only a few emerging D2C brands are cutting through on awareness
- Graph 26: awareness of emerging D2C brands, 2024
- Building awareness is key to building a D2C brand
- Graph 27: trends in awareness of top three emerging D2C brands, 2023 and 2024
- Gymshark has the potential to move upmarket
- Graph 28: awareness of emerging D2C fitness/activewear brands, by gender, generation and household income, 2024
- Opportunity for Snag Tights to expand appeal of its range?
- Graph 29: awareness of emerging D2C fashion brands, by gender, generation and household income, 2024
- Indu not scoring with core teen audience, but instead with Millennials
- Graph 30: awareness of emerging D2C beauty and personal care brands, by gender, generation and household income, 2024
- Heights and Provytl 50+ missing out on awareness among older generations
- Graph 31: awareness of emerging D2C supplement brands, by gender, generation and household income, 2024
- Tails could look to increase focus on savings and subscriptions
- Graph 32: awareness of emerging D2C pet food brands, by gender, generation and household income, 2024
- Motivations for buying direct
- Value still critical for emerging brands
- Perceptions of obtaining a better price are biggest motivation for buying direct
- Graph 33: factors that would motivate people to buy direct from a brand, 2024
- Easy returns and loyalty have strong appeal to female D2C shoppers
- Graph 34: factors that would motivate people to buy direct from a brand, by gender, 2024
- Better prices would be the main motivator for older generations
- Graph 35: factors that would motivate people to buy direct from a brand, all vs over-45s, 2024
- Good customer service keeps shoppers loyal
- Importance of customer service is underlined
- Graph 36: factors that would encourage D2C buyers to continue purchasing from that brand, 2024
- Older D2C buyers are more focused on price and deals…
- Graph 37: factors that would encourage D2C buyers to continue purchasing from that brand, by generation, 2024 (continued)
- …while younger D2C buyers want to feel part of something
- Graph 38: factors that would encourage D2C buyers to continue purchasing from that brand, by generation, 2024
- Attitudes towards D2C brands
- Testimonials influence perceptions of trust in D2C brands
- Graph 39: attitudes towards issues relating to trust and trial of D2C brands, 2024
- Brands targeting older female demographics should highlight testimonials
- Graph 40: “I think that customer testimonials are important for trusting a new direct-to-consumer brand”, by gender and age, 2024
- Being able to see a product physically is important when choosing to buy products from D2C brands
- Graph 41: “Seeing a product physically (eg in-store, in a pop-up) is important to me when choosing to buy products from direct-to-consumer brands”, by age and gender, 2024
- Two thirds of D2C buyers want transparency
- Graph 42: attitudes towards issues relating to ethics and sustainability of D2C brands, 2024
- Transparency about ethical credentials is most important to women
- Graph 43: “It is important to me that a direct-to-consumer brand is transparent about its ethical credentials”, by age and gender, 2024
- Buying direct is seen as enabling more-sustainable purchasing decisions
- Graph 44: “Buying directly from brands allows me to make more sustainable purchase decisions”, by age and gender, 2024
- Personalisation of D2C products and service is an expectation
- Graph 45: attitudes towards issues relating to personalisation and D2C brands, 2024
- Subscriptions play vital role in retaining customers
- Graph 46: attitudes towards issues relating to subscriptions and D2C brands, 2024
- An opportunity to trade on authenticity
- Graph 47: attitudes towards issues relating to other issues with D2C brands, 2024
- Use celebrities to build credibility
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Leading D2C players
- Using social media to increase content views and drive brand awareness
- Scrub Daddy: bringing exclusives to social media
- All Things Butter: making butter “cool”
- Bold Bean Co uses ‘beanspo’, recipe videos to showcase new ideas
- Personalising and incentivising loyalty
- Kith takes tiered loyalty to a new level
- Suri invites customers to have their say
- Innovate to stand out in a crowded market
- Rocco: the hard-to-find ‘Super Smart Fridge’
- Hello Klean: a solution to a niche problem
- Ffern: small batches for clients in the know
- Allday Goods: viral knives that protect the planet
- Sustainability – going beyond the norm
- Patagonia: continuing to put activism and sustainability at its core
- Davines: “To do our best for the world, creating a good life through beauty, ethics and sustainability”
- Allbirds backs its sustainability claims with visuals and context
- Nostalgia reigns
- Surreal: healthy ‘adult’ versions of breakfast cereals
- Tastes like childhood
- AI wearables: early days of a new product category
- Life-enhancing or invasive tech ?
