We have it in black & white. Actually, pastel.

If you’re one of those people that rolled your eyes or scrunched up your nose at the sight of the minimalist, san serif branding of direct-to-consumer (DTC) brands and then every conceivable object in the world, you’re in for some unpleasant sights of the town painted pastel.

All signs are pointing towards a lot more of this kind of branding in the coming months, not just on the internet, but IRL too.

Because we now have data on hand to show that at least half the brands in the market today have tested their retail strategy. And PipeCandy’s research indicates that both digital-first brands and brick-and-mortar stores are going to be stepping up their physical presence, and the stores are going to be designed and colored to appeal to millennial shoppers.

Reason: The Halo Effect

Way back in 2018, the  International Council of Shopping Centre (ICSC) published a study on the influence of physical stores on retailers’ web traffic.  It said that when a retailer opens one new physical store in a market, overall web traffic increases by an average of 37% in that market compared with web traffic before the store’s opening. Conversely, when physical stores are closed, web traffic in that market drops 10-50%.

While a lot has changed with retail stores since then, with the pandemic and the new normal and all, one thing that clearly hasn’t is this strange relationship between physical and digital retail presence.

As per the latest numbers and research from PipeCandy, about 47% of small and mid-market DTC businesses in the US have been in at least one physical store. This includes  brick-and-mortar brands that leverage websites as a parallel channel, and digital-primary brands that opened physical stores to exemplify their brand. And those that were convinced of the benefits went on to set up their own stores too.

According to our research, these businesses brand themselves in the same way as digital-only fashion brands in the Gen Z-esque, earth-positive, Whole-foods inspired non-toxic colors and see a significantly higher visitor traffic - proof that the halo effect we noticed years ago, remains.

So whether it’s going to be due-casted, pastel-colored stores or aisles inside larger stores, that the new normal is going to include a hella lot of retail presence for DTC brands. Also, you are hearing this first here - there are at least 150K DTC brands and not 1000 or 5000.

Seeing these hard numbers in black and white, you would have to put the store closures in perspective. Retail isn’t dead. No I don’t buy that “retail as entertainment” one bit either. Retail will be retail. Just who occupies the aisles and what happens there changes.

According to our data, 26,000 new stores opened in the clothing, jewelry, and footwear category in the five years preceding 2019, and around 30,000 stores closed down.

Yet, the ‘halo effect’ has been so compelling that physical stores are making their way back to the top of the priority list. New “as a service” platforms become merchants of record. We talked about it in the reincarnation of retail zombies blog.

Brands are doing all they can to appeal to customers…and if painting stores in pastel pinks, blues, purples, and yellows is what they need to do to reinforce their digital branding, paint they will.

I wonder if we’re going to have London’s Lancaster Road-like strip malls all over the US soon? David Rose (of Schitt’s Creek) will approve it (and I will too).

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