What's shaping the e-commerce landscape?

Retail is in yet another period of upheaval: A trade war is roiling consumers, enabling inflation and fueling speculation about a recession. Yet in many ways the industry has also entered a period of stability, according to a report from commercial real estate firm Colliers.

This is because e-commerce is no longer the destablizing force it once was.

In the last 15 years, the value of in-store sales declined just once, in 2020, amid pandemic lockdowns, according to research from two U.S. Colliers analysts, Anjee Solanki, national director of retail services and practice groups, and Nicole Larson, manager of national retail research. Physical stores still account for over 76% of core retail sales and, while e-commerce’s share continues to grow, the once-torrid pace of that growth has eased, they said.

“The real retail reality is that while headwinds like tariffs and store closures persist, the disruption from e-commerce appears largely behind us,” Solanki said by email.

One reason for this is the realization on the part of direct-to-consumer brands — including some that at one point achieved unicorn-levels of investment — that stores are a critical channel, whether they run them or sell via wholesale to other retailers. Even some established brands like Nike have had to relearn the value of partnering with legacy retailers.

Another is that many traditional retailers knocked off balance by the rise of Amazon, and online commerce in general, long ago established their own e-commerce. In fact, with consumers expecting to be able to make purchases and returns on or offline, retailers running stores are often at an advantage, according to Colliers. In 2024, stores were integral to about a third of online retail sales via fulfillment like pickup or ship-from-store — a milestone reached a year earlier than those researchers predicted — and in five years that is set to rise to over 36%.

Stores have also emerged as an important channel for returns, which have increased due to e-commerce. Returns were projected to land at $890 billion in 2024, equal to roughly 17% of retailers’ annual sales, according to a report from the National Retail Federation. Whether to handle returns in stores, outsource to a third party or offer a hybrid of the two “depends on a retailer’s format and priorities,” Solanki said.

“Returns are a key part of the omnichannel experience but handling them in-store requires balancing customer engagement with operational efficiency,” she said. “While in-store returns can drive additional sales and reinforce brand control, they also take up valuable space, potentially limiting revenue per square foot. Outsourcing to third party logistics providers may reduce costs and free up store resources, though it sacrifices direct customer touchpoints.”

Plenty of retailers have shrunk their store fleets in recent years, especially during and after bankruptcies. In 2024, Big Lots expected to close its remaining 870 stores, after closing several hundred earlier in the year. Due to their bankruptcies this year, Joann is closing its roughly 800 stores and Party City is closing its 700 or so.

“Although store closures are happening, they’re tied mainly to operational challenges or oversaturation, rather than displacement by e-commerce,” Solanki said.

Others, including international brands new to the U.S. market, are also keen to sign new leases. A couple hundred Big Lots stores have reopened under new ownership, and Burlington alone, which aims to add about 100 stores to its fleet each year, has snapped up 45 Joann leases. In Q1, the national vacancy rate was just 4.2%, and “shopping center occupancy hit a decade-high peak,” according to Colliers. 

In the U.S., between 2018 and 2023, more than 18,900 stores opened, more than 5,000 of them by foreign companies, Colliers said.

Opening a store is just the beginning, however, as the customer experience remains essential, Solanki said.

“The role of brick-and-mortar has evolved beyond transactions,” she said, adding that retailers investing in experiential elements, store design and digital tools are better able to drive loyalty and conversion. “To stay competitive, brands must continuously reimagine the in-store experience as part of a seamless omnichannel strategy that meets rising consumer expectations across every touchpoint.”

Neither stores nor e-commerce may be enough in the era of tariffs, though, given the higher cost of goods combined with the price sensitivity of consumers, per Colliers’ report. “Retailers will look to bolster revenue streams from outside of retail to help support both the top and bottom lines,” the researchers said.

If tariffs continue or a recession hits, some retailers “may face sustained margin pressure,” but today’s low vacancy rates mean that fewer landlords may be amenable to revisiting leases, as many were during the pandemic, Solanki said.

“Still, selective requests may emerge from smaller or discretionary-based tenants, who are most exposed to cost increases,” she said. “As market conditions evolve, new developments may occur every day, requiring both retailers and consumers to pivot. Landlords must remain attentive and responsive to these shifts to stay aligned as they negotiate and manage leases.”

