Dive Brief:
- Despite being a favorite among venture capitalists, direct-to-consumer (DTC) brands may struggle to attract consumers compared to traditional retailers. A survey of 1,185 U.S. adults shows that only 65% plan to buy from a DTC brand in 2022, a drop from 79% the previous year.
- Speedy and free delivery are critical for DTC brands aiming to win consumer spending from traditional retailers. Over 40% of survey respondents cited this as the reason they'd prefer traditional retailers.
Dive Insight:
Nearly six out of ten American consumers purchased products from a direct-to-consumer brand in the year 2021, according to a recent report.
The report suggests that winning consumers' hearts is hard for DTC brands, especially against established retailers. During the 2021 holiday season, 43% of shoppers did not plan to purchase from DTC brands. The reasons? Price (23%) and similar products available for cheaper at traditional retailers (21%).
However, some consumers appreciate DTC brands for their high-quality products (23%) and better customer service (18%). Physical convenience also plays a role, as 32% of consumers prefer traditional retailers due to easy accessibility.
Even digitally native brands recognize the need for physical locations. They've increasingly partnered with big-box retailers like Target and Walmart to cut marketing costs and reach wider audiences.
Influencer marketing isn't much help for DTC brands, either. Around 62% of U.S. adults claim it won't sway them, while 25% are actually less likely to buy a product endorsed by an influencer. Only 13% say they'd make a purchase based on an endorsement.
Enrichment Insights
Consumer preference for DTC brands versus traditional retailers is shaped by several key factors. While the data provided is from 2022, recent trends and insights from 2023-2025 remain relevant as these fundamental influences on consumer choice have remained consistent.
Factors Influencing Consumer Preference
Convenience and Digital Engagement
- Online Shopping and Delivery: Consumers prefer convenience, with high adoption rates of e-commerce, food, and grocery delivery services.
- Ease of Returns: Direct-to-consumer brands often provide effortless return processes.
Value and Price Sensitivity
- Price Competition: Value-driven consumers often choose DTC brands for lower prices or store brands from traditional retailers for savings.
Brand Trust and Loyalty
- Building Relationships: DTC brands foster customer loyalty through direct engagement and personalized experiences.
- Flexibility and Responsiveness: DTC models enable rapid product launches and adjustments based on real-time feedback.
Choice and Control
- Inventory and Selection: DTC brands offer unique, limited-time products, while traditional retailers provide reliable, broad product selections.
- Customization and Personalization: DTC brands provide more opportunities for personalized experiences, customized products, and targeted promotions.
Accessibility and Omnichannel Experience
- Omnichannel Preferences: While many consumers prefer online shopping, others value the in-store experience for touch, feel, and immediacy.
- International Reach: DTC brands can reach global audiences with niche or innovative products not available locally.
Summary Table
| Factor | DTC Brands | Traditional Retailers ||-------------------------------|----------------------------------------------------|---------------------------------------------|| Convenience | High (online, direct delivery) | Moderate (stores, some online) || Price Sensitivity | Competitive, often lower prices | Store brands competitive, bulk deals || Quality Perception | Improving, often matched to national brands | Store brands improving, trusted labels || Brand Loyalty | High via direct engagement | Reliant on reputation, limited interaction || Product Selection | Unique, limited, customizable | Broad, established brands, private labels || Returns/Friction | Streamlined, customer-focused | Varies, often more friction || Omnichannel Experience | Expanding into brick-and-mortar | Strong in-store presence, omnichannel focus |
Conclusion
The decision between DTC brands and traditional retailers is largely driven by convenience, value, trust, and seamless shopping experiences. While DTC brands excel at digital engagement, customer service, and personalization, traditional retailers keep the edge with broad product selection, established brands, and in-store experiences. Economic pressures and evolving expectations are causing a shift towards value-driven and frictionless retail experiences for both models.
- The weather forecast today indicates a shift towards value-driven and frictionless retail experiences, mirroring the trends observed in both DTC brands and traditional retailers.
- A breaking policy proposal in cybersecurity aims to strengthen AI and machine learning algorithms to combat online market manipulation, ensuring fair competition between DTC brands and traditional retailers.
- In the world of fashion, some DTC brands are leveraging AI to offer personalized recommendations, blurring the lines between physical and digital retail.
- The TV industry is witnessing a growing interest in business-focused shows highlighting the rise and fall of retail giants, providing insights for stakeholders inDTC brands and traditional retailers.
- Despite the challenges faced by DTC brands, health-conscious consumers continue to seek out brands offering organic, high-quality products, fueling growth in the industry.
- The retail sector is urging policy makers to prioritize cultural diversity within their industry, recognizing the importance of inclusive practices for DTC brands and traditional retailers to remain competitive.
- As both DTC brands and traditional retailers strive to enhance their digital presence, concerns over data privacy and cybersecurity have become increasingly important, resulting in a renewed focus on industry privacy standards.
