Direct-to-Consumer Pioneers Bet Growth on Physical Stores

Warby Parker and Allbirds to Open More Stores

Warby Parker and Allbirds, two high-profile direct-to-consumer brands going public, are staking their future growth on physical stores instead of online sales. It is an interesting twist for two well-known direct-to-consumer brands.

Warby Parker and Allbirds have made names for themselves selling eyewear and eco friendly sneakers online. The two companies are among a growing list of startups to adopt this model, in which direct-to-consumer brands cut out the middleman (like department stores) and sell their products directly to shoppers with little to no brick-and-mortar stores. Now, however, Warby Parker and Allbirds are gearing up to pour money into breaking that model and opening more retail stores. They see it as a way to drive growth and become household names.

Allbirds Sees a Big Opportunity

Allbirds, which is going public via an initial public offering, said in a recent Securities and Exchange Commission filing that it sees a big opportunity to open stores in the US and elsewhere. As of the end of June it had 27 stores across the world. The company anticipates the new stores will be very profitable and will allow its growth to accelerate. The sneaker-maker said its store expansion will also position it to take advantage of the retail sector’s eventual pandemic recovery.

To underscore the positive impact retail stores can have, Allbirds said consumers who shopped in-store and online spent 1.5 times more than customers who went online or to a store only.

Warby Parker to Increase Pace of Store Expansion

Warby Parker shares the same sentiment as Allbirds. The eyewear company, which is going public via a direct listing, said the stores are a valuable marketing tool and helpful in building repeat business. As of the end of June Warby had more than 145 stores. It plans to open an additional 30 to 35 by the end of this year, and anticipates the pace of new store openings will increase annually in 2022 and beyond. Of its net revenue in 2020, 60% came from online sales while 40% from in-store purchases.

Direct-to-consumer is taking on new meaning as two of the pioneers gear up to go public and open more physical locations. Investors now have to decide if physical stores are the best way to take the direct-to-consumer market to the next level.

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