The last time Walmart refreshed its brand, the Great Recession loomed large, the iPhone was only a year old and a hyphen still split the retailer’s legal name. In early 2025, the big-box store unveiled the latest update to its visual identity, one meant to embrace the growing role that digital and cross-channel capabilities play in an industry that has seen its makeup altered by technology over the past two decades. 

“It’s more about aligning the visual expression with how the brand has evolved since 2008,” said David Hartman, Walmart’s vice president of creative, of the changes. “What that means, in a more practical sense, is really establishing ourself as truly an omnichannel retailer versus just a brick-and-mortar retailer and being able to serve the customer no matter where or how they want to encounter the brand.”

Included in the 2025 refresh are more vibrant yellows and blues (technically True Blue and Spark Yellow), a bigger emphasis on the sunburst-like “spark” icon Walmart implemented in 2008 and a new wordmark echoing one found on a trucker hat frequently sported by company founder Sam Walton, including on the cover of his book, “Made in America.” The Walton nod was inspired by Hartman’s team at Walmart Creative Studio taking a deep dive into the corporate archives to find something that could connect heritage to the brand’s current vision. The new typography is a custom design based on the font Antique Olive that Walmart is calling Everyday Sans. 

“There is a great, unique origin story about that typeface, its roots in our past and how we’re bringing it forward to represent the brand where it is today,” Hartman said. 

The Walmart spark appears largely the same as before but will play a different role in branding, with wider separation from the Walmart name on assets like storefronts. It’s a move intended to reinforce the logo’s status as a stand-alone symbol that can shore up Walmart’s brand equity, according to Hartman. Other retailers have created easy visual shorthands for their brands, such as Target’s bullseye or the Amazon smile.

Jones Knowles Ritchie assisted with Walmart’s brand identity overhaul while Landor partnered on aspects like store executions. Publicis Groupe handles core marketing and advertising services.

Digital-first evolution

While Walmart’s makeover is perhaps less dramatic than some past tweaks, such as ditching its hyphen and bowing the spark, it speaks to changing priorities for a company traditionally known for sprawling superstores.

“It’s not a wholesale reinvention of the Walmart identity. It’s very much an evolution versus a revolution,” Hartman said.

Walmart’s focus on digital has accelerated since the launch of membership service Walmart+ in 2020, a response to Amazon, and the larger consumer gravitation toward online shopping, which has supported the firm’s bigger crack into areas like selling advertising.

Walmart’s e-commerce sales in the U.S. were up 22% in Q3 2025, extending a run that has dazzled investors. “If it ain’t broke, don’t fix it” is an adage that could generally apply to brand marketing, but the company still saw aspects of its appearance where modernization felt important and spent the past year-plus hashing out what those changes should look like.

In a press statement, Walmart U.S. Chief Marketing Officer William White described a goal of becoming an “inspirational, digital retailer” — comments echoed elsewhere in the refresh announcement. 

“The updated brand identity will help Walmart build credibility and connection, become known for its convenient digital-first services and be seen as a more modern, culturally dynamic brand,” states a press release. 

Vying for vibrancy

On the brick-and-mortar front, Walmart is introducing full-colored illustrated murals into store locations to add a pop of storytelling and aid customers in navigating different departments, a shift away from a previous system that relied on icons and line work. Some of these elements have been present at Walmart’s experimental Store 4108 in Springdale, Arkansas, since October 2024, but will roll out more widely later. 

“We’ve heard from customers who are shopping in that [4108] store and the store associates that it’s really helped improve the overall customer experience,” Hartman said. “Customers describe it as feeling more warm and more inviting when they enter the store.”  

The embrace of elaborate, brighter visuals is part of a larger industry shift away from the minimalism that underpinned many branding efforts throughout the 2010s. For a rebrand in 2023, Pepsi introduced electric blues and deeper blacks, a different wordmark and decorative packaging that pivoted away from a previous focus on simplicity.  

In other areas, Walmart’s aim is to deliver greater consistency and a user-friendly experience across channels like its app and Walmart.com, some of the earliest places where the refresh will go live. A modular grid system for browsing will display product images, photography and headlines, among other tweaks to what Hartman termed Walmart’s “brand operating system.”

