What Big-Box Retailers have to Gain from DTC Brands
Retail Dive | February 22, 2021
Scattered among the product assortment at a Walmart or Target are an increasing number of direct-to-consumer brands. Although DTC brands are known to cut out the middleman, the online marketplace is flooded. Some brands turn to permanent shops in key markets, others opt for temporary pop up shops. What's working? Turning to key retail partners.
"Having immediate access to the base of a retailer like Walmart [and] being able to have a store presence without having to lease your own stores could be pretty appetizing as the DTC space continues to become more crowded," said Lauren Bitar, head of retail consulting at RetailNext.
Target has gone all-in on its DTC strategy, striking deals over the years with brands like Harry's, Function of Beauty, Lively, Native and Quip. More recently, specialty players in the home space, have been partnering with DTC brands in adjacent categories. West Elm teamed up with online plant brand Bloomscape, and Crate and Barrel announced two partnerships with bedding brand Parachute and cookware brand Caraway. Casper has formed partnerships with more than 20 retailers, while also running its own stores.
Bringing in a fresh, new brand, in theory, seems like a good way to stand out from the competition. The challenge is "when your acquisition doesn't mesh with your brand reputation. If brands are perceived as 'too cool for Walmart,' both the DTC brand and Walmart could get hurt," Bitar said.
But when the brands align, retailers attract and build relationships with a new set of consumers that may have not reached. For the retailers, it helps generate more foot traffic to stores, provide incremental revenue and help maintain cultural relevance among consumers.