Digital Innovators: Digitally Native Brands Move Offline

Key Findings

The rise of digitally native, vertically integrated (DNVB) brands

DNVBs are companies that often achieve higher margins than traditional CPG companies through selling primarily or exclusively through e-commerce and through owning their own production facilities.

DNVBs increasingly turn to offline channels

As the costs of online customer acquisition and digital marketing have grown in recent years, DNVBs are increasingly considering their physical presence, leading many brands to open temporary and permanent brick and mortar stores. These stores help attract new shoppers to the brand and drive greater productivity from existing shoppers.

The best DNVB stores utilize technology in creative ways

Some DNVBs have used their digital expertise or leveraged effective partners to open brick and mortar stores that use technology in innovative ways, such as to educate the consumer about the brand, facilitate omnichannel purchasing, and to improve analytics. All players can learn from these best in class examples.

Key considerations for DNVBs opening stores

DNVBs face several challenges in looking to build a physical presence. Specific challenges include maintaining control of the brand, accessing expertise at brick and mortar retail operations and storytelling, and balancing how, when, and where to open stores against other growth objectives the brand may have. In particular, choosing an effective partner – whether a retailer, store operator, or DNVB showroom – is critical.

Opportunities for retailers

DNVBs are likely to continue to look to expand into brick and mortar presence in the years ahead, as the factors that drove their initial physical activities only intensify. Retailers can look to build partnerships with DNVBs into their own strategies, as well as draw inspiration from some of the most innovative approaches DNVBs have taken in developing their own stores, pop-ups, and partnerships.