“When [consumers] encounter the brand on the app, what they see from a product expression and a brand identity looks very similar or close to the same as what they see in our marketing and what they see in our store experience,” Hartman said of the refresh. “When you think about digital and omnichannel, we want to make those visual connections as tight as we possibly can so it feels like a seamless experience to the customer.”

The new look for Walmart will factor into its Q1 marketing campaign and activations, Hartman said, without offering specifics.

“We’re going to be very strategic about what assets get transferred and when,” Hartman added. “It’s not going to be an overnight change. It’ll definitely be something that happens over time.”

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By Yottaa

Every holiday season, the pressure on eCommerce teams intensifies. Rising ad costs, leaner teams, and cautious consumers make every click more valuable than the last. Yet, many organizations still go into peak season relying on outdated assumptions about site speed and performance.

The problem? These myths create blind spots that quietly drain revenue when it matters most. At Yottaa, we’ve studied thousands of sites and worked with top retailers through Cyber 5 and beyond. We’ve seen firsthand which assumptions hold up—and which ones cost millions in missed conversions.

Here are six of the most dangerous myths about site performance, and the truth every retailer needs to know before the holiday rush.

Myth #1: “We already optimized for speed.”

It’s tempting to think a past audit or a few optimizations means you’re covered. But performance is a moving target. Every new campaign, vendor tag, or personalization tweak changes how your site behaves.

Reality: Speed is an ongoing discipline, not a one-time project. If you’re not continuously validating your performance in the weeks leading up to peak, you’re relying on luck. And luck isn’t a holiday readiness strategy.

Myth #2: “Our third-party apps are under control.”

Third-party scripts—reviews, personalization, chat, analytics—are the backbone of modern retail sites. But they don’t stay still. Vendors push silent updates, traffic spikes change load order, and scripts that once passed QA can start blocking key content under stress.

Reality: Third parties are one of the biggest hidden risks to holiday revenue. Controlling them requires active orchestration, monitoring, and fallback plans, not blind trust.

Myth #3: “We’ll know if something breaks.”

Most teams assume they’ll catch issues in time. But by the time they receive an alert, the damage is already done. Shoppers don’t report problems—they leave. And traditional tools often miss client-side failures or edge conditions that only appear under peak load.

Reality: Monitoring without insight is just noise. Without real-time detection, root cause analysis, and automated mitigation, every slowdown risks becoming a conversion leak.

Myth #4: “Speed is a technical problem.”

It’s easy to relegate site speed to the dev backlog, tracked in milliseconds and Core Web Vitals. But that misses the bigger picture: performance is directly tied to conversion rates, customer satisfaction, and revenue.

Reality: Speed is a business issue, not just a technical one. It deserves executive ownership, cross-team accountability, and KPIs tied to financial outcomes, especially during peak times.

Myth #5: “Performance = page load time.”

Page load metrics only tell part of the story. A site might technically load quickly, but if scripts fail, layouts shift, or checkout breaks under stress, performance isn’t really there.

Reality: True performance means delivering fast, stable, and secure experiences under pressure. Load time matters, but resilience matters more—because shoppers don’t forgive broken checkouts.

Myth #6: “Performance is easy to manage.”

On the surface, performance seems straightforward: compress images, fix code, monitor Core Web Vitals. But modern eCommerce is more complex than ever. Headless frameworks, AI-driven personalization, shifting browser standards, and leaner teams mean the challenge is constant.

Reality: Performance management is resource-intensive. Readiness requires automation, continuous visibility, and often outside expertise to keep pace.

The assumptions that feel safe in August are often the ones that cost revenue in November. The truth is, holiday readiness isn’t about checking a box or passing a Lighthouse score. It’s about building resilience, agility, and visibility into every layer of your digital stack, all year long.

Retailers that break free from these myths don’t just survive peak season—they thrive. They convert more visitors, protect against fragility, and leave competitors scrambling to catch up.

Want to know where your site stands heading into Cyber 5? Get a free performance assessment from Yottaa and uncover the bottlenecks that could cost you this holiday season before it’s too late.

Once key players in a fast fashion boom, Shein and Temu are now seeing customers buy clothing elsewhere online. 

