4 Predictions for the DTC Market

The fact that the digital economy has reshaped the mindset of consumers, brands and retailers is no longer news to us.

Across every consumer category, the path to purchase has become incredibly complex; engaging social media, digital assistants, smart phones and a multitude of other channels. And not only has our path to purchase evolved, but we are faced with an increasing number of brands and retailers to choose from. Together, these changes have resulted in our expectations and demands skyrocketing.

With many retailers struggling to increase their market share against these relentless competitors, brands have been forced to re-evaluate the ways in which they engage with followers and consumer. For an increasing number of brands, this evolution in retail has resulted in more advanced direct-to-consumer strategies.

The DTC model is changing the face of consumer marketing altogether and it is not a trend expected to slow down anytime soon. According to the Interactive Advertising Bureau (IAB), two-thirds of consumers expect to have a direct connection between themselves and a brand. This opens countless opportunities for brands who facilitate and promote this direct accessibility, diving head first into consumer desires, demands and most importantly, wallets.

Much like emotional connections are retails new premium, the DTC model is retail’s new cool factor. It is not just a matter of the brand itself, but the key attributes of the consumer and what entices them to purchase. But what does the future hold for DTC strategies?

The DTC Consumer Attributes

Before we dive into our predictions for the future of DTC brands in 2020, it’s important to acknowledge the key consumer traits within the direct to consumer model. Research highlights than the majority of DTC consumers tend to be younger and more affluent, usually born within a digital advanced environment. They are generally early adopters of new brands who are creating innovative products or experiences, particularly if they are operating ethically. The IAB also recognise that 75% of these DTC early adopters will purchase without looking at the price, if they feel they trust the brand and its values.

With each of these heightened expectations for DTC brands, we highlight 4 predictions for the future:

1. Product Diversity

With incredibly modest budgets, often fuelled by kick-starter campaigns, DTC brands often begin with a single product to disrupt the market. However, their direct relationship with shoppers and social media follows, simplifies the process of obtaining data. The brand can precisely monitor the mindsets, buying habits and feedback of their customers and begin to build a more expansive product range based on this.

Casper is the perfect example of a DTC brand which has impressively diversified its offering. As a digitally native brand, they pioneered the online ‘mattress-in-a-box’ concept which revolutionised the way we purchase mattresses. The success of this unique product offering was widely recognised across multiple platforms, allowing the brand to magnify their presence in the industry. The mattress may be the Casper ‘original’, but they now offer sheets to help you sleep, and dog beds for canine pals to be as comfortable as their owner.

However, it is not just product diversity which sees Casper thrive; it is the escalation of brand purpose. When they opened The Dreamery, their pilot ‘nap’ store in the U.S, Casper successfully pivoted from mattress company to sleep company. They remain a DTC brand, maintaining the ‘mattress-in-a-box’ concept; except they now maintain a relationship with consumers which is rooted in sleep and overall wellbeing.

We Predict: DTC brands will modify the traditional sales model, choosing to sell more than a product but an education, a lifestyle and a purpose.

2. Global Subscriptions

For some individuals, the concept of online orders may be capitalising on our ‘culture of laziness’. However, our modern economy favours the option of being able to purchase products without even leaving the house; something which has been greatly advantageous in the current COVID-19 climate. For DTC brands, the importance is placed on long-term returns and not short-term sales. Much like the Casper reference above, these brands are not just selling products online, but providing consistent and increasing consumer value.

The rise in subscription offerings is one of the most prevalent trends of 2020. As consumers, we strive for convenience and subscriptions have become integral to achieve this. Rather than spending hours at the local supermarket or venturing into the city for a day of ‘essentials’ shopping, consumers can choose the convenience of a subscription which is delivered straight to home. Frey and Smol are just two examples of household laundry subscriptions, delivered on a regular basis to the consumer and permanently eliminating the stress of running out. In a similar vein, brands such as Gruum and Beauty Pie allow shoppers to curate their own skincare subscriptions based purely on their individual requirements. And finally, the food and drink industry. From Hello Fresh and Pasta Evangelists through to Beer 52, we can have our weekly sustenance prepared and delivered without much effort at all.

However, it is not just the convenience of subscriptions which sees these DTC brands thrive, it is the creation of long-term relationships between brands and shoppers. Whilst large online corporations set a standard for efficiency with 1-click purchases, they also removed the ‘joy of discovery’ for consumers. DTC subscriptions have been deemed the answer to this concern, creating an inherently personal relationship and bringing a sense of playfulness back to shopping; even if we still do not need to leave our houses.