- Tapping into the wellness trend
- Huel: appealing to time-poor health enthusiasts
- Provytl 50+: targeting older consumers specific health needs
- Oddballs: quirky undies with a serious message
- Nike extends into holistic fitness
- Advertising and marketing activity
- Advertising spend from D2C brands declined by 68% in 2023
- Graph 48: total above-the-line, online display and direct mail advertising by select D2C brands,2020-2023
- Most D2C brands focus on digital
- Graph 49: total above-the-line, online display and direct mail advertising by select D2C brands, by advertising type, 2023
- Top 10 D2C advertisers in 2023
- Hello Fresh was the top advertising spender in 2023
- Castore unveils glow-in-the-dark billboards for its latest ‘Better Never Stops’ campaign
- On Running’s Dream Together
- Mous tests new backpack
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Appendix
- Report scope and definitions
- Market definition
- Data sources
- Abbreviations and terms
- Snoop SpendMapper methodology
- Consumer research methodology
- Nielsen Ad Intel coverage
Following several years of rapid growth, direct to consumer (D2C) sales have been plateauing since 2021. While a technical definition exists between D2C and traditional retail, most consumers are unaware of this and therefore they expect the same experience when shopping directly. Therefore, alongside a solid online presence, pop-ups and flagships are an important way to reach more consumers.
UK Direct to Consumer Retail Market – Current Landscape
Brands in the UK retail industry have been reaching consumers through an expanding array of channels, with marketplaces, and to a growing extent, social media, now capturing more traffic and spending that traditionally passed through third-party retailers and brands’ D2C websites. The challenge today lies in standing out, finding ways to rise above the crowd, attract and keep new and existing customers.
One way that primarily digital D2C brands can do this is by finding physical space to create meaningful connections with consumers. Pop-ups or even one-off permanent flagships can be used to embody a brand’s design and style, enabling businesses to tell their story. Showcasing their products in a premium environment will help shoppers learn about the brand’s culture while also experiencing its products firsthand.
UK Direct to Consumer Market Statistics
- Popular brands in the D2C channel: Nike and Adidas are the most directly purchased brands in the last year.
- Direct to consumer retail demographics: Older generations, such as Baby Boomers and Generation X, are least engaged with D2C purchasing.
UK Direct to Consumer Retailing Market Report – What’s Inside?
Key Topics Analysed in the Report
- How the financial recovery among affluent shoppers should provide a boost for D2C brands which target the more premium market.
- The importance of a presence in the physical sector for D2C brands.
- Rising consumer expectations for personalised service and customised products that D2C brands are well positioned to tap into.
- Which D2C businesses are building momentum, and the relative awareness and usage of leading brands.
- The reasons why consumers choose to buy direct, and ways that brands can retain their loyalty.
- Elements which create success for D2C brands, including exclusivity, nostalgia, sustainability and wellness.
Report Scope
For the purposes of this report, Mintel has used the following definitions:
Direct to Consumer (DTC/D2C) – is a retail strategy where brands sell their products directly to their consumers instead of going through a retailer. This is often completed online, and examples of D2C brands include but are not limited to Made, Allbirds, HelloFresh, Glossier, Gymshark, etc.
The report also covers brands which can not be classed under the technical definition of ‘D2C’ but for which direct selling, either via their own channels or via marketplaces, constitutes a significant element of their business.
Meet the Expert Behind the Analysis
This report was written by Natalie Macmillan. Natalie is a senior analyst with over 25 years’ experience researching and writing reports for Mintel’s European retail market coverage. She now specialises in the French market.
With the finances of more affluent consumers recovering, premium demand is rising, giving D2C brands that can offer something different, a chance to secure a market foothold and expand retail distribution.
Natalie Macmillan
European Analyst – Retail
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