The Rise of Direct-to-Consumer Fashion
By: Dustin Brown
Even before the COVID pandemic significantly altered every industry this year, the world of fashion was undergoing great changes. Traditional retail was proving to become less effective, and companies were turning to new models to drive greater revenue while revitalizing their relationships with consumers. One strategy that began to take hold in recent years was Direct-To-Consumer (DTC): a business model in which fashion companies deliver products and communicate directly with their customers, circumventing third-party channels. Since the latter half of the 2010s, many big names have initiated the shift, with examples seen in Adidas’ plan to generate 60% of sales from direct retail by the end of 2020 and Rihanna’s choice to sell her 2019 Fenty collection exclusively through DTC. While these companies had found success working with this model, there still remained barriers to overcome. And by the end of the decade, digital marketing spending was increasing at a higher rate than consumer engagement, putting a strain on DTC companies to build connections with new customers without the aid of larger distributors.
Then 2020 arrived. While the situation brought on by the pandemic proved damaging to the fashion community in many ways, some changes created opportunities for future growth. Online ad costs dropped significant percentages, offering a chance for DTC companies to have more space to allocate cash for enhancing online experiences. Furthermore, increased online engagement coupled with a lack of access to third-party physical retailers leveled the playing field between DTC companies and those selling through traditional channels.
Direct-to-consumer fashion brand Dôen illustrated this innovation, as they took the opportunity to focus on conceptual messaging and direct communication with their customers. This included filling their social media accounts with paintings of artists like Georgia O’Keeffe and providing explanations of their relationship with factories. While they couldn’t sell many products during this period, their engagement increased significantly with these initiatives helping form a sense of community. Glossier also turned to Instagram, sharing entertainment content and educational live streams on facial massages and acupuncture techniques. This content brought in a new audience, who could then explore products used in the videos they were watching. But one company's DTC strategy proved to be the most successful in this otherwise challenging year: Nike.
Dôen’s Conceptual Messaging on Instagram (Dôen)
Nike’s shift to DTC actually began years ago, dating back to 2017. Recognizing the changing landscape of retail, they acted earlier than many large players through a major change in direction. They cut off partnerships with thousands of retailers, planned an aggressive move to direct sales, and eventually even cut ties with Amazon to better maintain the perception of their brand. As a result of Nike’s efforts, their loyal customer base grew substantially in size. Their initiatives offered people inventive ways to interact with the brand outside of purchasing apparel, such as their continued focus on their Training Club and SNKRS apps. Soon, they were experimenting with new kinds of physical spaces that presented a notable separation from their retail stores of the past. All the while, the company continued its longstanding tradition of corporate activism through advertising campaigns and key collaborations — highlighting what it means to be a supporter of their mission. And when the pandemic hit, Nike was fully prepared to take advantage of the market opening for DTC. With so many initiatives already in place, their sales approach was already in line with what companies needed to become — and smart moves like making the Nike Training Club free in March proved wise. By December, their stock hit an all-time high.
Promotional Material for Nike Training Club (Nike)
Although Nike is the current great success story, it’s important to recognize how Direct-to-Consumer changes a company’s consumer relationships. At the heart of DTC is creating a more intimate connection, building a community and lifestyle for shoppers everywhere. This shift in approach inevitably causes the customer to become invested in what values a company stands for. Because of this, there is a greater responsibility placed on DTC companies to be mindful of how their actions reflect on them.
For example, it was recently reported that Nike has been lobbying against an upcoming Xinjiang Forced Labor Bill, a measure that would impose restrictions on imports from the Chinese region that relies on the forced labor of Uyghur muslims. Like many apparel companies, Nike depends on goods from China and the government’s firm stance on the Xinjiang region apparently complicated things for them. Moves like this draw into question the authenticity of what Nike claims to be defined by during activist campaigns and progressive rhetoric. When the company attracts a crowd of politically active individuals, their supply chain’s possible reliance on human rights violations has the potential to greatly damage relationships with those who purchase their products.
Demonstrators support the Force Labor bill that has at this time passed in the House (Jacquelyn Martin/Associated Press)
As the COVID-19 vaccine begins its journey to bring normalcy into the world, we can see a day in the future where we go out and do things again. When this monumental day arrives, we’ll find ourselves wishing to engage with new experiences and various communities. Companies know this, and will be itching to be at the forefront of facilitating these interactions. Because of this, we will most likely find more and more companies going Direct-to-Consumer. But when they do so, they’ll need to put their money where their mouth is if they wish to stay afloat.