Sathish:
“Many DTC brands start online because it is cheaper and easier to scale. When should a founder start thinking that a physical retail store is the right next step?”
Rebekah:
“It depends on the product category, but I think a little bit the customer will tell you what the right time is. There is also a business tipping point where a brand knows they have product-market fit and understand their customer. Importantly, they are starting to see diminishing returns on the ROI for their digital efforts, whether that is Meta ads, influencer, TikTok, whatever. The cost starts to outweigh the benefits, or the cost of acquiring a customer is no longer paid for by their first purchase. Sometimes the customer now has to purchase two or three times for that CAC to be recovered. That is where brands need to start thinking about different channels. It could be wholesale, it could be an owned store. It really depends on the brand, the customer, and how fast they are growing.”
Sathish:
“What misconceptions do founders typically have when they start thinking about opening a store?”
Rebekah:
“The biggest one, and I am very vocal about this everywhere I go, is that you find a space, you lease it, and then you figure out what the store is for. You need to know what the store is for before you go find a space. That informs layout, size, back-of-house capacity, customer experience, and flow. Think about Warby Parker. Customers wanted to try on glasses without any barriers. The old optical experience had everything behind glass. You had to have an associate unlock a case just to try something on. It introduced a ton of friction. Warby knew the store had to let anyone walk in and put on glasses without even talking to someone. So they could then optimize for real estate: we have this many frames, we need this many bays, we need the store to be this big. Know what the store is for before you sign the lease. Do not sign the lease before you know what the store is for.”
Sathish:
“How have physical stores changed over the last 20 years and what does that mean for brands opening stores today?”
Rebekah:
“COVID was an inflection point. A much larger percentage of the population became comfortable purchasing utility items online. But what I believed through that experience, and it turned out to be true, is that personalized purchases, apparel for an occasion, beauty, skincare, accessories, glasses, things that inform how you look and are a part of your personality, those are the things people even more want to see in person. Pre-COVID you had the department store model declining. Post-COVID, people made a clear separation: the things I do not want to spend time on, I will order online. The things that really matter to me, I need to physically seek out. The second shift, especially in younger consumers, is community. Outdoor Voices did this well. Roan has done it well. Alo Yoga. A lot of wellness brands. The store needs to be an experience that introduces the brand and builds affinity, but also a place for community to return to. That is why we are seeing a retail resurgence now, especially with Gen Z and Gen Alpha brands.”
Sathish:
“What metrics should a DTC brand review before and after opening their first store?”
Rebekah:
“Before you open, it is more about knowing where your customer is and where your customer should be. Your first 10 stores should go where your customer already is. These are e-commerce brands. They have the data: top 10 zip codes, top 10 neighborhoods, the age, psychographic, and demographic makeup. Do not go somewhere just because it is a cool location or the rent is low. Go where your customer is, because that is where the store will succeed and where you will learn the most. Your very first store should always be in your backyard, the market where you will personally show up every week. After that, your next 10 stores go where your customer should be: markets with the right profile but where the brand has not yet taken hold. Once the store is open, the metrics that matter are conversion, AOV, UPT, and new-versus-existing customer mix. If you are running events, are your sales during events higher than a normal Tuesday? Those are the things to watch.”
Sathish:
“Should founders treat their first store as a learning experience with no ROI expectation, or does it need to be profitable from the start?”
Rebekah:
“Stores should be four-wall profitable. Period, end of story. I hear a lot of brands say their stores are marketing. That is fine as a mindset, but do not open a store if you think it will not eventually be profitable. It is not a marketing expense and it is not a write-off. There is a ramp-up period, maybe 12 months before you see EBITDA profitability, because the build-out cost has to amortize. But you should always see that moving in a positive direction. Think of it like a cruise ship versus a speedboat. E-commerce is the speedboat. You go fast, slow down, A/B test, pivot quickly. A physical store is the cruise ship. It takes a while to get going, but once it is going, it is really difficult to stop. Once it has momentum, it gathers customers, events snowball, and the halo effect grows. That is just the nature of physical retail. The key mistake I see is brands spending on the build-out and then being too fatigued to market the store. Nobody comes to your secret store. You have to tell people it exists.”
Sathish:
“What separates DTC brands that scale to hundreds of stores from those that close after two?”
Rebekah:
“What separates the brands that succeed from those that do not is really intentionally knowing the customer, knowing where they are, knowing who they are, and knowing how to talk to them. If you open in a market because the lease is cheap, that may or may not align with who your customer is. They might not be there, or they might be so nascent that it takes enormous effort to get them in. I have had that happen with brands that took a chance on a location outside their known customer base. The effort is just so much higher. The brands I see fail are the ones that say, we have a space and we want to open, without being intentional about it. And then there are the ones that felt rushed by a board or a VC mandate and forgot their principles. That is where things go badly. And that is usually where you see stores close at the end of the lease term, or sooner.”