Heightened tariffs on China and changes to the de minimis provision have added complications to the strategy that made Shein and Temu attractive to budget conscious customers: utilizing a China-based supply chain and sending small packages to avoid additional import duties. 

U.S. President Donald Trump’s Liberation Day tariffs, imposed in early April, shook consumer spending. Shein and Temu both announced they had to raise their prices to account for the impact, before later walking back their price increases. 

Consumer spending at Shein and Temu fell more than 10% and 20%, respectively, during the week ending on May 11, according to data from Consumer Edge. In the weeks since then, neither brand has mounted a significant comeback, according to Michael Gunther, vice president and head of insights for Consumer Edge.

While both companies had already seen a spending slowdown in 2025, there was a sharp drop off in the face of April’s tariff announcements, according to data aggregation company Similarweb. 

Since the tariff announcements, consumers’ shopping patterns have quickly shifted, per Similarweb data. Some companies experience short-lived surges, such as at e-commerce companies including TikTok Shop and DHgate. Meanwhile, more established players Shein and Temu are left experiencing long-term shifts.

“In the U.S., we’re going to see some rebalance, and I don’t think we’re going to see the levels [of spending on Shein and Temu] that we saw previously with these players,” Ben Parkes, advisory services for consumer goods and retail at Similarweb, said of Shein and Temu. 

Against this backdrop, Amazon has stood out as a key player that may stand to benefit from U.S. consumers changing where they shop for fast fashion.

“I think we’re going to see a spike on some of these Amazon players who already had a presence, but now they’re kind of beefing up that area,” Parkes said. 

In recent months, the women’s clothing category on Amazon grew more than 26%, per Similarweb data. Three out of the five top brands in the category are China-based third-party sellers that utilize Amazon’s fulfillment network, per Similarweb data. A vast majority (92%) of women’s clothing on Amazon is from third-party sellers.

Men’s clothing on Amazon doesn’t have the same statistics. In the last six months, the men’s category grew just 4%, and none of its top brands are China-based third-party sellers, per Similarweb. Third-party sellers make up 57% of the category.

“In the long term, who knows where they’ll go, but right now, we’re seeing a shift toward Amazon for women’s clothing,” Parkes said.

The e-commerce giant recently extended its annual Prime Day sales event from two days to four. While Amazon didn’t state its explicit reason for the change, the company could see it as an opportunity to capitalize on the current weakness of Shein and Temu, according to Gunther.

“Maybe they’re trying to take advantage of this situation here,” Gunther said. “I can’t imagine any of those companies are going to sit idle.”

But it’s not just Amazon benefiting from Temu and Shein’s lost market share.

Other fast-fashion merchants, including Asos and Zara, saw a surge in spending from Temu and Shein customers, according to Consumer Edge data. 

Discounter retailers such as Ollie’s Bargain Outlet also saw an increase in spending from Temu and Shein shoppers, along with athleticwear companies Columbia and Footlocker, per Consumer Edge. Department stores such as Bloomingdale’s and Nordstrom Rack also gained share, as well as young adult clothing brands Aeropostale and American Eagle.

How are Shein and Temu responding to a U.S. slowdown?

Further down the line, Parkes expects companies like Temu to start building out their supply chain in the U.S., he said.

“The biggest change we’re going to see in U.S. fashion is the supply chain,” Parkes said. “If you think about how [Shein and Temu] operated previously, with the de minimis situation, they were reliant on sending in smaller parcels and that is now something that becomes a challenge.”

Temu announced its intention to localize its supply chain when it walked back its previously announced tariff-related price increases, which it attributed to shifting to a local fulfillment model.

In the meantime, however, both Shein and Temu may have shifted their marketing spending to countries outside the U.S. 

During the first three weeks of May, Temu sales jumped more than 60% in the EU, compared to 40% to 50% in March and April, according to Consumer Edge. 

Broken down by individual country, France saw the largest increase with nearly more than 100% growth from April to May, per the data, which said this could be due to increased ad spending in the country. 

For Shein, EU sales were up nearly 20% in May, compared to low double-digit growth in April, per Consumer Edge data. Sales growth in the U.K. was nearly 50% year over year.

