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David Sobie Explains Why DTC Brands are Opening Retail Stores | Upfront Summit 2020

David Sobie
Co Founder at Happy Returns
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Upfront Summit 2020
January 29, 2020, Pasadena, CA, United States
Upfront Summit 2020
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David Sobie Explains Why DTC Brands are Opening Retail Stores | Upfront Summit 2020
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About speaker

David Sobie
Co Founder at Happy Returns

About the talk

Topic: Business

Founder and CEO of Happy Returns, David Sobie, shares his perspective on the myth of the "retail apocalypse" and why DTC brands are well situated to the new retail reality.

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Dropping in on David Selby the co-founder and CEO of happy returns, but doesn't mean they don't know happy returns yet. We're tackling the painful challenge returning products purchased online. We sell return software and reverse Logistics 2 online retailers, which puts us exactly the intersection of physical and digital Commerce and it's our position at this juncture where eCommerce meets the physical world that I'm excited to talk to you about today specifically about the remarkable Resurgence of the physical store in the retail equation. Tow truck by going through a narrative

and everyone in this room knows well and that's the idea that physical retail is dead. Another casualty in the software is eating the world narrative. It says e-commerce is the future what stores are a thing of the past is so pervasive in America today that the term retail apocalypse has its own Wikipedia entry is plenty of data to pick last year. For example, Amazon stocks or the new highs 9300 stores close their doors 9300 stores last year making it the worst year ever for store closures and it wasn't just the worst fear by a little bit. It

was the worst year by a long shot store closures up 60% year-over-year. It was otherwise a thriving US economy. Story names went bankrupt last year including the largest retail Liquidation in history when Payless ShoeSource went bankrupt following Payless for brands that we all know and love Tom's friends Charming Charlie Charlotte Russe, and we'll have to be the all-time worst name for women's apparel brand ever Dress Barn. Popsicle retail was failing e-commerce wrapped up its 20th Street year of double-digit growth.

And all the success stories you heard about last year are brands that sell direct to Consumer via the internet brands that many of you in this room has funded names like allbirds rothys everland Warby Parker in a way and all his friends and following the same Playbook make a quality product sell direct-to-consumer cutting out the Middleman have a fight with a minimalist aesthetic and sans-serif font pay some influence authentically promote your brand and make sure that your LTV to CAC ratio is 3 or higher. So if it'll retail dead they Converses the future, what do we make of this image?

Let me set the stage for you. It's holiday 2017 hits December in New York City. It's cold outside the snow on the ground yet, despite the weather and wind up not only out the door, but around the block to be the first ones to go into everlane's first-ever physical store. Now, it's possible to dismiss everland is a cult brand but this being played itself out the city after city with the largest single store flashes everlane followed up on a 6ft Soho by opening a store in San Francisco Denis 3rd and Brooklyn then 1/4

here in LA on Abbot Kinney birthday Warby Parker Parker has over a hundred in Casper has promised Wall Street 200 Doors in the next three years. So the DLC Playbook clearly have the new chapter in it that's called opening stores. So what are we making this dichotomy? How do you explain that incumbents who started with stores and bolt it on e-commerce are failing where the sea brand starting with e-commerce stores. Now, I'm a proud parent of a 6th grade pre-algebra student and I'm pretty sure that there's a property that tells me and Siri that the two sides of

this equation to equal as we talked about in reality the most definitely not so the key question is why I would argue that there's five reasons why technology data Focus distribution and cost to live on taxes from a technology perspective if ever there was a time when it was good to be fashionably late to the party. It's technology. Who started Adidas the brand in the last 5 to 10 years chances, are you picked your technology platform off the shelf this meant that you were starting your business with a text back that was available

that was meant to scale the accumbens never had this choice and see what they did is. They hired engineers and Cobble together what they could in the market and built their own versions of Technology. Now Along Comes the internet in Cummins do well. Unfortunately, they make the fatal error thinking it's different. So they hire new people develop new budgets new timelines of fatal error of building a second text back years with a project ahead of them to try to integrate these two and come up with some omni-channel dream and speaking of channels my got the retail. We love to talk about

Channel. We were talking about channels for the last 10 years and I think it's been a huge distraction to the incomings and I can remember going to the NRF show in New York to talk about what's happening in stores and then three months later going to Vegas to the shop. Org show to talk. What's happening in e-commerce, seeing the same people and we're acting like these are two different conversations no choice, but to focus on the customer experience.

Go back and talk about the outer per minute. You're sitting on a treasure Trove of data ordered Data customer data and all the demographic data that you need to really understand a profile who your customer is for. Southwest distribution for a minute I think I left for him to talk about to coach shoe brands in the last decade in the DTC Corner. We've got robbed only two places where you can buy a pair of Rockies on the Rock his website where the rocky store Nordstrom at nordstrom.com

Nordstrom Rack TOMS Shoes. Com the Time store you get the idea of buying the same product potentially from different places. You're making me do the work to figure out where the prices best all the sudden. My experience was very diluted. Robbie's controls. The experience is each one of those interaction points. Find the song about cough. So here's another case where the retail apocalypse actually help detox tea brands with open stores. It was a buyer's market. And so what did they do? They started by experimenting with pop

up then when I went to find Lisa's they said that they have the ability to demand flexible terms could also already figured out how to sell and unfulfilled directly from the warehouse. So the store wasn't necessary but they ended up with was smaller stores with limited inventory and anytime somebody want something they can fill it in a couple days, but no both y'all remember took this idea with the guide ShopRite perfect store that have one item of everything and no inventory. Incumbents on the other hand has gotten really good from a supply chain perspective that feeling their stores

of inventory and see what they did is they sign up for 10 year leases with big boxes and all those leases had rent increases each year. Which side do you think had the advantage? Don't clothing stores here again. I think the store is here to stay which which leads to a natural next question, which is David how many stores did Adidas the brand have the jury still out there and don't know if you know the answer but I think the days of having six seven hundred doors like a Macy's are clearly over. I'll tell you what I do. If I was a CEO of a company, I'd start by selling online

direct-to-consumer. Once I had a couple years worth of data at start experimenting with stores first of popups, and then with small footprint stores with flexible lease terms in markets that I knew recording me. And for everything else, I'd partner with a company like happy returns to make sure that I could enable buy online return to store and all the markets where I didn't know if Isabel presents, I'm David Sophie. Thank you.

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