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Digital Brands Group has changed the traditional nature of the corporate holding company structure for direct to consumer and wholesale apparel brands by focusing on a customer’s "closet share" and leveraging their data and personalized customer cohorts to create targeted content. We believe this allows the company to successfully drive LTV while increasing new customer growth.
Furthermore, Digital Brands Group strives to drives margin expansion through a shared services model and by owning the entire margin stack, which allows the company the ability to control pricing, promotions and profitability. This creates a scalable flywheel driven by personalized and targeted customer experiences, which we believe fuels loyalty, LTV and virality that leverages operating costs with the goal of increasing cash flow.
We believe that traditional department and specialty stores are no longer able to leverage their dominant power to determine brand product assortments, price points and promotional activity as they no longer maintain exclusivity on the customer relationship. We believe that customer transactions have transitioned to the internet as digital distribution continues to capture greater wallet-share, crushing traditional operating margins and forcing unprecedented store closures.
However, we believe that digitally native brands are not a stand-alone business because they are not scalable, profitable and therefore unsustainable. Digital is a channel not a business model. We believe that the digital-only model fails because it struggles to acquire customers at a fair price and grow market share while achieving profitability as shopping, returns, marketing and hiring expenses outstrip repeat customer revenue.