“Both companies were trying to make a concerted effort to diversify geographically, perhaps in preparation for trade tensions to increase,” Gunther said. “But those gains seem to have either remained steadily positive or accelerated. I think a lot of this is going to depend on what the regulatory environment looks like [in Europe].”

However, the U.S. is still a much more important market for them.

“If you’re seeing big increases in Europe and big decreases in the U.S. … that’s not [net] positive for them,” Gunther said.

Retailers’ ability to offer customers many happy returns is becoming more difficult and costly.

Total returns in retail amounted to $743 billion in 2023, according to a report from the National Retail Federation. That equates to $145 million in merchandise returns for every $1 billion in sales. In 2025, shoppers are expected to return $890 billion in merchandise, which represents nearly 17% of retailers’ annual sales, according to a recent NRF report.

Faced with the escalating challenge of returns, retailers are taking diverging approaches to dealing with the issue. And while not all returns involve fraud, that is one of the issues retailers are addressing. Most of the retailers surveyed in the NRF’s latest report said return-related fraud and other exploitative behavior was an issue for their business. 

“The rise in e-commerce shopping has led to an increase in return rates and volumes across most categories because online shoppers can’t touch and feel products before they buy,” David Morin, vice president of customer strategy at returns company Narvar, said via email. “The notion that ‘the living room is the new fitting room,’ where consumers try items at home before deciding whether to keep them, has led retailers and brands to review their return programs, including tightening their return policies.”

Buying multiple items with the intent to return some of them, also known as bracketing, has grown among younger people, the NRF found, with 51% of Generation Z consumers acknowledging they’ve done it. 

Morin said Narvar’s research has found rising rates of what it terms “friendly fraud” — behaviors like bracketing or wardrobing, where someone buys and wears an item with the intention of returning it. But Narvar also found rising rates of potentially criminal return policy abuse.

“The increase in fraud, along with the heavy incurred costs to retailers, is driving a larger focus on strategies that identify potential fraudsters and create unique workflows to deter the behavior,” Morin said. “Retailers are also balancing out strategies that still reward trusted customers to maintain the sense of ‘peace of mind’ that is critical in returns.”

Indeed, a return abuse or fraud crackdown must be balanced with maintaining customer experience, Katherine Cullen, the NRF’s vice president of industry and consumer insights, said in the organization’s latest report. Other experts echoed that perspective.

“Although Amazon, REI and Target and others have tightened their return policies this quarter to ‘combat fraud,’ the Gen Z and Alpha customers still expect to have a satisfactory and easy ability to return unwanted items in an efficient manner whenever they please,” Shawn Grain Carter, a retail industry consultant and professor at the Fashion Institute of Technology at the State University of New York, told Retail Dive in an email. “This is part of their seamless retail shopping experience of which they have grown accustomed.”

Who gets hit the hardest by returns? 

Some categories in particular are more vulnerable to returns. For example, several analysts told Retail Dive that apparel makes up the majority of retail returns.

“This is for multiple reasons,” Neil Saunders, managing director of GlobalData, told Retail Dive in an email. “Sizing is a major issue, especially if buying online, and many consumers will buy multiple sizes and return the ones that don’t fit. How things look in person is important in apparel, and this is another factor driving returns.”

Returns also peak during certain time periods. Besides the holiday season, Saunders said returns typically surge after big promotional periods, like Amazon’s Prime Day. Apparel also follows seasonal trends, which may drive upticks in returns as consumers buy new outfits for the changing seasons, Saunders said. 

Additionally, the prevalence of online apparel shopping and an inability to try on items before buying contributes to high return rates in the category, as do consumers’ expectations on issues like fit, color and fabric, Jonathan Zhang, a professor at Colorado State University’s College of Business, told Retail Dive in an email. 

And for the same reasons — look and feel — Zhang said home goods, like furniture and decor, also have high returns. “Items in this category are often returned due to damage during shipping, mismatched expectations about size or color, or changes in customer decisions after seeing the product in their home environment.”

Services like Stitch Fix that allow shoppers to try on apparel at home before purchasing came about to help solve this problem. Yet many such offerings have shuttered in recent years. Amazon also made a major change this month involving its own apparel try-on service. The retailer plans to phase out its Try Before You Buy service in early 2025. The program allowed Prime members a seven-day trial of select apparel, shoes and accessories. Amazon said it’s ending the service as an increasing number of customers turn to AI-powered features like virtual try-on as they shop for apparel.

