These are testing times for big retailers. The struggles of some of the largest and oldest consumer retail brands have only been amplified by COVID-19, and many who were teetering on the brink are now finding themselves on the plummet to bankruptcy.
At the time of writing, the list of endangered big-box retailers is long: JCPenney, Neiman Marcus, Lord & Taylor, Forever 21, Sears and Kmart, David’s Bridal, and many more. Even after the coronavirus period is over, consumer behavior will probably never be the same. Studies show that people are developing a major preference for online and direct-to-consumer (D2C) shopping, with six in 10 consumers saying they will shop as much online after COVID-19 as during the pandemic.
The world is witnessing what may amount to the next commerce revolution — the final and long-awaited shift from brick-and-mortar retail to an e-commerce model. While this marks the end of an era, it also signifies an immense opportunity for D2C brands. With the public’s growing preference for online purchasing, consumers are searching for new alternatives to traditional retail chains. This levels the playing field and gives challenger brands a fighting chance to grab precious consumer mindshare from big-box retailers, even now. But to do that, D2Cs are going to need several smart marketing moves up their sleeves.
Here are some simple yet powerful strategies that challenger brands can use to fill the vacuum left by the demise of the big retail chains and make their mark on the new world of retail.
Ramp Up Branding
Challenger brands can’t compete with big retailers in terms of size and volume, so they do battle with the weapons they have — their brand values, promise, and unique identity. And not just against retail behemoths that have dominated the market for so long, but against competing D2Cs as well. The consumer market is so saturated and competitive, branding is one of the only ways for D2Cs to really differentiate themselves and compete for market share.
Branding isn’t some fuzzy ideal or theoretical concept. It’s everything the brand lives and breathes by — from the seemingly smallest details, like background color and CTA wording, to the largest, such as the brand’s stated mission or return policy. There are always steps that can be taken to ramp up branding efforts, whether it be launching a social media campaign, updating the website with a COVID-19 message, or partnering with charities for community-building activities.
Now, when the large retailers are fading, it’s time to focus on ramping up branding efforts in every sphere.
Case in point: Waldo, the popular UK-based D2C contact lens brand, does a wonderful job of branding on its home page. Note the appealing consistency of the brand colors — patriotically British — and the clean, no-fuss layout of the page. The COVID-19 update is clear and smart, with a pun that winks at social distancing rules and the company product: “get contact-free home delivery today.” Plus, there’s the all-important survey that pops up so that customers know the brand really cares what they think. This is a great case study in powerful branding, thanks to a few small details that make a huge difference.
Focus on the Supply Chain
One of the pain points of e-commerce that really stands out during COVID-19 is the vulnerability of the supply chain and the challenges of home delivery. E-commerce companies of every size still have a lot to learn about managing deliveries during unexpected online shopping spikes. Even retail giant Amazon struggles with the massive increase in demand and has taken steps to discourage customers from overfilling their shopping carts.
Growing D2Cs, who don’t have the infrastructure of Amazon to fall back on, face similar challenges, albeit on a smaller scale. According to eMarketer, D2C sales in 2020 are expected to expand by 24.3% to $17.75 billion. If social distancing and lockdowns continue, this could be even higher. The question is: do D2Cs brands have the capacity to handle such increases? Is their fulfillment strategy robust enough to cope with spikes in demand? These are the questions that challenger brands should be asking now to pinpoint weaknesses in the supply and fulfillment chain, so they can be properly dealt with in time as big retailers fall away and online shopping becomes more prevalent.
Case in point: Private investment firm Grays Peak purchased three niche D2C brands, all focused on healthy, organic foods for pregnant women, babies and toddlers, and children. The three brands now operate under the name NurturMe, providing a healthy food solution for all ages, from expectant mothers to kids aged eight years. This creates significant benefits for the supply chain, as the consolidated brand can offer discounts and bundles to families with children of all ages. The company is optimizing delivery costs, shipping higher-value packages in one go, rather than having to deal only with smaller purchases that severely limit profit margins. In the D2C world, complex supply chain issues demand creative solutions.
It’s not just D2Cs that are looking to boost brand visibility in the COVID-19 era. Even Coca-Cola is reducing its traditional marketing budget and focusing on digital-first campaigns to make up for the approximate 25% drop in lost sales from the away-from-home segment.
Without constant efforts to boost brand awareness, D2Cs — like any brand — aren’t going to attract the customer base they need to grow and thrive. The challenge is finding ways to measure the effectiveness of brand visibility campaigns so the company can optimize time and resources toward the right ones.
The answer lies in digital marketing tactics that enable D2Cs to not just reach customers, but also track their online behavior. There are loads of different ways that challenger brands can optimize brand visibility online, including paid advertising, social media marketing, native advertising, mobile marketing, and much more. Opportunities for online marketing are endless. It’s just a matter of thinking out of the box and experimenting with various tactics and channels to gather the right data that will help boost sales.
Case in point: Take D2C brand Bombas that sells comfort socks and other apparel for adults and kids. They promoted their products in podcast ads, inviting customers to visit specific branded URLs with discount offers on product purchases. This strategy enabled the company to measure the Cost-Per-Acquisition (CPA) by tracking how many customers visited the URLs and completed a purchase. It provided the brand with the data to know that 15-40% of new customers every week were coming directly from the podcast ads.
Build Up Customer Relationships
The buzz-phrase “consumer mindshare” belies the fact that behind all the data, there are actual flesh-and-blood people who are looking for products to spend their money on. And they don’t want to feel like a faceless number. They want authentic brand experiences and connections.
It’s these individuals that D2Cs are competing for.
The biggest prize for any D2C brand is a long, strong list of satisfied customers. After all, gaining new customers is much harder and more expensive than retaining existing customers — five times harder, in fact.
That’s why challenger brands need to work hard at building customer data lists and strengthening the personal connection with those customers on an ongoing basis to keep them coming back again and again. The first step is providing incentives and opportunities for customers to hand over their contact details. This is the entry point to their email inbox and SMS messages, which opens up a direct line of communication to their hearts and minds. The next step is nurturing the relationship with all kinds of tactics — content marketing, influencer marketing, personalized emails, and more — that’ll help push them down the funnel towards the conversion stage.
Case in point: A simple pop-up when first-time visitors land on the website is an easy, low-cost method for building a customer list. D2C apparel brand UpWest does a great job with a discount offer in exchange for signing up to its distribution list. Take a look at the powerful CTAs. The black-and-white choice to “Enjoy” or “Decline” 20% off is perfectly formulated to encourage the customer to enjoy it. Even if they don’t end up purchasing, their email address has been added to the list for future campaigns.
The Industry Shake-Up is Here
Interesting and unexpected things are happening for challenger brands, as big-box retail chains struggle with the new world order that puts online shopping at the front of the race. When even giants like Coca-Cola and Amazon are overwhelmed and shifting tactics, it’s clear that there’s a huge seachange underway.
With the decline of the big brand retailers, there’s far more space in the market for D2Cs to make their mark. It’s time for challenger brands to pull out all the stops where it really counts these days — in branding, supply chain optimization, consumer awareness, and customer relationships. These are the fronts of the new battle being waged in the wake of big retailer bankruptcies that are remaking the industry forever.