Member Exclusive   //   May 31, 2022

DTC Briefing: Brands like Glossier and Thinx are bringing on new leadership amid retail expansion

This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →

This is the latest installment of the DTC Briefing, a weekly Modern Retail column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. To receive it in your inbox every week, sign up here

As direct-to-consumer startups plot out their next phase of growth, they are increasingly bringing on new top executives. 

Both beauty startup Glossier and period care brand Thinx named new CEOs last week. While the two startups operate in different categories — and there are unique circumstances that lead to them respectively naming a new CEO — they’re both at a similar inflection point: the two brands are increasingly betting on retail expansion to grow. 

The early days of a direct-to-consumer startup are often dependent upon driving a cult following through word-of-mouth while also focusing on growing online sales through paid Facebook ads. But the longer a DTC startup is in business, the harder e-commerce growth is to come by — at which point, startups like Glossier and Thinx start to bet more on physical store sales for growth. Not all direct-to-consumer startups feel the need to swap out CEOs, but as Dan McCarthy, assistant professor at Emory University’s Business School, put it, “there’s kind of a natural transition point where there’s just a much wider and different range of skills that would be required of the CEO.” 

Thinx and Glossier serve as examples of how some DTC brands are seeking out new top brass to handle shifting strategies. Thinx is looking to expand its wholesale presence with a focus on encouraging more mass-market adoption, after launching in Target and Walmart last year. Meanwhile, Glossier is looking to both open more of its stores and expand its wholesale presence with the help of its new CEO, as the bulk of its growth has historically come from its direct-to-consumer website.

“Our growth agenda is about thinking about where our consumer is shopping, thinking about the price points and access points that the consumer would need, and making sure that we adapt,” Thinx’s new CEO Meghan Davis told me. Before joining Thinx, Davis previously held a number of leadership roles at Johnson & Johnson. She succeeds former CEO Maria Molland roughly three months after CPG conglomerate Kimberly-Clark acquired a majority stake in Thinx. 

Glossier announced last Tuesday that chief commercial officer Kyle Leahy, a former executive at Cole Haan and Nike would be taking over as CEO, while founder Emily Weiss will transition to executive chairwoman. Glossier was an early darling, surpassing $100 million in revenue by its fourth year in business. But the company laid off over 80 employees earlier this year after Weiss acknowledged that the company spent too much on technology and got distracted from its core business of ‘scaling our beauty brand.’

Glossier declined to make Leahy available for an interview with Modern Retail, but in an interview with Bloomberg, she said that a core focus will be expanding Glossier’s physical retail presence: both by opening new stores, and adding wholesale partners.

“We’ve built brand demand through our own channel, as a direct-to-consumer business,” Leahy told Bloomberg. “We see there’s now opportunity for us to take that brand, expand upon it and bring it to more people in more places.”

McCarthy said that for direct-to-consumer brands who start by selling purely through their own website, “it’s absolutely the case that you start hitting this upper bound… if you were to just continue on with the paid ads, just the customer acquisition costs ends up becoming prohibitively expensive. And you need to find these other ways to be able to generate more awareness and to reach these customer segments that you just can’t really reach through the Facebook ads.” 

Indeed, growing sales through physical retail has been a key focus this year for some of the biggest, publicly-traded direct-to-consumer startups like Warby Parker and Allbirds. “Physical retail was the biggest driver of [fourth quarter] growth,” Allbirds’ chief financial officer Mike Bufano said during a March earnings call, in which the company said it would start pursuing permanent wholesale partnerships for the first time. 

But what a brand’s physical retail expansion strategy looks like varies depending on the category. Not all brands have a big enough product assortment to justify opening a standalone store. 

Whether a brand decides to open more of its own stores or expand through wholesale requires somewhat similar but different skillsets. Once a brand gets beyond a handful of stores, McCarthy said that CEOs likely have to become more well-versed in scouting out locations, and making sure the economics of subsequent stores are viable over time. 

A CEO of a wholesale-reliant brand, meanwhile, might have to spend more of their time building relationships with key retail partners — and continuously ensuring that the brand can offer unique products for each of those partners without eroding sales to the brand’s direct-to-consumer site. “You have to kind of embrace the fact that you’re going to lose customer level visibility,” McCarthy said. “Typically, the visibility is not going to be very good when you’re selling to third parties.”

Thinx’s Davis said, “I don’t see independent stores as a current priority, but as shoppers evolve their shopping, we will evolve to serve them of course.” Thinx is currently available for sale in 4,500 doors in the U.S., and Davis said she thinks there’s room to add more retail partners. “I think the key for us is always thinking as to where our shopper is shopping, and what we know is the bulk of purchases for period products or incontinent products are within retail outlets. So for us the focus is to make sure that we are where they are looking for the products and where we can best access them.” 

Davis also added that adapting products and price strategies would be a focus for Thinx. When Thinx launched into Target last year, the company decided to sell a lower-priced line through the store, and eventually expanded that line to other retailers. Called Thinx for All, that line started at $17 a pair, while Thinx’s classic styles start at around $35 a pair. 

“Just because you have one [product] that works, doesn’t mean you are done,” Davis said, adding that Thinx would be looking to continuously add new styles and materials.

Davis described her near-term focus as such: “to continue to bring access to be in more doors, to drive more of that as we call top of the funnel awareness that this category exists, that these are options for people with periods and bladder leaks.”

As DTC brands of all sizes look to make physical retail expansion a greater priority this year, more CEOs will likely have to grapple with some of the decisions that the new CEOs of Glossier and Thinx are facing. It doesn’t necessarily mean, however, that all of them will be swapping out their CEOs. 

“It could be that [the founder or CEO] is able to successfully grow into that, or maybe they have had that experience from the beginning,” McCarthy said. 

What I’m reading

  • Retail Dive examines why Washington, D.C.’s Georgetown neighborhood is becoming a hub for DTC brands, with Warby Parker, Allbirds, Brilliant Earth and more opening stores in that area 
  • Thingtesting looks at how hand sanitizer brands are pivoting, expanding their product range as demand for their hero product subsides. 
  • Retail Brew has the scoop on why Memorial Day became such a big sales day for mattress brands

What we’ve covered 

  • Buy now, pay later provider Splitit is launching a white label service to stand out from competitors. 
  • Rebelstork is looking to gain an edge in the resale space by obsessively focusing on one category: baby gear
  • Liquid Death has hired a new chief operating officer to oversee its supply chain operations and retail expansion.