Retail Unicorns Face Reality
A few years ago, digitally native direct-to-consumer (DTC) brands exploded onto the retail scene, creating an entirely new avenue of shopping for consumers. Long gone were the “gatekeepers” of traditional retail models and these brands — think Warby Parker, Casper, Away, Glossier and Allbirds —found a niche in connecting directly with their consumers and supplying them with merchandise that challenged long-held retail traditions. But, as is often seen in this industry, these brands are finally facing the reality of both needing to grow rapidly while also reaching and maintaining profitability. Selling directly to the consumer via e-commerce only provides so much momentum in a store-based economy, and many of these brands have been acquired, opened stores or looked to wholesale opportunities to tap into new customer pools.
Recently, Glossier, Allbirds and Warby Parker all announced layoffs and pivots to their business models, within days of one another, in order to meet changing consumer needs. For DTC brands that have built their businesses around the end consumer, the need to evolve alongside their shopper has become paramount. At a certain point, the formula has indicated to us that being a “cool” brand that evolves into a large scale business makes it less adaptable to meeting consumer demands while finding profitability. Many of these businesses have stumbled as they took their eyes away from the consumer and brand value in an attempt toward faster growth. Traditional retailers also have shifted their focus to either partnering with these brands or finding avenues in which to compete with them. And, with so many DTC unicorns in the industry, is there truly enough consumer demand to warrant the supply of newness?
Our industry needs these types of disruptors to help push us forward and promote creative products, experiences and marketing to keep tangible retail relevant. But the question remains: will retail unicorns find space to thrive in saturated industries along with ever-evolving consumer demands? Only time will tell…