Description

This report provides comprehensive and current information and analysis of the Direct-to-Consumer retailing market including Direct-to-Consumer retailing market size, anticipated market forecast, relevant market segmentation, and industry trends for the Direct-to-Consumer retailing market in the US.

Current market landscape

Direct-to-consumer retailing is – and will continue to – evolve. The term direct-to-consumer itself is even starting to lose its luster as traditional brands incorporate DTC approaches and offerings and muddy the water. Two thirds of consumers feel that whether or not a brand is DTC has no impact on their choice to shop with the brand. This means that DTC brands have some work to do in order to stay differentiated in an increasingly crowded marketplace. It also indicates that the shopping experience a brand offers is more important than how it might label itself.

The lines that constitute a DTC brand from a traditional brand are becoming blurred. DTC brands face increasing challenges from traditional brands making a DTC play. Many digitally native DTC brands are also expanding into brick and mortar, with some seeking distribution in traditional retailers. As more traditional brands offer a direct-to-consumer path to purchase and DTC brands enter brick-and-mortar locations, brands need to be even more active about showing consumers how a DTC brand can more readily meet their specific needs. Capitalizing on personalization and customization opportunities will be key in driving consumer preference for DTC brands.

Market share and key industry trends

  • There is ample room for DTC brands to expand their reach: 74% of consumers have at least some interest in purchasing from DTC brands with 36% having done so in the last 12 months (see DTC Awareness).
  • Stores and retail partnerships are important to consumers as they shop DTC brands: 70% find it more convenient to shop with traditional retailers rather than buying directly from brands (see DTC Shopping Behaviors).
  • The term DTC isn’t a purchase motivator – 67% of consumers feel that whether or not a brand is selling DTC has no impact on their shopping decisions (see Motivations to Shop DTC Brands).

Future market trends in Direct-to-Consumer retailing

Rising prices of consumer goods will impact shoppers’ discretionary spending and have them seeking greater value from brands. Value will need to be offered in both monetary and non-monetary forms. Brands can look to offer deals, discounts and promotions through their social media channels, a space where consumers are spending much of their time. Other forms of value can be provided by offering consumers access to experts, exclusive experiences, and help in best managing their budgets.

One of the biggest areas of opportunity for DTC brands is to look for ways to grow with the changing lifestages of their shoppers. Millennials and Gen Z are big proponents of shopping with DTC brands, but as they age, their preferences and needs will evolve. To stay relevant, DTC brands will need to look toward ways to demonstrate they can be go-to brands for life and not just at a point in time – an example could be offering product packages that meet different household needs (eg single use versus family use).

Read on to discover more about the retail direct to consumer market, read our Path to Online Purchase – US – 2022, or take a look at our other Retail research reports.

Quickly understand

  • Consumers’ awareness of DTC brands.
  • Sources consumers seek for information on DTC brands.
  • What motivates consumers to shop DTC brands.
  • Barriers to purchasing DTC brands.
  • The role of physical stores in the DTC business model.

Covered in this direct-to-consumer retailing market report

Direct to consumer retail brands include: Everlane, Prose, Lovevery, Magic Spoon, The Farmer’s Dog, Allbirds, Warby Parker, Dollar Shave Club, Casper, Quip, Target, Costco, Boll & Branch, Dagne Dover, Rockets of Awesome, Rhone, Peacock, Hulu, Whole Foods, Function of Beauty, TikTok, Klarna, AfterPay, Columbia, TrueBill, Chargebee, Stitch Fix, Felix Grays, Everlane, Glossier, Native.

Expert analysis from a specialist in the field

This report, written by Katie Hansen, a leading analyst in the Retail and eCommerce sector, delivers in-depth commentary and analysis on US direct-to-consumer retailing market research to highlight current trends and add expert context to the numbers.

The line between direct-to-consumer brand and traditional brand is becoming blurrier as more traditional brands shift toward the DTC model to a greater degree. This – combined with more brands entering the marketplace in general – means that DTC brands have their work cut out for them in order to stand out amongst the crowd. Brands will have to lean into their personalization offerings and value-added services, especially as inflation eats away at consumers’ spending power.
Katie Hansen, Senior Analyst, Retail and eCommerce
Katie Hansen
Retail and eCommerce Analyst

Table of Contents

  1. Overview

    • What you need to know
    • This Report looks at the following areas
    • Definition
    • Market context
  2. 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
  3. 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
  4. 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
  5. 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
  6. The DTC Consumer – Fast Facts

  7. 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
  8. 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
  9. 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
  10. 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
  11. 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
  12. 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
  13. 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
  14. 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
  15. Appendix – Data Sources and Abbreviations

    • Data sources
    • Sales data
    • Market Forecast
    • Consumer survey data
    • Abbreviations and terms
    • Abbreviations
    • Terms
  16. 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

About the report

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