Regardless of the driving factors for returns, the rising tide of returned merchandise also poses a sustainability issue for retailers. More than 11% of the $100 billion worth of purchased apparel that’s returned to retailers eventually ends up in a landfill, according to research by Equal Ventures, a venture capital firm.

“Consumers are increasingly aware of the environmental impact of returns, such as waste from disposed products and emissions from reverse logistics," Zhang said. “Retailers are under pressure to address these concerns, either by encouraging exchanges over returns or by implementing fees to disincentivize habitual returning behaviors.”

How are retailers responding?

During the last couple of years, retailers across the industry have made some noteworthy return policy changes. A key driving factor, according to industry experts and retailers themselves, is the escalating cost and volume of handling returned merchandise.

In 2024, Morin said Narvar saw about 25% more retailers charging for return shipping. Many others shortened their return windows, especially retailers that had policies longer than 30 days. 

“Rising return costs and fraud are pushing retailers to overhaul their policies,” Zak Stambor, a senior analyst for retail and e-commerce at Emarketer, said in an email to Retail Dive. “While many have rolled back free returns, others are taking more targeted steps to cut costs and curb abuse.” Stambor added that the nuanced approaches retailers are employing “reflect the growing pressure on retailers to balance customer satisfaction with operational efficiency.”

Here’s a snapshot of some of the changes retailers made to their return policies in 2024: 

• Walmart said it has increased return shipping rates for its third-party sellers. Additionally, the retailer said its Walmart Marketplace sellers can allow customers to keep items and receive a refund, thus avoiding the need to pay for return shipping.
• Amazon in August said sellers using its fulfillment services can now issue product refunds without requiring customers to return the item. The move avoids sellers having to pay for the reverse logistics of accepting returned merchandise.
• Kohl’s began accepting Amazon returns at all of its locations in 2019. Last year, the department store chain added an additional return service in partnership with Narvar and Inmar Post-Purchase Solutions, which allows customers to return items from several brands to Kohl’s stores, including Carhartt, Hanes and Levi’s.
• REI said in November that it is now declining returns from a “small subset” of its members. These individuals have repeatedly abused REI’s policy, the company told Retail Dive in a statement. The people in question represented less than 0.02% of REI’s 24 million members but had an average return rate of 79%.

Data analytics advancements are now enabling retailers to identify and address return patterns among specific customer segments. Zhang said advancements in data collection make personalized return policies a possibility in the near future, although he cautioned the data should be handled carefully and decisions should be based on actual behavior to avoid any perception of preemptive discrimination.

Morin said another significant factor is that regulations on handling consumer data are becoming stricter. That’s making first-party customer loyalty program and membership data more valuable — and more costly to acquire.

“Loyalty and membership programs are some of the most valuable sources of first-party data for merchants, but consumers, especially younger generations, are increasingly mindful about sharing their data and may only be willing to provide personal information if they perceive the value exchange is equal.” 

Morin said some retailers are launching more incentive-based loyalty and membership programs with built-in returns benefits such as free shipping in response to concerns about data privacy. Better logistics and automation could also make the retail returns process faster, more seamless and more consumer-friendly by the end of this year, the NRF forecast in its report.

Saunders said a leading factor that’s likely to shape future return policies are changes in the cost and volume of returns, along with how rival retailers are responding. “The aim of any retailer is to reduce returns, but this must be balanced against protecting sales,” Saunders said. “Return policies that are too onerous can cost retailers sales.”

A reduction in U.S. tariffs on China-made goods has generated optimism among direct-to-consumer shippers, but there’s still plenty of work ahead for their supply chains to adjust to evolving trade rules.

Direct shipping models have faced tariff- and compliance-related turbulence since the U.S. eliminated de minimis eligibility for China and Hong Kong products on May 2. The exemption, which allows sub-$800 imports into the U.S. to avoid added duties, has long helped Shein, Temu and other e-commerce companies keep prices low when shipping China-made orders to consumers.

