Retail outlook
Retail formats are developing dynamically around the world. Direct-to-consumer (DTC) strategies have significantly disrupted the technical consumer goods (TCG) industries. The benefits to manufacturers are clear and 2024 brings fresh opportunity for retailers too, as successful DTC brands surge out of ‘digital only’ towards traditional retail stores to extend touchpoints.
Why buy direct?
In a consumer centric world, it is essential to understand and address what is differentiating DTC from retail purchase triggers. GfK research reveals that consumers who bought direct place greater importance on certain factors*, compared to consumers who bought via a retailer. The top one of these differences is after sales support. This suggests consumers perceive this as a strength of the original producer. Similarly, the next two most relevant aspects are knowledgeable staff and detailed product information – suggesting these consumers believe that manufacturers know best about their own products and hence are able to offer superior consultancy service.
Overall though, price and promotions continues to remain most important buying criteria factor. It is just relatively less important when buying D2C compared to the overall retail market.
A final factor seen in consumers buying direct is an “exclusivity” focus: the attraction of early access to new products launched by brands via their own channels before they become available in retail stores, enticing consumers to buy from brands directly.
*gfknewron consumer; all tracked product groups across: BE, BR, DE, ES, FR, GB, IN, IT, JP, NL, RU
Retailers and DTC
As additional touchpoints for consumers continue to complicate the shopping journey and competition increases, direct sales by brands are an area being watched closely by many retailers. However, retailers’ level of concern is mixed. For example, globally, GfK’s latest research shows that 33% of retailers are worried that direct sales might harm their business but, on the other side of the scale, 40% are not worried. 20% are at present undecided.
Retailers see opportunity in their ability to offer manufacturers additional services and better consumer reach than they could otherwise achieve.
In the case of traditional retail, brands must understand that traditional retail continues to hold lion’s share of TCG market sales and so cannot be ignored, if those brands wish to grow. Physical retailers have already started offering dedicated kiosks or interactive displays within their stores where manufacturers can deliver the all-important brand experience.
The evolving DTC journey – collaboration key to growth in 2024
As consumers no longer differentiate between online and offline shopping experiences, online DTC brands will have to consider creating ecosystems via partnerships or collaboration to expand to the offline space for growth. At the same time, the dominance of traditional retail will continue this year too, so online brands could gain and expand their reach by partnering with established retailers who can connect them with target audiences both online and via a physical presence.
For more information:
https://www.gfk.com/blog/the-evolving-direct-to-consumer-dtc-journey-2024
Download graphics: https://gfu.de/en/market-figures/infographics/
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Based on a new partnership between GfK SE, gfu Consumer & Home Electronics GmbH and IFA Management GmbH, we are providing regular information on market developments and trends in the consumer electronics and home appliances industry. Interesting insights, current market figures, consumer trends and much more will be professionally prepared for you from the sources of the three expert partners.