Sathish:
“Is there a playbook for getting physical retail right, or is it more about principles?”
Rebekah:
“I believe strongly in principles over playbook, because principles let you remain malleable. The principles are: go where your customers are, put the first store in your backyard so you can learn from it, know what your store is for, and know the customer journey. Then there is the unsexy stuff that really matters: develop MVP operations. Have a process for inventory counting, checking in, and tracking. Have a codified customer experience, even a simple document that walks new employees through how you want the customer to feel, what they should know, and what they should leave with. Not Apple-level instructional design. Just something written down. And remain agile. Do not think of it as a playbook because the consumer will change. Gen Alpha behaves differently than Gen Z behaved. You cannot set it and forget it.”
Sathish:
“What are the most common mistakes brands make when they start scaling to 10, 20, or 25 stores rapidly?”
Rebekah:
“The most common mistake is treating each store like it is your first store. Reinventing the wheel every single time. Not having a codified operations manual, not having baseline employee policies, dress code, vacation policy, things like that. You would be shocked how many brands grow to 20 stores and do not have these things. And not having a design concept language, what flooring do you always use, what lighting, what paint colors. The rest can be retrofitted into each space. What is repeatable should be documented and it should make every subsequent store cheaper to open than the first. The second mistake is being rushed by investor mandates and forgetting your principles. Signing whatever lease is available because you have to open in a market by a deadline someone else set. That is where it starts to go badly.”
Sathish:
“How should small or first-time DTC brands think about customer experience, given that it is so central to brands like Apple and Starbucks?”
Rebekah:
“You do not need a team of instructional designers. You just need something. What I see a lot is brands teaching employees how to use the cash register and about the product features and benefits, and then stopping there. What they leave out is the human discovery process. I welcome you in, I get to know you, I ask what you are looking for, I find out if you are shopping for yourself or someone else, I find out if you are in a rush or have time. Those things can be defined in a simple document. The key question is: if your brand were a person, what would they be like? That is what the store experience should feel like. Know what you want the customer to feel, what they should know, and what they should leave with. That piece gets missed far too often.”
Sathish:
“How should DTC brands think about blending their online brand identity into the physical store design?”
Rebekah:
“D2C brands actually have an advantage here because they usually have a well-developed visual identity: logo, brand kit, customer data, demographic breakdown. The mistake is thinking you should withhold all of that from your designer and let them create from scratch. The opposite is true. Give them everything. The brand, the customer, the data. Then they can build an environment that is uniquely suited to that customer. I worked with a brand whose website presented very feminine, light colors, pastels, imagery of women. But they wanted a store that felt almost industrial. Wrought iron fixtures, harder lines. And I said: if I was shopping on your website and walked into this store, I would not know it was the same brand. We dug into the data and found a very even male-female customer split, 52% to 48%. That launched a much larger conversation about whether the brand identity itself needed to shift. Stay open to learning something new about your customer through the store design process.”
Sathish:
“Where does AI fit into the in-store retail experience, and where does it not belong?”
Rebekah:
“What I am most excited about is AI replacing or expediting low-value interactions, the checkout process, capturing a name, an address, an email. Anything that expedites that without a human having to type it in manually is great. What I do not think will happen, at least not anytime soon in specialty and boutique retail, is AI or robots replacing a sales associate on the floor. Seventy percent of apparel purchases are still made in the physical store, precisely because people want to ask a human if the blouse looks okay. That is why we go into the store. AI for inventory management and predictive stock allocation, all day, that is great. AI replacing the human relationship on the sales floor, I do not see it, and I do not think the consumer wants it right now.”
Sathish:
“If you were advising a mid-sized DTC founder with limited capital who wants to open their first store, what would be the roadmap?”
Rebekah:
“Start with the principles: go where your customer is, know what your store is for. Then think practically about the build-out. You do not need $2 million. You can go into a second-gen or vanilla box space that already has walls, paint, flooring, and lighting. You just need to fixture it. Or you can find a landlord who will offer tenant improvement allowance, especially in malls. Let the landlord do the work or pay for the majority of it. I have done builds like that for $40,000. I have done builds for $300,000 and for $5 million. The direct-to-consumer brands typically land in the first two ranges. On revenue: from my five-plus years doing this, the sweet spot seems to be $10 million to $100 million in gross revenue. At $10 million, you know enough about your customer, you have data, you have product-market fit, and you have probably already tested something physical, a pop-up, a shop-in-shop, a temporary activation. Now you are ready to sign a real lease.”