We Predict: Subscription-based DTC brands will become the norm in many consumer lifestyles, bolstering the concept of personalised and convenient retail.

3. Digitally Native

DTC remains the common acronym for this retail evolution, but we are seeing a rise in the term ‘Digitally Native Vertical Brands’ (DVNBs). They are brands born on the internet, but unlike typical e-commerce brands, they control every aspect of their own product distribution and advertising. They do not find issue with localisation of demographic barriers, with the ability to reach a colossal audience worldwide.

However, competing on product alone is far too rudimentary in our current environment. Omnipresence is not strictly divided between ‘online and offline’, there are multiple channels for a brand to uphold. With that in mind, the combination of offering, experience, service and simplicity is what makes a DTC brand work in the eyes of the consumer.

DTC (or DNVB) brands are not just born digitally, every single aspect of their consumer interaction takes place online. Their brand offering is built utilising their digital community, from the individual products through to the meticulous packaging design. The shopping experience is curated with social media at heart, relying on compelling visual content, user-generated posts and affable conversations with brand ambassadors. Finally, with most DVNB brands built as the antidote to tedious retail, consumers find fulfilment in the ease of digital purchasing. For instance, brands such as Gainful, Function of Beauty and Glossier employ online questionnaires to not only curate a personalised experience but capture data for future reference.

However, despite being born on the internet, DNVB brands do not dismiss the importance of bricks and mortar. As they mature as a brand, they begin to appreciate the power of physical activations; viewing them as a complimentary addition to their brand presence.

We Predict: Digitally native brands will continue to thrive, armed with shopper data which can accelerate relevant and required product creation.

4. Living the brand

Engagement and Experience. Two words which have been bandied around multiple sectors almost too much. Yet, whilst the terms themselves are overused, the reality is that they remain of the highest importance. Consumers are no longer buying for the sake of it, they are buying into the product and everything which encompasses it; the value proposition, the experience and the brand narrative.

Whilst we refer to the importance of the internet above, DNVB brands do not eschew bricks and mortar in its entirety. They understand the importance of real-life experiences which connect first hand with the shopper. However, they are reluctant to curate spaces which cannot fully recreate the context required for consumers to fully immerse themselves in the brand. Recognising this shortfall, many forward-thinking DTC brands are becoming more creative and blurring the lines between retail and hospitality.

Direct to consumer brand Muji was born out of a vision for creating useful products which would create a balanced, luxury lifestyle through the art of simplicity. Whilst in London, they transformed their product range into a pop-up ‘apartment’ for the masses, in Asia they opted to explore the concept of a Muji hotel. It is the ultimate brand experience. Consumers become travellers, with the ability to literally eat, shop and sleep the Muji brand. Designed with simple, natural materials and focused on the concept of wellness, the store / hotel hybrid is holistic consumer experience at its best. Muji are essentially advancing the potential for a DTC brand to operate and oversee the entirety of a consumer’s lifestyle; from manufacturing through to hospitality.

Our Prediction: There is extremely fertile ground in the intersection between DTC retail and hospitality and we predict that brands of the future will take the opportunity to create the ‘ultimate destination’, rooted in pure brand expression.

Our Thoughts

Let’s take a second to consider the four predictions holistically. Regardless of physical, digital or social presence, the DTC topography is not based on a singular product, marketing strategy or location. The market of direct to consumer (or DNVB) brands are united by authenticity. They forge real-time connections with their audience, negating the need for any ‘middle-men’ and in turn, create authentic and insightful relationships; reaching shoppers across multiple touchpoints. It is this knowledge of the consumer which not only builds the DTC brand, but powers every interaction afterwards.

The DTC and DNVB acronyms will surely be replaced with new terminologies as we progress, but the quest for creating meaningful ‘direct to consumer’ strategies will continue to hold power over brands. It will become an ingrained approach to brand engagement, progressing from retail’s new cool factor, to our new normal.

Let’s talk about your DTC requirements.

The State of Global Travel Retail

Today, Global Travel Retail represents a $75bn sector (2018), but, by 2025, it’s predicted to grow to become a $153.7bn market, driven primarily by airports and Asia.

With over 14.2% growth in sales over the last year, Asia Pacific is expected to account for more than half of all Travel Retail sales within two years.

The top 10 operators generate 40% of all sales, and the top 100 airports account for 70% of total business, creating an increasingly challenging market to compete within for brands and retailers alike.

