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THE WEEK IN RETAIL ISSUE 40
EDITOR’S COMMENT
WHAT’S THE FUTURE OF D2C?
Coronavirus has changed a lot of things, that’s a given. Many of them have been positive for the sector but some of them are potentially a little more alarming. I stumbled upon Coke’s new direct-to-consumer (D2C) website [insert link to article in Out The Box] recently after hearing about it in a post from a Coke employee on LinkedIn and immediately wondered why they hadn’t been shouting about it themselves. The answer, of course, is fairly obvious. D2C cuts retail and wholesale out of the supply chain so it’s not something that the big suppliers will want to go shouting about.
To be clear, Coke are far from the first to have a go at D2C and they follow a long line of major suppliers dipping their toe into the D2C water over the last year or so.
The attractions to a supplier of developing a D2C channel are obvious. No retailers or wholesalers taking their cut, more control over how the brand is presented to the consumer, the prospect of building a database of consumers that they can talk to directly and so on. Many have predicted in the past that in 10 or 20 years’ time there will be no retail or wholesale channels at all, with suppliers exclusively going D2C, but that always seemed far-fetched.
It would require a shift of epic proportions to reach that stage, but these small plays by companies like Coke and Pernod Ricard undoubtedly reflect an interest in the channel, if not some form of commitment to developing it. Granted, it’s very small scale at this stage and the big suppliers clearly aren’t shouting about it from the rooftops, but setting up a D2C offer requires a lot of work, manpower and investment. It’s not a decision anyone will have taken lightly.
So is it just a token bit of Covid opportunism? Is it an attempt to recoup some money lost through the collapse of hospitality? Or is it the first step in a longer term strategy that could ultimately see suppliers competing directly with their current customers (retailers and wholesalers) for the consumer’s precious pound?
