Overview
In the early 1900s manufacturers reached consumers through brick and mortar stores and this led to the development of business centers globally, all cities having their own business hubs based on the market they catered to, from Broadway , Madison Avenue, Oxford Street , Vivocity and Wangfujin Shopping Street among others. Different retail outlets became icons like Selfridges ,Harrods , Sears Toys R US, Walmart, Target. TESCO , etc and it seemed that these chains would last for eternity. In the recent past there has been a substantial change , the retail graveyard is growing and many of these iconic stores were not only struggling but actually filed for chapter 11 bankruptcy , and aggressively curtailing their retail presence , which included Sears, Blockbuster, Forever 21 and TOYS R US.
The graph shared by Bloomberg shows the status of retail marketplace where more stores are closing down than new store openings and is quite a clear picture for the volatility of the retail market .
Gone are the days when focus was on opening gigantic stores and departmental stores reigned the market place .
This major shift in retail has been caused by a number of reasons , which has led manufacturers to re-think their brand sustainability and sales strategies.
Reasons for Change
Path to sustainable brand loyalty
D2C is an e commerce model which connects manufacturer directly with its end customer. This enables manufacturer , actual customer assessment of trends , likes ,dislikes and enables him to adapt accordingly.
Why D2C
- D2C eliminates the barrier between the producer and the consumer, giving the producer greater control over its brand, reputation, marketing, and sales tactics.
- On Line Retail Sales are constantly rising and touching & $ 5 trillion annual sales globally ( Statistica )
- Consumers have started searching direct brand ,instead of other virtual market places . Now 20% ( of all online searches ) search brands directly, instead of other virtual market places.
- Since consumer focused , changes in consumer trends ( likes, dislikes ,changing fads etc ) are visible more quickly. Dollar shave club & Harry’s have been able to capture around 12% market share ( of the $3.5 billion market) from Gillet through D2C and other techniques.
- Very effective in developing strong brand loyalty