While the rate of growth might be slowing, Wong states that D2C brands are still seeing growth year-over-year, just at 10 to 15% instead of 85%.
Wong does, though, predict that promotions will come to the forefront of retail in the rest of the year as inflation continues to impact consumer behaviour, with D2C brands – who are not typically very promotional – also offering discounts.
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“Because you’re competing for more wallet share – consumers shop at both premium brands and Target, you see – the competition from the big box retailer is going to drive more discounting in the back half year than we historically see,” she explained.
“Also, everybody from small brands to big brands has extra inventory, and so I think we’re going to see a pretty promotional landscape.”
Though heavy discounting is often thought to erode consumer perception (particularly of luxury brands), Wong says that this is no longer an issue, with consumers across the board appreciating good value for money.
“It used to be that people thought less of a brand… if you were in a mall, you didn’t want to be at the Sears end of the mall, you wanted to be at the Nordstrom end. It was the same with discounts. It used to be that if you were a big promotional discounting brand, then you weren’t a good quality brand. But I don’t think the consumer has that perspective anymore at all. I think the consumer just wants great value for money and it doesn’t change the perception of the quality of the product or the quality of the brand.”