Mapping the physical locations of DTC brands
Editor’s note: This piece is updated periodically to reflect current store counts and bring in new brands. As a result, some of the information may have changed from your last reading.
At this point, it’s no longer a surprise to hear that a direct-to-consumer (DTC) brand, started as a pure-play e-commerce business, is moving into physical retail.
It started with some of the front-runners — think: Warby Parker and Bonobos which now have over 100 and 60 stores respectively in the U.S. Since then, other DTC brands have jumped on board, opening their own form of physical retail, whether it be showroom-style or a more traditional (albeit usually smaller square footage) format.
As evidence of that movement, one JLL study from 2018 noted that digitally native brands were set to open 850 stores in the next few years. At the time, Casper had recently announced plans to open 200 stores across North America and Adore Me was considering 200 to 300 stores over five years.
Since then, beauty retailers Sephora and Ulta have launched their own merchandising efforts to highlight their partnerships with DTC brands, and Target continues to scoop up partnerships with the likes of Quip, Casper and Versed. And while wholesale partnerships are also helping young brands grow, many are dedicated to opening their own fleets of stores.
In September 2019, hair color brand Madison Reed announced plans to open 600 stores by 2024 through a joint venture with Franworth to franchise its locations. The brand also has an exclusive wholesale partnership with Ulta.
Even with the grand brick-and-mortar ambitions these companies have, there are marked differences between the stores they’re opening and those operated by traditional mall-based retailers or mass merchants.
For one thing, DTC brands have a different view on the purpose of a physical location, with many highlighting an educational experience or one-on-one service rather than another spot to make a transaction. Others are turning to brick-and-mortar retail as another form of marketing and a means of creating more personal relationships with shoppers.
To explore some of the unique elements of DTC brands opening brick-and-mortar stores, Retail Dive took a look at where top-of-mind brands opened their first few stores. For larger players, we capped the count at their first 10 physical locations.
The results confirmed trends we’ve been watching — for example, that New York (and particularly SoHo) is a popular place for DTC brands to open shop — but it also highlighted some cities that have gotten less attention.
In tracking some of the first locations for eight DTC brands (Allbirds, Away, Bonobos, Casper, Everlane, Glossier, Untuckit and Warby Parker), Chicago appeared five times. While that’s not the largest concentration of stores we came across in our reporting, it shows a significant interest in the city, at least for brands just beginning their journey into offline retailing.
Outside of DTC brands opening up shop in the city, Chicago has been home to innovation from some of retail’s older players as well. Target has focused in on the city for several of its small-format stores, Amazon in July 2019 announced plans for two Go stores in the city and Kohl’s piloted its in-store WW Studio in the area.
San Francisco was also a popular location for the brands we examined, with seven choosing to open one of their first ten locations in the city. It was also the site of Allbirds’ first physical location and Everlane’s second.
Like Chicago, San Francisco was a target of Amazon’s Go stores and has had its fair share of retail experimentation, including a pop-up from Gap Inc.’s Hill City brand announced in the fall.
Austin, Dallas and the Washington, D.C. area also showed up more than once across the small sample size we selected, perhaps indicating a second-tier city of interest for DTC brands.
In tracking some of the first locations for eight DTC brands (Allbirds, Away, Bonobos, Casper, Everlane, Glossier, Untuckit and Warby Parker), Chicago appeared five times. While that’s not the largest concentration of stores we came across in our reporting, it shows a significant interest in the city, at least for brands just beginning their journey into offline retailing.
Outside of DTC brands opening up shop in the city, Chicago has been home to innovation from some of retail’s older players as well. Target has focused in on the city for several of its small-format stores, Amazon in July 2019 announced plans for two Go stores in the city and Kohl’s piloted its in-store WW Studio in the area.
San Francisco was also a popular location for the brands we examined, with seven choosing to open one of their first ten locations in the city. It was also the site of Allbirds’ first physical location and Everlane’s second.
Like Chicago, San Francisco was a target of Amazon’s Go stores and has had its fair share of retail experimentation, including a pop-up from Gap Inc.’s Hill City brand announced in the fall.
Austin, Dallas and the Washington, D.C. area also showed up more than once across the small sample size we selected, perhaps indicating a second-tier city of interest for DTC brands.
Since we operated off a relatively small sample size, the brands we chose do not, of course, tell the whole story of DTC brands opening brick-and-mortar stores. But they do point to some locations of interest for retail’s new class of disruptors — and what they might be looking for as they make their first forays into physical retail.
Six of the brands we looked at opened their first ever physical location in New York. A popular city for retail experimentation, DTC brands are not the only companies establishing a presence there. New York is home to several experiential flagships, including Nike’s House of Innovation, opened last year, as well as Puma’s recently opened location and Nordstrom’s Manhattan flagship.
In fact, Nordstrom has made several moves in New York recently, including its first men’s store and its Nordstrom Local concept. The allure of the city is obvious — it’s an urban area well known for its shopping streets — but it’s also a city that has experienced a slew of retail vacancies (double that of a decade ago) thanks, in part, to high rent.
Still, for DTC brands trying to reach current customers and raise awareness for new ones, New York has the undeniable pull that comes with being the center of U.S. retail for so long — and also has the benefit of both mainstream shopping streets (e.g. Fifth Avenue) and slightly more local ones (SoHo).
Los Angeles, and in particular the Melrose neighborhood of Los Angeles, seems to be an up-and-coming test bed of retail innovation. Los Angeles is the only other city, in addition to New York, to have a Nordstrom Local (there are currently three locations in Los Angeles, including one in Melrose), and Nike has also turned to the Melrose neighborhood to test out its members-only store concept Nike Live.
In addition to those mentioned above, and the DTC brands we looked at in specific, Los Angeles is also home to a new store concept from The Container Store and was one of the cities for Samsung’s three experience stores. Melrose in particular, which seems to be popular with DTC brands, is also home to The RealReal, Indochino and Reformation, among others.
Boston can be forgotten, like San Francisco and Chicago, in the the shadow of high profile retail destinations like New York or Los Angeles. However, it also showed up consistently for the DTC brands we looked at, and like New York, has brands opening locations in a few different shopping areas. Near or around Newbury Street was a popular location, with three of the four DTC brands with Boston stores opening one of their first stores there.
And the city’s relatively new Seaport district plays host to Away’s only location in the city along with Bonobos and Warby Parker stores (which both opened one of their first stores near Newbury). Outdoor Voices and a retail concept called For Now, which sells emerging e-commerce brands, are also stationed in that area.
According to data from Placer.ai, Boston Seaport has grown from a daily average of 34,000 visits at the start of 2017 to “well over 40,000” in 2018 and 2019. In addition, the company found that the average visit duration is over four hours and almost half (47.3%) of visitors to the area spend over 150 minutes there.
Methodology
For this project, we wanted to look into where DTC brands are opening their first locations to see if we could glean any insight from those choices. We picked eight of the DTC brands we hear about the most and that had also distinguished themselves (for now) as constant players in the space. Those were: Allbirds, Away, Bonobos, Casper, Everlane, Glossier, Untuckit and Warby Parker.
We update this piece periodically to reflect current store count numbers and to add more brands to our set. As such, some numbers may change from one reading to the next. For example, Rent the Runway was included in our first iteration of this piece and was later removed to form a set of brands more representative of the DTC model.
Since store footprint varies widely among the brands we chose, we limited our study to the first 10 locations of every brand, which were provided to Retail Dive by company spokespeople or the brand’s website. For Casper, we included 16 locations, as several temporary pop-ups became permanent stores around the same time.