New Davids

The New Davids are growing up — and into something else. 

When the Traub consultancy first analyzed the fresh wave of direct-to-consumer brands in 2015, it was a look at how the fast, innovative New Davids were taking share from fashion’s incumbent players, the Goliaths, by delivering service, quality and value, particularly online. 

As the decade draws to a close, Traub is hanging up the New Davids moniker as the two groups converge. The tech set is not only taking to retail, but also wholesale in a significant way, and the big traditional players are getting into the game, for instance with Gap Inc. launching the Hill City digital native brand. 

“As Goliaths start their own ‘New David brands’ and New Davids expand offline, the distinction becomes less and less relevant,” according to the latest report from the consultancy, which gave WWD an exclusive first look. “The era of the New Davids is over, after all they are now just building global brands.”

As the two groups have grown closer together, the New Davids — and there are 370 of them across fashion, accessories, beauty, wellness and home in this year’s report — have taken plenty of market share from the establishment and will have a big hand in shaping the future of commerce. 

It’s getting harder to tell the disruptors from the disrupted as everyone fastens onto a new approach to consumers. 

“While digital and physical retail will continue to play an important role in the ability of New Davids to own their branding, customer relationships and data, in order to become businesses of scale they will need to act as traditional brands and leverage multiple channels of distribution,” the report said. 

The study found that 31 percent of the New Davids have a physical presence, with the group overall operating 960 stores. Some of them, including Warby Parker, Peloton, Untuckit, Bonobos and Indochino, have become national retailers.  

And 62 percent of the brands studied sell wholesale — with 74 percent of that group selling multibrand third-party retailers, 61 percent selling department stores and just 53 percent selling through Amazon.

“While retail can be expensive and the growth potential more limited, wholesale is a way to increase distribution of a brand to many new customers all over the country,” the report said. “The wholesale channel enables the Davids to take advantage of the discovery power that multibrand environments provide. This channel is also an important customer acquisition tool. We expect to see more of Davids move into the wholesale channel.”

Thirty-three percent of the companies in the study were fashion brands —  from Amour Vert and La Ligne in women’s wear, Ash & Erie and Barbell in men’s and The Arrivals and Outdoor Voices in the unisex category. 

Fashion is a part of the market that has enjoyed little love lately from dealmakers, who have been busy in beauty, but Kelsey Groome, senior managing director at Traub, said that might start to change as strategic buyers look to build out their portfolios. 

“These fashion strategics will come around and start making more of the acquisitions,” Groome said. “Walmart kind of led the way, [although] they’ve backed off of that a bit.” (The discount giant bought Jet.com, Bonobos, ModCloth and more as it sought to improve its digital business, but has since sold ModCloth and has been focusing more on its primary business.)

Many of the brands are still tightly focused on just a handful of products, which makes it easier to launch, but are branching out as they grow and reach more customers through multiple channels. 

Daniella Fischel, senior associate at Traub, said many of the brands are coming to market with a real purpose, pointing to Figs, which sells scrubs and other fashions specifically for medical professionals. 

“They’ve built this trust with a specific consumer from the onset,” Fischel noted. 

The question now for many of these brands is: “Can they grow to scale?” she said. 

In many ways, the New Davids fashion brands are simply ones that launched over the past decade and naturally started with the web, using the tools of digital commerce. 

“In today’s world, they’re branded as digital natives, but in many ways they’re just fashion brands,” said Michal Tepper, senior associate. 

Just what follows the New Davids is a question for the 2020s.

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