Justine and Olivia Moore


How (and why) D2C brands are moving into physical retail — lessons learned from Casper, Warby…

tech brick and mortar

Like many millennials, we’re big fans (and customers!) of the direct-to-consumer brands that have popped up over the last few years. Innovations in supply chain and distribution have allowed these brands to offer products that deliver on the “faster, better, cheaper” experience required to take market share and customer attention from incumbents. These brands are also aspirational in a way that is appealing to millennials and Gen Z by building a presence across social channels and cultivating a community feel.

One of the main benefits of the D2C model is that these brands don’t need a physical presence, which allows them to avoid the overhead, inventory, and complexity of brick-and-mortar stores. They can easily set up storefronts through platforms like Shopify and market through social networks like Instagram. The most successful brands (e.g. Glossier, Warby Parker, Casper) have used these platforms to achieve immense scale in a short period of time.

For these reasons, almost every D2C brand starts exclusively online. However, we’ve seen a number of now more established D2C brands make a move that may seem backward — opening brick-and-mortar stores. We attended Primary Venture Partners’ fantastic NYC Summit last week, and were surprised to hear how many of these brands are planning to substantially scale their retail presence. A few examples of retail successes:

  • Steph Korey, co-founder and CEO of Away, said that the brand currently has five retail locations and plans to increase this by 4–5x in the next year.
  • Gabe Flateman, co-founder of Casper, said that the brand’s stores have become a key point of differentiation. He sees retail as an important way to develop deeper customer relationships, and said the brand is performing much better in markets where they have a physical presence.
  • Natalie Mackey, founder of Winky Lux, said that customers acquired via the brand’s retail pop-up were 3x more likely to become repeat buyers.

We were intrigued by how successful these retail stores have been, and were curious to experience them in-person. While in NYC, we decided to tour the birthplace of D2C expansion into retail — SoHo. We visited twelve stores, from Everlane to Allbirds to Glossier, and asked the managers about the role of physical stores in context of the overall brand experience. We’ve summarized below the key lessons we learned.

All of the D2C brand stores we visited in NYC — do most of these logos look pretty similar to anyone else?

P.S. — if you’re an emerging brand looking for retail space, check out CRV portfolio company Uppercase! They’ve opened 5,000 stores across North America for brands like Casper, Everlane, Wayfair, Nike, and Thinx, and can help you launch and manage a store in key retail markets.

  • The littlest details matter, even on the outside. Most of the stores had similar exterior design elements, including: (1) a horizontal or vertical flag, almost like a hang tag, with the brand’s name — often in sans serif font; (2) a wooden sidewalk board with a graphic design and clever line to draw customers; and (3) large glass windows (or even an entire glass front wall) that shows off inventory and an Instagrammable interior — more on that later! As the D2C brand aesthetic becomes more recognizable (minimalistic, relatable, and clean), we think these outside touches signal to consumers that the store fits in to this category.
The Outdoor Voices store featured the classic outdoor sign and the glass windows. Inside, a wall was papered with customer polaroids, the mirrors featured the company’s hashtag (#DoingThings), and the clothing tags were printed with the company’s motto (“Endorphins Make You Happy!”)
  • Trendy location. There are a few reasons why D2C brands are popping up in SoHo. Most obviously, there is a lot of available retail space, and prices have fallen significantly in the last few years as many traditional brands struggle and close stores. More importantly, however, SoHo has become known as a boutique area for innovative and emerging brands, many of which have not yet hit the mainstream. This appeals to the stereotypical D2C customer — millennials who are looking to discover superior products at attractive prices, especially from aspirational brands.
Glossier took the “trendy location” theme to the next level with its first store, located in the penthouse suite of a small building in Chinatown. Customers are greeted by a pink jumpsuit-wearing Glossier employee, who escorts them to a special elevator to deliver them to the store. Because the entrance is limited by a single elevator, the store often has lines down the block, which makes it seem even more exclusive.
  • Interior design optimized for social media. Many of these D2C brands launched on Instagram and advertise heavily there — their target customer is an avid IG user and will sometimes visit a store or location just to snap a photo. More than half of the stores we visited had hashtags on their walls and mirrors, and almost all of them had a special wall, mirror, or even a photobooth to help customers share their shopping experience.
Burrow, which opened its first store a month ago, has a GIF maker with different interactive backgrounds. The store is also optimized for helping customers experience Burrow (and ideally take plenty of photos). It’s set up like a house, with a living room filled with couches that customers are welcome to use for hours at a time. The store also features a mini movie-theater full of Burrow couches (it was playing Mulan when we visited!).
  • Limited inventory. Most D2C stores hold very little inventory — it’s not uncommon to not be able to walk away with a product after making a purchase! A common strategy is to carry enough inventory to answer size, fit, or texture questions, but send the product to the customer’s home later. This allows the stores to run efficiently with small square footage, and also acquaints the customer with the online process that they may use for re-orders. This is one of the sharpest contrasts to traditional retail stores, specifically Forever 21 and H&M — incumbents in the millennial space that are always crowded and messy, with a focus on sheer volume of inventory.
The interior of Greats looks unlike any other shoe store we’ve ever been in! For one, it’s beautifully designed with lots of open space — there’s even a swing hanging from the ceiling that customers can use. There’s also only one pair of each shoe out front, which is common in many higher end retailers.
  • Lots of open space. Almost every store we visited was designed to maximize space to experience the product. We heard from several store managers that customers often come in with the intent of trying out a product that they’ve already selected online (especially for higher-value items). Therefore, these stores are designed to give customers a chance to get a true sense of the product, whether it’s a mattress or a pair of shoes, before clicking the “purchase” button.

