The Retailer Autumn Edition_2020

How Retailers are Future-Proofing their business by going Direct-to-Consumer

SHIMONA MEHTA MEHTA, HEAD OF EMEA Shopify Plus

2020 HAS ACCELERATED THE SHIFT TO ONLINE SHOPPING, REVEALING THE IMPORTANCE OF ESTABLISHING A DIRECT RELATIONSHIP WITH CUSTOMERS GOING FORWARD Lessons have been learnt in 2020. For retailers, a key one has been the importance of direct to consumer (DTC) selling. For digitally native DTC brands, the transition to a lockdown environment was undeniably easier than for traditional wholesalers and offline businesses. Despite this, there have been some great examples of prompt ‘pandemic pivots’ from brands that have decided to literally overhaul their entire strategy and offering overnight. Moving fast to offer digital discounts, virtual consultations and curbside pickup, as well as adopting cutting-edge technology to create a seamless user experience—certain DTC brands have managed to attract significant online traffic even faced with lockdowns, border closures, and major supply-chain disruptions. The pandemic has rapidly accelerated consumer buying behaviour—what many expected 2030 to look like regarding digitisation is suddenly happening now. This means that selling direct is vital for staying relevant to customers who are increasingly shopping online. With new consumer habits, of course, come new consumer expectations. Businesses that accelerate to adopt advanced tech such as drone deliveries, AR and 3D are differentiating their brand and creating standout experiences for customers to return to. There are many benefits of selling direct and that applies whether it’s a small mom-and-pop business or a large multinational consumer goods brand. With the onset of COVID-19, Heinz U.K. quickly realised many of its consumers were unable to get to physical stores. For the first time in its 150-year history, Heinz launched a DTC offering to make food products available to vulnerable populations and essential workers—and it did so in just seven days. Similarly, the Swiss chocolate brand, Lindt which has been operating since 1845, launched its first ever online store in just five days and began selling chocolate directly to Canadian customers just in time for Easter. So, a brand has decided to go DTC. What needs to be considered? Before launching, it’s important to define the goal of the DTC strategy, and consider how this can be integrated into a retailer’s holistic strategy. DTC is not only vital for replacing in-store sales during lockdown, it’s also about creating the ideal omni-channel experience which blends the digital and physical worlds. This allows retailers to tell a consistent brand story that customers can choose to interact with wherever, however and whenever they want. It’s not online versus offline—it’s about merging both together in a way that works best for the particular brand and creates a consistent relationship with customers across channels. Social commerce and storytelling are also significant components of the DTC journey. Perhaps the most important aspects to action in moving DTC are providing value to the customer while creating a frictionless customer journey. If a customer thinks they can buy the product or service for cheaper or more easily with a department store, the impact of being DTC is minimised. There is a misconception for some businesses that DTC means cutting out or bypassing trusted retail partners altogether.

On the contrary, going DTC adds more space to tell the brand story and increase its equity, from which partners and retailers in turn can benefit. Customers can have the option to buy from both and make their choice based on convenience and preference. It can even benefit retail partners if a brand is recognisable and has its own identity and narrative, as customers are more likely to buy a product they are familiar with. There’s no one size fits all approach. In making the move to DTC, brands should consider, for example, what tech would be most advantageous for its user experience. That doesn't mean using technology for technology's sake. It's about being strategic and seeing what works for a brand. Consider the context—the circumstances of this year may mean that a strategy that would have worked in 2019 may not in 2020. It is important for retailers to always ask ‘how do we stay relevant to this moment?’ and going DTC is no exception to that. Direct selling simply gives more control to businesses looking to carve out their own space in the market and establish an exceptional brand identity. While online shopping patterns are on the rise, businesses should not forget that it is a period of financial uncertainty and anxiety for many and this should be acknowledged. Offering instantly redeemable promotions, discounts or ‘buy now, pay later’ options have a clear benefit—they allow customers to enjoy making a purchase despite the financial uncertainty. This demonstrates a commitment to the customer that can only be demonstrated by brands that are DTC. Now, more than ever, there are clear incentives for brands to move DTC. With the uncertainty that lays ahead, transitioning to direct selling could be a very effective way for retailers to future-proof their brands. Selling DTC online ensures that they can continue to sell in the unfortunate event of further lockdowns, travel bans or store closures. They will also rely less heavily on distribution partners and are able to control brand identity and form a connection with both customers and community. In determining how to go DTC, it is important to create a strategy that is right for that brand. There are various factors to consider but that doesn’t mean it can’t be done quickly and seamlessly, even when faced with a crisis—2020 has been clear proof of that. If you’d like further information on moving DTC, have a read of Shopify Plus’ Direct-to-Consumer Guide. Link to download DTC Report: shopify.co.uk/plus/guides/direct-to-consumer-guide?utm_ source=BRC&utm_medium=content_syndication&utm_ content=direct_to_customer_guide&utm_campaign=BRC-retailer- aug2020

14 | Autumn 2020 | the retailer