Designer brands are joining the direct-to-consumer fray

Brands like Milly, Comme des Garcons and Theory are designing in-house offshoots of their main collections that have all the makings of the digitally native, direct-to-consumer brands that have flooded the market. The lines are sold through the brands’ direct channels (as either online exclusives or both in stores and online) and not wholesale partners; they’re designed with a trendier, millennial customer in mind; and they don’t abide by the traditional fashion calendar. Instead, they follow the streetwear-inspired drop model of monthly or regular seasonless collections.

Milly’s direct-to-consumer line will launch this spring only in Milly stores and online, with lower prices, shorter production cycles and trendier designs, to be released more often throughout the year, outside of the regular fashion calendar. The goal is to push growth past a steady rate of 15 percent annually, get a foot in the door with younger customers, and take back control of the majority of sales: The brand is aiming to have 60 percent of its sales come from its direct retail channels, and 40 percent come from wholesale. A direct-to-consumer collection not found in department stores could help. Milly also wants to own the entirety of the data they can collect from a valuable demographic.

“We want to keep people hungry for what’s next,” said Milly CEO Andy Oshrin. “About 24 percent of our business right now is from millennial customers. We know they’re interested, and this could be an even bigger entry point to the brand. Selling directly to them at lower prices could be an enormous blessing for the business.”

Theory 2.0, designed, marketed and merchandised in-house by a group of younger Theory employees across departments, is a similar play for more direct sales driven from a younger customer base. While there’s little information about Comme des Garcons’ upcoming new brand, CEO Adrian Joffe said that it would be sold online-only through the brand’s e-commerce site.

“Direct-to-consumer is one of the most important trends in retail, whether it’s through brick-and-mortar or e-commerce,” said Jane Hali, CEO of retail analyst firm Jane Hali & Associates. “It gives brands more control of their branding and shopping experience.”

Co-opting a saturated model — the direct-to-consumer apparel space bubble itself is ripe for bursting — feels like a late attempt to maintain relevance by following the customer to where they already are. But for luxury and contemporary luxury brands, the new spin they add to the direct-to-consumer model is an element of design prestige that can often be missing from startup brands.

“The word ‘luxury’ is abused; a lot of people use the word luxury and are not luxury. We see that word a lot. They all say the same thing: Luxury quality without the luxury prices,” said Tamara Mellon, the founder of her namesake, direct-to-consumer footwear brand and Jimmy Choo. “It’s hard for a customer to tell the difference.”

One brand CEO who asked to remain anonymous said that direct-to-consumer fashion brands are most often led by business entrepreneurs, not professional designers. People still buy into and shop designer-led brands, but the way they shop has changed, said the CEO, and combining the designer aesthetic and brand recognition with the updated business models of direct-to-consumer brands could help otherwise traditional brands modernize.

Of course, pulling out of wholesale entirely and converting the entire company to direct-to-consumer is an option. But it’s not easy to pull off.

After selling her share of Jimmy Choo in 2011, Mellon launched her first collection, working with wholesale partners. But she soon felt frustration around the seasonal collection limitations, which felt out of sync with customers and the stores’ inability to properly relay a brand story.

“I was lucky enough as a small brand to be able to pull out of all of my wholesale accounts and start over direct, on my own terms,” Mellon said. “If I still owned Jimmy Choo, I don’t know what I would do. I had hundreds of millions of dollars in wholesale. You can’t just pull that out and switch. You’re really stuck.”

Brands like Thakoon, which went bankrupt in 2016 after a direct-to-consumer shift, have been burned for trying. Others, like Public School, have adopted a direct-to-consumer strategy to try to recorrect their businesses. Oshrin said that, at Milly, there’s still a value in wholesale, especially as department stores work to update their experience. He added that not only does selling in stores like Neiman Marcus still create a brand halo for a business, but that revenue from wholesale supports other initiatives, like the direct-to-consumer line.

“We just want to have more control,” said Oshrin.