(More) Optimism

Note: If you want to more data to better understand this macro environment or how loyalty fits, let me know. We can get something set up.

There is a lot of pessimism—and, in some cases, fear—in DTC right now. I get it and I feel it, too; but I also see a lot of room for optimism.

To sort of set the stage, here’s a chart, featuring KNO data on consumer sentiment, that has been shared in the DTC index recently

This doesn’t feel good. Really, the only potential “positive” view of this chart is that sentiment was worse as recently as 2023. So, it’s not like we’re in completely uncharted waters from that perspective. But even still this one certainly feels different, given tariffs and the resulting implications. In other words, it’s not just consumer economic sentiment that's dropping, it’s brand economic sentiment that’s dropping, too.

But, then, there’s also this chart:

This feels … better!

So, even if consumer sentiment is down, consumer willingness to buy direct from brands is up. And that matters for DTC.

One of the macroeconomic contexts here, too, is something we’ve discussed before: In times of economic uncertainty, loyalty programs grow in popularity.

Normally, the benefit of that change accrues to retail, because—as you can see from the second chart—consumers are more likely to spend there.

But what happens when consumers shift that spend to DTC at the same time that loyalty programs grow in popularity?

For as much as consumer behavior changes, it is also hard to change. When a macro event can force a behavioral change in your favor, it’s something you want to take full advantage of.

A loyalty program may seem like a low priority right now, but if your target customer is moving spend directly to you, their receptivity to adopt your loyalty program is going to be higher now than it has been in the last couple of years.

The lens through which to look at these macro developments, then, is whether there’s anything you can do about it. In this case, there absolutely is. And that’s something you can be optimistic about.