With a fresh $100 million in the bank and a newly minted unicorn valuation of $1.4 billion, Away’s got a whole bag of ideas to cement its status as a brand.
Unsurprisingly, that includes further expanding its retail footprint to 50 stores over the next three years (the company currently has locations in seven cities). However, unlike traditional retailers, direct-to-consumer brands like Away can use retail as a means of expanding the brand experience, as opposed to just a selling channel, industry experts say.
“When direct brands curate their own store experiences, they have the opportunity to precision craft an experience that deepens the emotional engagement between the consumer and the brand,” said Dipanjan Chatterjee, vp and principal analyst at Forrester. “Since these direct brands are not beholden to their stores as drivers of retail sales [with] the bulk of the business being transacted online, they lean heavily on retail to create a human experience that fills in the gaps of digital interaction.”
Away’s already played around with this aspect, both in its store and pop-up experiences. For example, in the brand’s pop-up in New York last year, the company gave out its exclusive “mini” suitcases to the first 100 customers who came into the store. It also sold merchandise that centered around the New York travel experience.
“DTC brands handle the bulk of selling through direct channels, allowing their retail manifestations the freedom to brand, brand, brand,” Chatterjee said. “No one likes being sold to, and we all like to build meaningful relationships.”
Anjali Lai, a senior Forrester analyst, added that consumers enjoy physical stores because it’s a “source for social interaction and connection, and because they offer authentic immersive experiences.” The company’s other advantage includes creating an omnichannel experience where they can connect the offline and online aspects of their customer.
However, retail analyst Bruce Winder said Away faces numerous challenges such as not expanding too quickly and finding the right fit.
“Retail is not for the faint of heart and it can be very punishing, because it has a lot of fixed costs like rent [and] employee wages,” Winder said. “[You have] to build a significantly different capability.”
Away opening up more stores isn’t an anomaly, either. Winder said brick and mortar stores from these digitally native brands will keep popping up. The number of stores is a whole different question; Chatterjee said it’ll depend on the brand itself and in the category it’s in.
“For direct brands, the store selection process involves a combination of the right density of addressable consumers and the ability to drive brand engagement that in turn drive cross-channel revenue, unlike physical retailer who had to contend with a geographical boundary,” Chatterjee said. “I think ultimately the decision comes down to the marginal benefit of pursuing this retail expansion pitted against the brand’s ability or willingness to fragment their focus by taking on too much of an alien operating model.”