How Retail Can Enhance a DTC Operation

Just because you have a thriving DTC operation doesn’t mean you can’t dip your toe into the world of physical retail. In fact, it’s a natural next step for many established DTC brands, and one great example is Casper. CEO Philip Krim shares the ways that a retail presence has helped Casper improve everything from discovery to delivery.

Toothbrushes. Skincare. Snacks. Brands of all stripes are embracing the direct-to-consumer model.

What can we say? It works.

But just because you have a thriving DTC operation doesn’t mean you can’t dip your toe into the world of physical retail. In fact, it’s a natural next step for many established DTC brands.

 

One great example is Casper, the innovative mattress company. At least, they started as a mattress company—now they cover every building block of a great night’s sleep, from pillows to glow lights to cooling technology.

CEO Philip Krim shares the ways that a retail presence has helped Casper improve everything from discovery to delivery.

1. Retail drives awareness

Growing brand awareness means that customers need an opportunity to encounter your brand. Yes, that can happen in an online setting, but humans don’t live the majority of their life online. That means it’s beneficial to place your product in other venues.

We are investing in the brand and growing brand awareness and driving more people to sleep with Casper products. We've been trying to build out distribution behind all of that.

Philip Krim, CEO of Casper

Compared to competitors, Casper famously invests a lot of money into G&A, or general and administrative expenses. They funnel a big chunk of that money back into their retail stores.

Today, Casper has over 70 stores that provide an elevated, enjoyable shopping experience for sleep products.

Granted, 70 stores across the United States still don’t allow for a huge increase in customer reach and awareness. That’s why Casper has also pursued retail partnerships.

“We sell thousands of pillows at Target every week. And so there are just more and more products now that consumers will realize. Over time, that means Casper will be thought of as a sleep destination, not just a mattress destination. But we have to build those businesses, and we have to do that on the backs of great products with the right distribution. As we do that, Casper will evolve to be a sleep destination.”

2. Retail allows you to (further) disrupt the status quo

Casper was founded on the fact that mattress stores are like used car lots: nobody likes them.

First, they pursued that vision by cutting out the store experience entirely, and shipping a mattress-in-a-box to customers’ doorsteps.

Now that Casper is more established, they can create the retail experience that they’ve always dreamed of.

“One of the reasons we launched Casper direct-to-consumer is we said, no one wants to step foot into a mattress store. You immediately feel like you're getting ripped off. You feel like you have to take a shower afterwards. That was the antithesis of the brand we wanted to create with Casper. Buying mattresses statistically ranked worse than pretty much anything else out there in the retail environment...We said, what do we do to create the opposite of that?”

Now that Casper has stores of their own, it means they can inject their own ethos and approach into the traditional mattress store setting.

3. Retail enables customer education

There’s no doubt that many customers appreciate the ability to see and touch products like a mattress before buying it.

“Sleep products are a highly considered purchase. You're spending a 30-year life with these products. We want to make sure that we have the right distribution so you can find our products when you need them, and you get the best educational experience around them,” Philip says.

Casper also realizes that customers are educating themselves in a hybrid format. They don’t just shop online or just shop in a store; many do both before making an important purchase.

Philip shares, “They're going online to do their research. They're walking into stores to aid their education. Oftentimes those are happening at the same time. People are on their phones reading about products while looking at them on the shelves. We really have to think about how to have multiple touchpoints and multiple facets of engaging with customers in a way that ultimately lets them buy wherever they want to buy that's most convenient for them.”

“Think about building that in an infrastructure that's channel-agnostic. We're just as happy if you buy Casper products through one of our retail partners as we are through our retail owned and operated stores, or on our ecommerce store.”

At the end of the day, Casper doesn’t care where or how a customer buys their products. What they do care about is that the customer has every opportunity to make an informed decision.

4. Retail expands your distribution network

When they first started, Casper’s achilles heel was in the supply chain. Once they got more manufacturers in place, the next hurdle was distribution.

That’s when they slowly started to dip their toes into physical retail settings. Here’s Philip on how that shift started:

“We had our ecommerce business. We started to do more things with stores and pop-ups, bringing physical inventory closer to customers and seeing the value of offering real-time delivery. In New York City, you could get a bed delivered same-day. That didn't exist in this industry before Casper. We've always tried to push the envelope on the customer experience, which then requires us to push the envelope on our warehousing logistics and supply chain.”

Today, Casper’s distribution network improves with every new retail partnership. They now sell mattresses through retailers like Costco, Raymour & Flanigan, and Rooms To Go.

The benefits they’ve seen are multi-fold. It allows them to compete with big legacy brands now that they operate on a bigger stage. It increases consumer education and choice. Finally, it improves delivery speed.

More retail locations mean that Casper can get their products into the hands of consumers who want them, faster.

5. How to approach working with retail partners

Here are the big omnichannel lessons that Philip learned as he steered Casper into the world of retail partnerships.

• There's no one-size-fits-all in how you work with retail partners
• You have to understand how their retail business operates
• Retailers know their customers best
• It’s not just about getting product on the retailer’s shelves

When Casper first started this process, they wanted to set all the terms. If retail partners didn’t agree, they would refuse to do business.

They quickly learned that approach doesn’t work. In Philip’s words:

“The way you're successful with every individual retail partner is different. You have to listen. You have to understand what makes their business tick, who their customers are, how their salespeople are used to selling, why consumers are shopping with them...The reality is that a lot of these retailers have been in existence for a long time. They have buyers that know their customers super well. They're building categories in really specific ways. And it's not just about getting product on the shelves.”

In order to be successful, you have to think about the right product-market fit with each individual retailer.

The best recipe for success? Listen carefully to both the retailer and the customer, then go from there.