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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

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 00:00 challenge returning products purchased online. We sell return software and reverse Logistics 2 online retailers, which puts us exactly the 00:08 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 00:17 to you about today specifically about the remarkable Resurgence of the physical store in the retail equation. Tow truck by going through a narrative 00:25

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. 00:33 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 00:41 Wikipedia entry is plenty of data to pick last year. For example, Amazon stocks or the new highs 9300 00:51 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 01:01

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 01:10 year including the largest retail Liquidation in history when Payless ShoeSource went bankrupt following Payless for brands that we all know and love 01:20 Tom's friends Charming Charlie Charlotte Russe, and we'll have to be the all-time worst name for women's apparel 01:27 brand ever Dress Barn. Popsicle retail was failing e-commerce wrapped up its 20th Street year of double-digit growth. 01:37

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 01:48 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 01:55 direct-to-consumer cutting out the Middleman have a fight with a minimalist aesthetic and sans-serif font pay some influence authentically promote 02:04 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? 02:13

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 02:22 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. 02:32 Now, it's possible to dismiss everland is a cult brand but this being played itself out the city after city with the 02:40 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 02:48

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. 02:58 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 03:08 incumbents who started with stores and bolt it on e-commerce are failing where the sea brand starting with e-commerce stores. 03:18 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 03:26

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 03:35 technology data Focus distribution and cost to live on taxes from a technology perspective if 03:44 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 03:54 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 04:01

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 04:09 market and built their own versions of Technology. Now Along Comes the internet in Cummins do well. Unfortunately, they make the fatal error thinking 04:18 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 04:26 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 04:36

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 04:44 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 04:51 happening in e-commerce, seeing the same people and we're acting like these are two different conversations 04:59 no choice, but to focus on the customer experience. 05:04

Go back and talk about the outer per minute. You're sitting on a treasure Trove of data ordered Data customer data 05:14 and all the demographic data that you need to really understand a profile who your customer is 05:22 for. Southwest distribution for a minute 05:30 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 05:40 pair of Rockies on the Rock his website where the rocky store Nordstrom at nordstrom.com 05:49

Nordstrom Rack TOMS Shoes. Com the Time store you get the idea of buying the same product 05:58 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. 06:08 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 06:15 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 06:24

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 06:32 unfulfilled directly from the warehouse. So the store wasn't necessary but they ended up with was smaller stores with limited inventory and anytime 06:41 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 06:50 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 06:58

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 07:06 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 07:15 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 07:23 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 07:31

direct-to-consumer. Once I had a couple years worth of data at start experimenting with stores first of popups, and then with small 07:38 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 07:47 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. 07:55

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