Radio Fuels the D2C Pipeline
Author: Lisa Cirigliano, Director of Insights and Analytics
Source: Katz Radio Group®
As we hope to begin a transition from pandemic to endemic, retailers are seeing more consumers return to in-store purchasing, while ecommerce continues to grow. Large corporations and brands found great value in ecommerce and the direct-to-consumer (D2C) relationship over the past few years, adding new customers through a new channel. A traditional avenue for start-ups and small businesses, see why this model will continue its growth among the bigger brands and how Radio is KEY to generating brand awareness and driving site traffic.
*January and February 2022 combined sales is already up almost 12% from January and February 2021
The NRF's recent forecast predicts retail sales will continue to grow through 2022 into 2023. Non-store, D2C, and online sales (which are included in the total figure) are expected to grow between 11% and 13% year over year to a range of $1.17 trillion to $1.19 trillion due to the continued use of ecommerce. Consumer confidence, healthy household finances, strong job and wage growth and a decline in unemployment is expected to help weather the impacts of rising gas prices, inflation, COVID-19 impacts, and international tensions.
According to eMarketer's forecast, U.S. D2C ecommerce sales will reach $151.20 billion in 2022, an increase of 16.9% compared to 2021.
Direct-to-consumer (DTC) brands such as Allbirds, Casper, Peloton, and Warby Parker have creatively found a weakness in the marketing citadel of incumbent brands. By using data gleaned from daily interactions with customers, these brands have been able to adapt how they serve their unique customer communities across a start-to-finish purchase journey. The best of them have parlayed that ability into a profitable business model applied across multiple channels and customer segments.
While forecasts predict D2C purchasing will only account for 2.5% of 2022 total retail sales, many of these brands have successfully disrupted the retail industry by diversifying the consumer experience, and will continue to flood the retail space because of what appears to be a bottomless purse for funding.
A recent Morning Consult study conducted from March 31-April 3, 2022 cites 31% of Americans are spending more money now than before the pandemic. When it comes to ecommerce, 47% said they're spending more online than they were pre-pandemic, while this number jumps to 57% with people who have an annual income of $100k or more.
This holiday season has shown the power of our digital transformation across the globe. Digital is the engine driving our Consumer Direct Acceleration strategy. More legacy brands have seen the value of adding D2C sales channels: building deeper connections & consumer loyalty, expanding reach to a new audience, collecting first-party data to help in product development & marketing tactics, ease supply chain disruptions, and grow profit margins.
Consumers value brands that are consumer centric, who personalize the customer experience, demonstrate they are inclusive & supportive of diversity and other values, and can fully communicate these actions.
The personal relationship and the engagement that radio, in particular local radio, has with its daily listeners is authentic and intimate and unlike any other medium. It only seems natural that Radio, with its ability to personally connect & engage with its audience, mass reach to drive search & site traffic, and proven ROAS, is the BEST medium to deliver D2C messaging.