US Direct-to-Consumer Retailing Market Report 2022

Overview

• What you need to know
• This Report looks at the following areas
• Definition
• Market context

Executive Summary

• Top takeaways
• Market overview
  • Figure 1: Total US retail ecommerce sales and fan chart forecast, at current prices, 2016-26
  • Figure 2: Direct-to-consumer retailing category outlook, 2022-27
• Opportunities and challenges
• Younger consumers are a prime group for DTC brands to target
• Consumers aren’t concerned with the DTC descriptor but with the experience
• DTC brands need to find in-store retail opportunities
• More brands entering the DTC space increase competition for consumers’ dollars
• Key consumer insights

Market Landscape

• DTC brands will see growth as consumers continue to flock to ecommerce
  • Figure 3: Total US retail ecommerce sales and fan chart forecast, at current prices, 2016-26

Market Factors

• DTC brands face pricing and access issues due to economic disruptions
• Impact of inflation: consumers seek out value
  • Figure 4: Consumer Price Index change from previous year, 2020-22
• Impact of the pandemic: rocky supply chains spotlight DTC brands momentarily
• Impact of the Ukraine conflict: not all DTC brands will fair equitably
• New privacy laws drive DTC brands to reconsider marketing strategies
• Consumers seek out brands emphasizing environmental responsibility
  • Figure 5: Everlane makes sustainability the heart of the brand

Competitive Strategies and Market Opportunities

• The lines between traditional and DTC brands continue to blur
• What it means for brands
• DTC investment grows in physical store locations
• What it means for brands
• DTC brands look to challenge the current delivery process
• What it means for brands
• Competition expands into new product areas
• Hair care: Prose
  • Figure 6: Prose displays its custom hair care with new fragrance
• Child Development: Lovevery
  • Figure 7: Lovevery highlights the need for independent play
• Food: Magic Spoon
  • Figure 8: Magic Spoon highlights new adult-friendly kid flavors
• Pet Care: The Farmer’s Dog
  • Figure 9: The Farmer’s Dog helps with portion control
• What it means for brands
• A flurry of IPOs and holding companies disrupt the disrupters
• What it means for brands

The DTC Consumer – Fast Facts

DTC Awareness

• Direct-to-consumer brands can seek out partnerships to boost education, awareness
  • Figure 10: Direct-to-consumer brand awareness, 2022
• Consumers have high interest in DTC but blurry lines complicate understanding
  • Figure 11: Interest in purchasing DTC, 2022
• DTC brands can evolve with lifestages and lean into DE&I initiatives
  • Figure 12: Interest in purchasing DTC, by key demographics, 2022
• No product category is truly off limits for consumers
  • Figure 13: DTC products of interest, by gender, 2022
• Older generations can benefit from home and personal care offerings
  • Figure 14: DTC products of interest, by generation, 2022

Sources of Information

• A multi-channel strategy will expand brand’s reach
  • Figure 15: Sources of information, 2022
• Social media can reach consumers from Gen Z to Baby Boomers
  • Figure 16: Sources of information, by generation, 2022
• Parents rely on their communities for recommendations
  • Figure 17: Sources of information, by parental status, 2022

Motivations to Purchase DTC

• Brands need to show consumers why buying “direct” can benefit them
  • Figure 18: Influence of DTC on purchasing, 2022
• Allowing consumers to trial will be key to brand’s success
  • Figure 19: A Dozen Cousins offers consumers a way to test its product
  • Figure 20: Influence of DTC on purchasing, by interest in shopping DTC, 2022
• DTC brands have many ways to drive consumer interest
  • Figure 21: Function of Beauty shows off its positive reviews
• • Figure 22: Motivations to purchase DTC, 2022
• Connect with older consumers on function, younger consumers on emotion
  • Figure 23: Motivations to purchase DTC, by age and gender, 2022
• Low-income consumers focus on monetary value from DTC brands
  • Figure 24: Motivations to purchase DTC, by household income, 2022

Barriers to Purchasing DTC

• Consumers need to be reminded and educated about DTC brands
  • Figure 25: Barriers to purchasing DTC, 2022
• Brands need to remind women and reassure men
  • Figure 26: Barriers to purchasing DTC, by gender, 2022
• Younger generations need more incentives and ways to stretch their budgets
  • Figure 27: Barriers to purchasing DTC, by generation, 2022

Attitudes toward DTC Brands

• Consumers plan to continue to seek out DTC brands
  • Figure 28: Attitudes toward DTC – Shopping DTC, 2022
• Barriers to flexibility will hamper younger consumers’ enthusiasm for the brand
  • Figure 29: Attitudes toward DTC – Shopping DTC, by generation, 2022
• Consumers care most about the experience they get from DTCs rather than how a brand classifies itself
  • Figure 30: Columbia invests in social commerce as a DTC shopping channel
• • Figure 31: Attitudes toward DTC – DTC landscape, 2022
• DTC brands can be better partners in helping younger generations manage their budgets
  • Figure 32: Attitudes toward DTC – DTC landscape, by generation, 2022
• DTC brands should lean into service, ethical efforts to stand out in a crowded market
  • Figure 33: Attitudes toward DTC – DTC qualities, 2022
• Younger consumers can make out the differences between brands
  • Figure 34: Attitudes toward DTC – DTC qualities, by generation, 2022
• Personalization can set brands apart from one another
  • Figure 35: Attitudes toward DTC – Personalization, 2022
• Offer consumer easier ways to show off their style, personal taste
  • Figure 36: Attitudes toward DTC – Personalization, by generation, 2022

DTC Shopping Behaviors

• Consumers seek out one-stop-shop options
  • Figure 37: Felix Gray shows where shoppers can purchase at Target
  • Figure 38: Attitudes toward shopping process, by generation, 2022
• Consumers often explore before making a purchase
  • Figure 39: Attitudes toward shopping process, by generation, 2022

Perceptions of DTC Brands

• Consumers view DTC brands as of high quality
• • Figure 40: DTC brand associations, 2022
• • Figure 41: Glossier provides instructions on how to get the most out of a product
  • Figure 42: Allbirds discusses partnership with Adidas for a more environmentally friendly shoe

DTC Physical Stores

• Stores should be considered for DTC brands
  • Figure 43: Reasons for visiting a DTC store, 2022
• • Figure 44: Native uses social media to alert consumers where to try a new product
• Tap into experiences to drive younger generations into stores
  • Figure 45: Reasons for visiting a DTC store, by age and gender, 2022
• Parents seek fun environments that encourage play
  • Figure 46: Reasons for visiting a DTC store, by parental status, 2022
• Consumers seek out brands with an omnichannel approach
  • Figure 47: Attitudes toward physical stores, 2022
• Create urgency to encourage younger consumers to visit
  • Figure 48: Attitudes toward physical stores, by generation, 2022
• Multicultural consumers focus still on store cleanliness and safety
  • Figure 49: Attitudes toward physical stores, by race and Hispanic ethnicity, 2022

Appendix – Data Sources and Abbreviations

• Data sources
• Sales data
• Market Forecast
• Consumer survey data
• Abbreviations and terms
• Abbreviations
• Terms

Appendix – The Market

• • Figure 50: Total US retail ecommerce sales, at current prices, 2016-26
  • Figure 51: Total US retail ecommerce sales, at inflation-adjusted prices, 2016-26