D2C home goods brands Brooklinen and Parachute vie for market share

The news: Direct-to-consumer (D2C) home goods retailers Brooklinen and Parachute are both aggressively expanding their physical presences as part of their broader efforts to gain a larger piece of the home goods market.

• Brooklinen, which operates two stores in New York City, plans to triple its retail presence by the end of the year. It aims to have 30 stores by the end of 2024, per Bloomberg.
• Parachute, which has 15 stores, plans to open 30 new locations by year-end, according to Modern Retail.

More on this: Beyond stores, the two retailers are embarking on a number of other initiatives to broaden their reach.

• Brooklinen launched a collection, Brooklinen for Business, that’s aimed at boutique hotels. The retailer’s hospitality business has doubled in size over the last three years, according to Retail Dive.
• It is also opening a Canadian warehouse later this year to help it grow its business in that country.
• Parachute recently began selling furniture such as bed frames and nightstands.
• It also embarked on an executive hiring spree, adding its first chief financial officer, chief merchandising officer, and chief commercial officer.

The trend line: The two retailers’ efforts come at a time when digitally native brands’ D2C ecommerce sales are decelerating. We estimate their growth will slow to 17.5% this year, which is down from 19.8% last year, and 40.0% in 2020.

• D2C brands such as Warby Parker, Away, and Casper grew rapidly by leveraging inexpensive digital ads to reach consumers with a message that by cutting out retailers and selling directly to shoppers, they could sell goods at lower prices. But many brands have seen their growth slow due to a host of factors, including rising digital ad costs, increasing shipping costs, and Apple’s iOS privacy changes.

Focusing on profitability: While many D2C brands have viewed their stores as showrooms, Brooklinen has been careful to ensure they can turn a profit.

• “The store should serve as a billboard to help marketing, but at the end of the day we need people to come in and transact,” co-founder Rich Fulop told Bloomberg.

The big takeaway: Brooklinen and Parachute’s initiatives represent the two brands’ efforts to evolve from upstart D2C brands into traditional brands.

• That may mean the days of massive growth rates are over: Brooklinen’s revenues more than doubled in 2021 and it experienced more “outsized ecommerce sales” last year, and Parachute’s grew 58% last year, per Modern Retail.
• But their efforts should help them weather the evolving retail landscape.