People have three priorities when clearing security:

  1. Where’s my gate?
  2. Where’s the nearest power socket?
  3. What’s the WiFi?

For almost all brands, capturing shopper attention before they’re lost to their devices is critical, regardless of category. But, understanding shoppers and what will resonate with them within travel retail can be difficult.

Passengers can be defined by the amount of time they have to spend, whether they’re rushed or have time to spare, as well as what kind of trip they’re taking, just as much as their age, budget, and socio-economic status.


As a general rule across all retail, customers purchase very few items and prioritise speed above everything. Any aspect of the shopping experience that unduly slows them down risks a loss of sale. In travel retail, with the limited time available and the fact shopping is often a third or fourth priority for passengers, it becomes even more critical.

The Golden Hour, where shoppers have cleared the stresses of security and check-in and are waiting to board, remains a crucial period for brands and retailers to capitalise on a captive audience. Despite its label however, research shows that brands and retailers typically have far less than one hour to encourage purchases. Nigel Dolby Consulting reported that in 2016, the average amount of time spent shopping across all categories in airports was a mere 29 minutes.

While some categories may have a higher or even lower shopping window, time restrictions make it challenging to maximise additional impulse sales or drive prolonged brand engagement which represent some of the largest opportunities across all sectors.


Space restrictions can make it extremely difficult to balance merchandising and experience. Within most global travel retail stores, counters and pop-ups are forced to operate in a restricted and often congested amount of space.

Balancing the ‘Trinity’ is a crucial challenge faced by many brands within travel retail when planning their activations. Brands are often dictated to by the retailer, who in turn is dictated to by the landlord and owner of the property. Dufry stores can range from 10m2 in size, right up to 3000m2, and often feature over 50,000 different products at a given location.

When space availability is limited, and product choice is vast, it becomes difficult but even more vital that brands provide shoppers with a compelling and relevant reason to buy, and deliver it in ways which are less reliant on and dictated by the spaces available to them. Customers also may not be able to carry everything they want to buy, which can make for difficult choices as to where to spend their money.


Only 6% of people now believe duty-free offers the best prices. 52% know they can find a better price online or on the high street.

The duty-free price advantage continues to become less attractive.

The price advantage available from not having to pay tax on purchases was a core reason to buy when travelling for most shoppers. However, digital price transparency and the growth of online retailers are now leading many shoppers to opt to buy online instead of in the airport.

Research by price comparison site PriceSpy found that on average only 10% of products were cheaper in duty-free than on the high street or online. However, research by Telegraph Travel disputes this, claiming their study found that they were, in fact, cheaper. While both sides can be argued, the more important aspect is the impact e-commerce and high street discounts are having on driving uncertainty, and when shoppers feel a sense of uncertainty, they’re far less likely to buy.

The value proposition, purely when you think of the price, was the original motivator, but that’s eroded over time. There are several reasons behind that, whether it be the abolition of intra-EU dutyfree, the rise of the supermarkets discounting on product lines like alcohol, or the advent of Amazon and smartphones that provide people with the ability to instantly compare prices

Alex Avery, MD at Pragma Consulting

Changing Demographics

By 2030, Asian Pacific countries will have seen a growth of their middle-classes of over 500% in the 20 years up to 2030 – OECD.

The rising number of middle-class populations and rapid urbanisation are propelling the growth of the global duty-free and travel retail market, with increases in disposable income, improvement of living standards, and the affordability of air travel all helping to boost the numbers of middle-class travellers.

Perhaps most interesting however are the continually emerging countries such as India and China, where middle-class consumers are the largest contributors to the economic development and therefore have the spending capacity to promote the growth of the duty-free industry in the global market.

The OECD projects that the world population will grow to over 8.2 billion by 2030 and that China and India will be home to roughly two-thirds of the global middle-class. By then, some estimates suggest Asian-Pacific (APAC) countries will have seen a growth in their middle-classes by over 500%  in the 20 years up to 2030, compared with 2% growth in Europe and a decline of nearly 5% in America.

Experiential Growth

67% of brand-side marketers anticipate a growth in their experiential budgets over the next 18 months.

Our own research has identified that for most brand owners, achieving penetration is often one of the hardest battles within global travel retail. Not only getting passengers into the relevant parts of the store, but ensuring their brand is seen amongst the noise of other activations continues to become more challenging than ever.

As such, we expect the need to capture attention and drive engagement will lead to the continued adoption of experiential activations.