Author’s note: It’s an interesting trend that some D2C brands are building larger stores to invest in the consumer experience. Part of the initial appeal of these brands was the idea that they would operate hyper-efficient stores with very small physical footprints. We’re guessing the boost in sales outweighs the cost of the extra square footage for most brands — but would be curious to see the data!

At least half of the square footage of Casper’s store was dedicated to what we’ll refer to as “nap cottages” — small rooms where customers are encouraged to test out a mattress for 15–30 minutes or more. The photo on the right, a view inside the nap cottage, comes from Yelp reviewer Luci B — who left her own very comprehensive review of the brand experience!
  • Exclusive in-store experiences/products. Consumers are busy, and it can be tough to get them to visit a physical store. How can brands get people in the door? Offer something you can’t get online. One example — Warby Parker hosts an in-house optometrist to perform eye exams, saving the step of going to an independent optometrist. The store also holds celebrity-hosted events for the Pupils Project, which helps kids in need get glasses. Other brands offer special products only in-store (Burrow does this with pillows and blankets).
The SoHo store is Warby Parker’s flagship retail location — it is designed like a library, and features sliding ladders and books available for purchase. As well as a counter for eye exams, the store features several stations for employees to perform bridge measurement checks (pictured left) to optimize frame size.
  • Messaging around the brand’s key differentiators. In addition to functioning as showrooms, these stores serve to further educate customers about the product. Many brands prominently feature displays that explain the steps of how the products are made, and how the components or manufacturing process differ from the industry standard. Some brands even have samples of raw materials for customers to see and feel!
Allbirds was perhaps the most aggressive of all the D2C brands we visited in marketing their product materials, with multiple large displays around the store showing each component of the final product.

These displays serve a dual purpose — (1) educating people who come in with no prior knowledge of the brand; and (2) further highlighting brand values to existing customers. This is particularly important as many D2C brands are either mission-oriented or have a social good component.

Everlane’s in-store messaging around brand differentiation is particularly prominent. The store has a number of displays with educational content around the brand’s sustainable production process, unique benefits offered to factory employees in LA, and ethical factory practices worldwide.
  • Feeling of community. We’re not exaggerating when we say that our visits to these D2C brands were among the most pleasant retail experiences we’ve ever had. At every store, we were greeted by friendly employees who were incredibly knowledgeable about the brand and products — several talked to us at length about the brand’s history and values, and walked us through details on the store design (shoutout to Cali at Bonobos!). Many brands also use these stores as community gathering places, holding events centered around the company’s values.
Away holds monthly travel-themed events at each of its stores. September’s workshops in NYC, SF, and LA focused on eating well and staying healthy while traveling. These events are often hosted by local experts (influencers or other brands), and serve to both expose more people to Away and deepen relationships with existing customers.

Thanks for reading! If you have any thoughts or feedback, we’d love to hear from you — you can reach us via email at twins@crv.com or on Twitter @venturetwins.

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