Digitally Native Vertical Brands: The New Reality

Overview

Ten years ago, many of today’s most talked about retail brands didn’t even exist. Warby Parker, Everlane, and Cuyana may have made quiet entrances, but they quickly carved out a niche for themselves amongst consumers with whom more established industry players were struggling to connect. So what were the market forces in place that enabled these brands to capture market share, build widespread awareness, and gain a devout consumer following, despite limited resources?

Known today as Digitally Native Vertical Brands (DNVBs), they were able to start lean as they were unburdened with the costs of operating physical retail spaces. Furthermore, they could scale up quickly, propelled in large part by savvy digital marketing methods. Their receptive audiences were entirely comfortable interacting with an unknown entity, and frankly, had become increasingly disillusioned and bored with the offerings of more established brands. But the most important element of their success was a curated product offering and brand story that resonated with and reflected the values of their target consumer base. In particular, these brands offered up a new definition of what ‘modern luxury’ could be, something accessibly-priced, high-quality, yet with that cool and relatively unknown factor that traditional luxury brands simply couldn’t replicate.

There’s been a bevy of entrants into this space, too many to list in fact, but we highlight three different examples of DNVBs who are redefining what a product- and customer-focused experience can and should be.

Fame And Partners

A vertically integrated women’s apparel brand, Fame and Partners takes a customized, ‘atelier’ approach to shopping. Customers browse a set of base designs and can either elect the for standard sizing and color options, or they can select from a set of material, color, embroidery, length and fit choices to create a customized garment. With production lead times under two weeks and messaging centered around women’s empowerment and sustainability, their approach has been very well received amongst shoppers looking for bespoke sans the unattainable price point. Without a doubt, the wave of mass customization will continue to rise and disrupt, as consumers navigate and acclimatize to this new world of one-of-a-kind retail. 

The Arrivals

Founded in 2014, The Arrivals is an example of a brand that has focused on one category and executing it to perfection. An outerwear brand, their ethos centers on ‘balanced design and beautiful products, driven by functionality, craft, individuality.’ They use the highest-quality materials but are priced at levels far below their designer brand counterparts. They are also one of the most recent players to try their hand at bringing the online experience to brick-and-mortar. Partnering with other up-and-coming brands Pintrill, Killspencer, and OTHR, they piloted a seasonal pop-up in New York City during the 2016 holiday season. Realizing one of their biggest assets was their loyal fan base, they recently launched an initiative that customer-sources new designs, a move that is sure to add more winning products to their assortment and fuel their already viral reach. 

AYR

AYR stands for ‘All Year Round,’ and with womenswear basics meant to be worn, not just across seasons but for a lifetime, this brand has gotten the attention of many a savvy female consumer who ‘defies labels’ and has matured beyond fast fashion. Their range seems deceptively simple but includes the highest-quality denim, silk and knit materials. Based in NYC, they have a shoppable showroom right next to their design studio, where they offer exclusive pieces, styling sessions, and private parties. In addition, they recently partnered with Nordstrom to distribute their products, an increasingly common and mutually beneficial move, as digitally-native brands pursue additional growth avenues and established brands look to gain credibility and access to a different, younger customer base. 

Trends

There’s been increasing speculation around whether the DNVB space is becoming crowded with a whole lot of ‘me too’ behavior. No doubt, every time we’re on Instagram we spot a new brand that is offering up a range of products seemingly geared to the same consumer profile, and if we’re to be honest, looking vaguely familiar. While we would argue that this space continues to be ripe for disruption, the onus is on brands to craft a differentiated product range and brand positioning that is not simply copying what has previously succeeded.

And partnerships, like the ones AYR and The Arrivals have undertaken, are becoming more commonplace for DNVBs, to give them access to consumers outside of major metropolitan areas and enable a live product experience.

The last trend in DNVBs is sure to frustrate the established brand struggling with unproductive retail space, and that is their movement into brick-and-mortar retail spaces. Most are dipping their toe in the pond with short-run pop-ups, but a few are also electing to open permanent locations in key markets. We'll be watching this closely to see whether opening more physical doors is pursued as a growth channel or simply undertaken as a way to build marketing buzz.

Did you know that StyleSage tracks data from brands like the disrupters profiled today? No matter where you sit in the market, it’s never been more important to keep an eye on their product assortment and pricing movements. Contact us at hello@stylesage.co to learn more.