D2C Brands Double Down on Physical Retail
Direct-to-consumer (D2C) brands in India are rapidly expanding their offline presence, with their share of retail leasing jumping from 8% to 18% in the past year. This trend indicates a strategic pivot towards physical stores as a core part of their growth and a re-evaluation of purely online business models.
- The fashion and apparel sector is leading this offline push, accounting for 60% of retail space leased by D2C brands in the first half of 2025, followed by homeware, furnishings, and jewellery, each at 12%. - Brands are diversifying their physical locations beyond malls, with high streets now being the preferred format, capturing 46% of total leasing activity, compared to 40% in malls. - This trend is geographically concentrated, with Delhi-NCR leading the country in D2C retail leasing at 26%, followed by Bengaluru (22%) and Hyderabad (18%). - A significant driver for this shift is the sharp increase in online customer acquisition costs (CAC), which tripled for many brands after Apple's iOS 14 privacy update reduced the effectiveness of social media ad targeting. - Physical stores are demonstrating significantly higher conversion rates; for example, the fashion brand Snitch reports 50-60% conversion in its stores, compared to just 3-4% on its website. - An omnichannel strategy provides tangible online benefits, as opening a single physical store can increase a brand's web traffic by 37% within that same market area. - To finance this physical expansion, brands are raising significant capital, such as Snitch securing ₹110 crore and luggage brand Mokobara raising $12 million specifically to accelerate its retail growth. - In total, D2C brands leased nearly 600,000 square feet of retail space during the first six months of 2025, underscoring the scale of this strategic shift to brick-and-mortar.
