- Brands are rethinking their e-commerce strategies, according to a new WSJ report.
- In 2021, Nike pulled its products from department stores. Now it's returning to Macy's.
Nike and department store chain Macy's are back together again after a short-lived but headline-making breakup that symbolized how brands were moving away from physical storefronts to focus on reaching customers directly online.
The pair's reconciliation, announced earlier this month, represents a larger trend happening in retail, according to a recent Wall Street Journal report.
Brands that have moved away from department stores and physical shops in recent years are now pivoting back to traditional retail tactics after experiencing first-hand the difficulty of acquiring and retaining customers directly online.
And they're not alone: even digital-first brands like Warby Parker and Allbirds have also opened new physical storefronts.
This trend is in large part due to the headaches and costs associated with digital storefronts, according to the Journal. Experts told the Journal that as digital marketing fees piled higher, and acquiring and retaining online customers became more expensive, companies began to rethink their direct-to-consumer approach.
BMO Capital Markets analyst Simeon Siegel said in a recent note that the DTC strategy is "not all it's cracked up to be," when factoring in these additional costs.
"Despite widespread belief to the contrary, the push to DTC from wholesale appears to hurt, not help, overall company profitability," he said.
But it's unclear how the retail landscape will pan out in the coming years.
A 2022 report from the International Council of Shopping Centers found that 94% of holiday shoppers planned to buy holiday gifts from physical stores as well as online shops, while more than half of shoppers planned to buy their gifts in-person to avoid shipping delays and fees.
Big-box retailers like Burlington, Ross Stores, and Barnes & Noble are opening dozens of new locations, even as experts predicted a "retail apocalypse" that would see physical storefronts struggle as e-commerce paved the way for a new era of shopping.
But at the same time, other stores are closing their doors.
Major retailers like Amazon, Bath & Body Works, Walmart, and Foot Locker are shuttering storefronts. An Insider tally found that more than 2,100 stores are closing across the US in 2023 amid bankruptcies, poor performance, and shifting strategies. A recent study by UBS predicted that retail stores would continue to close over the next five years and estimated that 50,000 shops would disappear by 2028.
Nike has also recently announced that it's expanding partnerships with other physical retailers like Designer Brands and Foot Locker after years of steadily cutting its wholesale relationships.