Strategy
Management
Retail
April 07, 2025
Why are industries selling directly to the final consumer?
D2C strategies and monobrand stores increase sales, including in other brand channels
A strong trend in retail currently is the increase in the number of consumer product manufacturers that have adopted the strategy of direct sales to the consumer, the so-called D2C (Direct-to-Consumer), mainly in e-commerce. Try an experiment: think about how many times this year you bought something not on the website of a retail company, like Amazon or Magalu, but on the website of the company that manufactures the product itself. Next time you go to the mall, try to identify which stores have the same brand and exclusively sell products from a manufacturing company. Havaianas and Melissa are two that immediately come to mind.
This trend has everything to do with the advancement of e-commerce. Nevertheless, there is an increase of physical stores in the D2C model — often franchised — fitting into the omnichannel reality of retail. Direct-to-Consumer is already attracting market attention, and a great article from the Exame portal, signed by consultant Marcelo Cherto, provides some interesting answers to the question: “Why are more and more industries moving into retail?”.
The consultant states that he never believed that online retail would completely replace physical retail, and I am with him on that. As Cherto rightly said, after the Covid-19 pandemic, “we, consumers, went back to being what we always were: gregarious, social, analog beings, who need face-to-face contact with other people and to touch with our hands most of the goods we are acquiring”. I think we all agree, and for him, the increase in exclusive (single-brand) stores from manufacturers demonstrates this.
Specialized service
Physical retail is becoming a space for shared experiences and the creation of connections among consumers, and this brings an intangible but very precious value to a consumer goods brand. And, in single-brand stores, they can have total control over this experience, thinking about details to convey the brand’s messages and values. The architecture, layout, lighting, visual merchandising, and even the temperature and aroma of the stores can coherently convey what the brand wants to communicate.
And there’s more: single-brand stores allow for more strategic pricing, with promotions, loyalty programs, standardization of sales scripts… And specialized customer service for that brand’s products. In this regard, the pioneer and still “gold standard” is undoubtedly Apple and its Apple Stores. The emotional connection between the consumer and the brand reaches its peak — in these stores — and sales conversion happens naturally.
Consumer habits and behavior
Beyond this obvious advantage from the branding perspective, exclusive stores are also excellent for extracting a value that is perhaps the most important today: data and information about the end consumer. Consumption habits, behavior within the point of sale, desires, the way they perceive and use products, all of this can be measured and analyzed, generating insights to base marketing strategies and new product development on.
For all these reasons, Cherto states that the implementation of single-brand stores increases sales, including in the brand’s other sales channels. His hypothesis is that exclusive points of sale improve the consumer’s perception of that brand. Thus, even if the customer is in a multi-brand retailer, they would end up preferring it.
Technology and management
However, the consultant issues a warning: these benefits depend heavily on how stores are structured and managed, and to what extent the brand strategically considers this model. From the perspective of a technology provider for retail, I strongly believe that store management systems are fundamental for extracting and analyzing consumer data, among other aspects for the success of the strategy.
By their very nature, manufacturing companies do not possess expertise in retail, and need to seek specialized consultancies to make this leap with certainty. This is where professionals like Cherto and a series of suppliers, such as TOTVS in the technology area, come in.
It is worth noting, of course, that the process of a industry entering the world of e-commerce is long and requires a lot of preparation from all areas of the business. Structuring an operation that serves a new sales channel requires a lot of planning. Therefore, each stage of this journey must be fulfilled responsibly and based on study, examining the market, the players already operating in this model, the suppliers, the adopted technologies, and so on.
The cat’s jump
In practical terms, all the success examples I’ve seen to date in D2C have involved setting up an almost segregated management structure focused on retail. The dynamics are so distinct across all areas, such as purchasing, sales, logistics, inventory, and even areas one wouldn’t expect, like tax and accounting, that I’ve seen many D2C cases fail to scale because of attempts to apply industry logic to retail operations, which effectively “sinks” the operation in concepts entirely foreign to the segment, making it uncompetitive.
In these cases, the industry ended without scaling its operations, and its retail did not go beyond one or two model stores. The accounting department could not understand how to close accounts that never closed, with infinite fiscal coupons; the purchasing department could not buy with the granularity that the stores required; the logistics department could not make deliveries in units from open boxes, and no longer in pallets.
Every single-brand retail that has effectively scaled has created internally a semi-independent retail division, equipped with professionals with retail experience, and that applied the best retail principles to its operation, finding with its industry-side peers the points where they could achieve significant synergies to operate in an integrated manner and, thus, prosper.
