Morning Brew - ☕ DTCing the light

DTC companies shift strategies.
Morning Brew October 11, 2022

Retail Brew

Impact.com

Hello, hello. ICYMI, the month of October is the new Black Friday, so if you missed Target Deal Days last week, there’s still two days of the Amazon Prime Early Access Sale and Walmart “Rollbacks and More” events this week. And, of course, Kohl’s Bricktober.

In today’s edition:

—Erin Cabrey, Kelsey Sutton, Jeena Sharma

DTC

Sticker shock

two computers with text on them, one older and one newer Grant Thomas

Before Naomi Blackman co-founded the apparel brand alder, she helped other DTC clothing brands find new customers using Facebook and Instagram. “It was really a cheap place to acquire customers,” said Blackman, who began advertising alder on those same platforms in 2020.

This year, though, it’s a different story: In some cases, Blackman said, the cost of acquiring a new alder customer through a digital ad has nearly doubled compared to a year prior.

“Obviously, it’s a stressful situation for a lot of young brands,” Blackman said.

Big picture: Other DTC brands are experiencing the same sticker shock.

  • Marketers say they are seeing rising digital ad rates, compounded by iOS privacy changes that have hurt the effectiveness of Meta advertising, just as economic concerns about inflation and consumer spending intensify.
  • The confluence of factors is prompting DTC brands to experiment with other marketing channels.
  • “A lot of people are in this real trial-and-error period,” said Laura Burget, co-founder of skin-care brand Three Ships.

Channel surfing: As advertising costs increase, DTC brands are eyeing new channels, and high on the list is TikTok. Wong said she’s seen some spending shift to the platform, and clients, from home-decor brands to apparel and footwear, are seeing “some significant success.”

Long game: At Three Ships, Burget said the company has shifted its focus to developing “compelling, entertaining, and educational” creative to hopefully pique interest across social platforms while also building out a mail-order sampling program.

Customers who receive samples “have a higher [lifetime value] than customers that we acquire through regular means, like Facebook and Meta ads,” Burget said. “We’re just kind of playing a long game.”

Keep reading how brands are shifting their strategies here, on Marketing Brew.KS, EC

        

TOGETHER WITH IMPACT.COM

Do you know the modern consumer?

Impact.com

We aren’t talkin’ about their favorite color or drink of choice (if you do know that stuff…we have questions). We’re talking about the modern-day consumer’s latest purchasing behaviors.

Shifting shopping habits have led to big changes in the retail industry—and retailers need to be up to speed.

For a comprehensive overview, impact.com teamed up with Power Retail to survey more than 1k online shoppers. They compiled their findings into a report that showcases pivotal data on shopper trust and channel efficacy, including how content creation protects consumer trust and which devices shoppers use (and prefer) to discover brands.

You’ll also discover how e-comm leaders Booktopia and LVLY drove revenue growth by acquiring the right partners for this new consumer climate.

See the results here and start aligning with the modern consumer.

        

FASHION

Wear art thou

Young man and woman in an art museum Pacsun

On a recent rainy Wednesday afternoon, a small group of influencers and TikTokers gathered inside the Metropolitan Museum of Art in New York. The occasion? A look at 19th-century art and paintings by artists like Van Gogh and Henri Fantin-Latour. Also? A sneak peek at Pacsun’s latest capsule collection of sweatsuits, t-shirts, hats, socks, and more inspired by these artists.

  • The 30-piece fall/winter collection has been a year in the making, starting with Pacsun reaching out to the Met.
  • “We started the whole product development process in March,” Richard Cox, VP of men’s merchandising at Pacsun, told Retail Brew. “That’s kind of when we came to agreement, that, “Yeah, let’s do this. Let’s put a collection together.’”
  • The collection features sweatshirts with the Met X Pacsun logo, as well as sweaters featuring floral motifs inspired by the paintings.

Although Pacsun is certainly not the first brand to look to art for design inspiration, it’s an interesting choice for a brand whose consumers are mainly Gen Z, who Cox believes have been especially “inspired” by the arts over the past few years.

“A lot of the content on the actual pieces that were there that were used for the products just spoke to us. Plus, we know that our customer is aware of who Van Gogh is,” Cox said. “But then some of the other items from other artists, they really helped kind of tell a complete story. We wanted a certain color language. We wanted to speak to more floral motifs.”

  • So far, collections and items with artistic motifs have been Pacsun’s strongest sellers, though the company said that it “can’t disclose sales numbers.”

Beyond Gen Z, Pacsun is also hoping to tap into a smaller base of fashion-focused customers with the new collaboration.

Keep reading here.—JS

        

SWAPPING SKUS

Today’s top retail reads.

Scare tactics: Home-improvement retailers Home Depot and Lowe’s are turning to Halloween decorations—some of them 12 feet tall—to spur sales. (CNBC)

Price to pay: Whole Foods has raised prices for smaller brands, causing concerns among the brands that it might hurt their sales. (Business Insider)

Fast lane: As many rapid-delivery startups struggle, Gorillas is betting on its new 17,000-square-foot warehouse in Queens to help streamline operations. (Modern Retail)

Tell us: Complete this survey to help us bring you the content you crave—and be entered for a chance to win a $250 AmEx gift card. Talk about a win-win!*

*This is sponsored advertising content.

The SKU in two!

The SKU in two!

The SKU: A Retail Brew Summit is coming to NYC in just two weeks!

In just one day away from your desk, you can expand your professional network, gain perspective from leaders at top retail brands such as Crocs and Kroger, and head home with strategic insights that could help reduce your brand’s carbon footprint, increase brand awareness and affinity, and much more. Tickets are only $599 for a limited time!

Register today

WHAT ELSE IS BREWING

  • Hollister is rolling out a tool called Share2Pay that lets shoppers send their carts to someone else for payment.
  • Grubhub partnered with autonomous delivery company Starship to bring delivery robots to college campuses.
  • California will phase out single-use plastic bags for meat and produce by 2025.
  • Lacoste named chief brand officer Catheine Spindler as deputy CEO.
  • Some former Sephora stores in Russia reopened under new ownership, rebranded as Ile de Beauté.

TIME MACHINE

What happened in the world of retail this week in…1844 and beyond? Retail Brew takes you way, way, way back.

  • On October 10, 1933, chemical engineer Waldo Semon received a patent for a “synthetic, rubber-like composition” later known as vinyl.
  • On October 10, 1913, Adolphus Busch died. He co-founded Anheuser-Busch after immigrating to St. Louis from Germany.
  • On October 11, 1844, Henry John Heinz, who founded prepared-food company the H.J. Heinz Company, was born.
  • On October 14, 1922, the first Thom McAn store opened on Third Avenue in New  York.

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Written by Erin Cabrey, Kelsey Sutton, and Jeena Sharma

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