Experiential activations are a useful means for helping brands reach their goals of audience engagement, brand awareness and more, and explains why, amongst respondents surveyed, budgets have grown for the past three years and show no signs of stopping.

Factor in the larger opportunity for human to human interaction and experiential activations represent an opportunity for many brands to connect with their audiences in a more meaningful way. Something often overlooked in an increasingly digital-centric world, and one which we believe will grow in prominence.

Continued Digitalisation

In the 12 weeks leading up to a trip, there are 3 times more experiences searches than hotel searches, and 8 times more experience searches than air searches.

The prevalence of digital touch-points throughout the shopper journey will continue to change the way people shop in travel retail as well as the opportunities presented to brands for engagement.

Digital formats allow brands the opportunity to not be constrained by the challenges of purely physical activations, and instead, capitalise on the limitless potential of immersive digital experiences.

Activations in-airport are already incorporating the use of VR and other technologies, but perhaps a more notable shift may be as brands expand their experiences outside of the terminal building, using the full path to purchase as a method for priming their audiences before their airport arrival.

Travel Retail continues to be a growing, effective channel for engaging with, and introducing brands to consumers around the world.

While we’ve provided an overview of a selection of notable themes impacting this diverse channel, from our research we believe there are 5 stand-out elements for consideration to best capitalise on the opportunities within Global Travel Retail.

Think Omnichannel

The growth in digital touchpoints continues to offer significant opportunities for brands throughout the whole traveller journey. From booking, through to travelling to the airport, to checking-in and transiting through general duty-free, down to following customers onto their flights, and being there as they arrive at their destinations.

Priming passengers, introducing them to your campaign prior to them arriving at the airport has the added effect of increasing the likelihood of activation recognition once in the terminal building. The colours, the tone, the messaging can all be used throughout the journey to encourage  familiarity with the brand and concept, and increase passengers likelihood to engage with your primary activation once there.

Think Added Value

The challenges of price, space, and time, are making it more challenging than ever to keep travel retail activations commercially viable.

To succeed, therefore, brands should continue to create retailtainment, and immersive, compelling experiences for passengers, but, at the most effective price points. Innovative materials, digital content, and newer cost-effective methods of personalisation can all help to provide higher value for shoppers, encouraging purchases, but without the higher cost associated with more traditional promotions such as gift with purchase.

Think Asia-Pacific

The growth in the Asia-Pacific middle class may represent one of the most promising opportunities for western brands to capitalise on over the next decade.

Where relevant, brands must keep this audience in mind, and capitalise on the Asia Pacific market, and in particular, their propensity for gifting purchases and items which demonstrate the places they’ve visited. Two vital Asia-Pacific shopper missions, which, while not fully expanded upon within this document, were identified from our research.

Think Brand Experiences

As price and space restrictions erode travel retails effectiveness at showcasing mass products/ranges, we believe it will become even more critical for activations to build brand equity, helping customers understand and engage with brands’ histories, stories, as well as the requirement to drive sales.

The use of engaging, disruptive displays and experiences with less of an emphasis on driving immediate sales will become more prevalent, particularly across categories which suffer from high price comparisons or where shoppers may be restricted in the quantities available to purchase, such as alcohol.

Think Traveller Mindset

Psychologically when travelling, brands almost couldn’t ask for a better opportunity.

Holidaymakers, in particular, having spent money and time looking forward to the trip itself, are in the mindset to spend. To capitalise, brands must create a point of difference by playing to the emotions of travellers to instil a greater sense of desirability in their products.

To capitalise on most scenarios, it’s important not to overlook the basics – brands must ensure their products are always visible and easy to find, that their displays house merchandise within arm’s reach of shoppers, anything too high or too low can be a significant detriment, and the best-sellers are always displayed most prominently as they will have the highest likelihood of driving sales.

But, for every brief, it’s essential to ensure audiences are fully understood, and the mindsets and emotions they’re likely to be feeling are identified to ensure activations best meet their needs.

One opportunity we’re seeing more of are brands seeking collaborative activations between complementary brands/products. For those travellers seeking a new holiday look, cosmetics and perfume dual activations can help encourage multiple purchases. Similarly, confectionery and alcohol may best meet the needs of those passengers in the mood to indulge.

As experts in airside brand delivery, we’ve built our reputation on successfully landing first class travel retail activations, imaginatively, consistently, safely, and globally.

We have the experience to understand the challenges you face and keep pace with the changes in airport regulations. Simply put, we deliver inspirational retail environments. 

Let’s talk about your GTR needs and how we can best help you!