The pandemic, matters of culture, and why direct-to-consumer brands are thriving

We’ve passed the six-month mark of living through a global pandemic. I’m not sure it’s an anniversary worth celebrating – it’s more of a ‘day-that-will-live-in-infamy’ type. In the retail world and working with consumer-facing brands, we’ve observed that many with a direct-to-consumer orientation have fared well. In contrast, the broader spectrum of the retail and consumer services sector has not.

I’ll try to be as diplomatic as possible here – if there’s one thing Americans don’t like, it’s being told what to do. We tend to think of ourselves, our families, and our immediate communities – and probably in that order – as the best sources of information. State and federal guidelines tend to (at least initially) be met with resistance, especially when those guidelines affect one’s ability to earn a living, visit with family and loved ones, or eat a meal indoors at a restaurant. What the pandemic has revealed is simple: culture matters. Congregating limitations and business closure edicts, and the delay in loosening them, have put our culture on ice.

Although, not entirely.

Discovering new brands and the act of shopping itself has not stopped. It has dramatically shifted during the pandemic to the digital domain. This has been a big win for direct-to-consumer retail brands. They were never dependent on physical store locations. Most of their customer’s experience with the brand occurs online.

Noteworthy, too, is an analysis of how and where we spend our free time, pre-pandemic vs. during. Gone are dinners at restaurants, drinks at bars, movies in theaters, music at concert venues, vacations requiring flights and overnight hotel stays, even backyard barbeques with one’s neighbors. But that doesn’t mean we’re just sitting around, waiting for those places to reopen – no, we’ve simply refocused our free time, and retail spending, on other aspects of our lives.

So, within the retail sector, what’s working? Home improvement and home décor merchants have, in large part, performed exceptionally well. Outdoor apparel and accessories are other categories that have performed admirably. Most hobby-oriented brands – think gardening, fishing, jewelry making – have seen significant year-over-year growth during the pandemic. Food delivery, pet supplies, swimming pool maintenance, health, and wellness – you name it. If it’s something centered on the home, the outdoors, or physical and mental health, it’s a thriving category.

Direct-to-consumer brands took advantage of CPG brands scaling back their online ad spend, achieving improved ROI, CAC (Customer Acquisition Cost), and ROAS metrics with their digital ad campaigns, primarily during Q2 2020. This trend towards lower CPMs, however, has not continued. Back to School campaigns have been postponed. More traditional retail brands are chasing to recapture the sales they lost earlier this year. To top it off, it’s an election year, so tons of non-profit organizations and political campaigns are ramping up their paid social ad spend as I type.

Fall/Holiday 2020 looks like it will be very competitive, in terms of the bid price to serve ads to qualified but not-yet-engaged audiences on popular social media platforms.

Direct-to-consumer brands, of course, have addressable advertising channel options. Direct mail has seen a renaissance of sorts, especially during the pandemic. Sheltering in place and working remotely afforded individuals more time to discover new brands and buy from those they trust. Once seen as a costly alternative to digital advertising, direct mail is attracting new attention because of the consistently high ROI, CAC and LTV metrics its users observe. For consumers, it’s a welcome respite to staring at computer screens – especially mobile devices. That which is tangible and tactile holds our attention – we’re able to retain what we’ve seen and read when it’s delivered on good old ink and paper.

The shifts in consumer behavior we’re observing during the pandemic are significant, and they’re here to stay. Fundamentally, we’re a consumer culture, and as we’ve seen throughout the pandemic, culture matters. Direct-to-consumer brands will continue to thrive, even post-pandemic – and, they’ll do so by leveraging all addressable advertising channels, including direct mail.

CohereOne’s agency practice orients itself towards the direct mail channel and integrates it with all that a brand has online. If you’re considering a direct mail launch, let us help. If you’re successfully leveraging direct mail, let us uncover ways to optimize and grow your program. If you’ve tested previously, with not-so-great results, let us assess why – you might be surprised by the results of a re-launch.

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