Legacy brands that have been historically distributed in retail are being disrupted from the inside out from fast-moving, growth-hungry DNVB’s. More agile DTC brands have leveraged a data-first mindset to build a customer understanding and relationship that legacy brands could never achieve with a traditional retail distribution play.
Why are we seeing legacy brands enter DTC?
The key for brands both big and small is audience insight. When a legacy retail-led brand sells a product, there is a lengthy journey to get that product onto the shelf and into the hands of the end-consumer. Based on this long-winded distribution strategy, legacy brands never truly own their audience - and therefore can’t ever evolve, disrupt, and innovate at the speed of their smaller DTC counterparts. When eCommerce and DTC started to disrupt that model, incumbents had no choice but to try and adjust.
The adoption curve of larger incumbents to a DTC model has largely followed a clear and consistent path over the last 10 years. Initially disrupted legacy brands started acquiring their fast-paced assailants (Like this $1B Unilever acquisition that set the pace), playing catch-up in a game they didn’t fully understand yet. Continuing on from this, internal micro-brands were created and were incubated under their umbrella legacy brand. As this strategy started to fizzle out or not yield the metrics required, a direct DTC approach as part of an overall omni-channel strategy has slowly emerged - which is what we’re seeing now. We’re seeing some of the world’s biggest brands create a whole new distribution model, truly reflecting DTC’s evolution to a viable, long-term disruptive model that could challenge traditional retail.
A key part of the changing attitude of legacy brands to a DTC model is that it’s not a decision of this or that, but of this and that. An omni-channel DTC and retail approach can produce amazing results. We’ve seen Harry’s partner with both Boots and Target, alongside others like Tiffany’s partnering with FlowerBx for in-store experiences. This blurring of eCommerce and retail operations paves a way for modern audiences and insights to co-exist with the reach of traditional retail.
This mega-shift is important for a number of reasons, none more so than it drives demographics that previously never saw DTC as an option to open up to this new commerce model. The uprising of modern DTC co’s largely only appealed to a young, affluent, urban demographic. Whereas, when incumbents like Nestle, Unilever and P&G put an eCommerce strategy at the top of their priorities, older and less tech-savvy demographics will start to evolve with it.
This strategy will also enable legacy based brands to build a new “core” consumer base, where they can test new SKU’s, limited editions, and tell a story to an audience they truly have connection with - removing the antiquated retail distribution model that used to sit in-between them and their consumers. The overall share of eCommerce of total retail is therefore only likely to accelerate, especially when your biggest supporters start to play for the other side.