The trade tool's usage plummeted when the change took effect, as it exposed low-cost imports from China — where the bulk of de minimis activity comes from historically — to 145% tariffs. Daily de minimis volume has seen a decline "upwards of 85%," Chris Mabelitini, director of U.S. Customs and Border Protection's intellectual property rights and e-commerce division, said during a May 7 panel at the agency's 2025 Trade and Cargo Security Summit.

"We've gone from, say, almost 4 million a day to maybe around 600,000 a day," Mabelitini said, according to a recording of the event viewed by sister publication Supply Chain Dive. "So it's been a significant decrease in those low-value de minimis shipments coming in.”

At least some of that drop can be attributed to formerly de minimis-eligible products entering the U.S. through other entry methods. One popular option since the changes is Type 11 informal entry, which generally allows sub-$2,500 imports to pass through customs in a more streamlined fashion.

"It's a good indicator that those de minimis shipments are being consolidated into other entry types, which is what we want to see, and the shift that we're looking for there," Mabelitini said.

Tariff pause optimism: Enough for a rebound?

How the 90-day tariff reduction between the U.S. and China, which took effect May 14, will influence direct-to-consumer trade flows from China is up for debate.

For Portless, which provides direct e-commerce fulfillment from the country, President Donald Trump's duties dropping from 145% to 30% has generated optimism among the brands it works with. CEO Izzy Rosenzweig said companies can manage a 30% tariff with cost-savings initiatives and price increases, adding that he hopes ongoing trade negotiations will lower the rate even further.

"Now we're doing a ton of shipments," Rosenzweig said. "Brands are doing marketing again. There is a lot of optimism going on with this discussion, and that there's a bit more structure behind this discussion, and it doesn't feel like it's cowboys just shooting at each other."

Dropping the duty rate is certainly more palatable for shippers, but some experts said it will aid companies' transitions to traditional supply chains rather than fully revive de minimis-associated import methods. Businesses have already been exploring the addition of U.S.-based fulfillment partners and alternative sourcing options, like Vietnam.

With the tariff reduction in place, Cirrus Global Advisors founder Derek Lossing expects a partial rebound in direct-to-consumer shipping activity out of China but not enough to fully recover from recent lows. Many e-commerce sellers will begin shipping bulk inventory via ocean carriers for U.S. storage, rather than using air cargo to ship individual orders to shoppers, he added.

"I think we will see a structural shift from air to ocean long term," said Lossing, a former Amazon Logistics leader.

Temu has been a major driver of air cargo activity out of China in recent years, but the company has relied more on fulfilling U.S. orders via local sellers since the de minimis exemption changes. Lower China tariffs offer an opportunity for the e-commerce marketplace to stockpile inventory in warehouses ahead of any potential duty escalations, according to Thomas Taggart, vice president of global trade at Passport, an international shipping and compliance provider.

Alongside the general tariff reduction, the Trump administration lowered the duty rate on international postal volume from China and Hong Kong from 120% to 54%. Transportation carriers can also opt to collect a $100 per-package fee instead. Experts said with the international postal system's limited use in direct-to-consumer shipping, the changes won't make significant waves.

"Postal volume is pretty much nonexistent right now out of China, Hong Kong, Macau, so I don't know if that's gonna encourage people to go back," Taggart said.

Compliance struggles post-de minimis

The de minimis exemption's end for China-origin goods has exposed many importers to tariffs and more stringent information requirements that they could previously avoid. Compliance with the wave of new trade requirements hasn't been consistent or spotless, experts told Supply Chain Dive.

Misrepresenting a shipment's country of origin to evade higher tariffs, such as by giving a China-made product a "Made in Vietnam" label, is one of the illegal tactics experts highlighted. Another illicit approach is shipping an item from China to another country prior to U.S. entry in an attempt to circumvent tariffs on that trade lane.

"We expect to see a rise in country-of-origin fraud via tactics like falsifying customs entry documents, invoices, or product labels, and transshipment where goods are routed through third countries to conceal their true origin," LVK Logistics CEO Maggie Barnett said in an email to Supply Chain Dive.

All products made in China and Hong Kong are ineligible for de minimis treatment, even if they are shipped into another country prior to U.S. entry, CBP noted on its website. This includes products shipped via the international mail system.

CBP enforcement efforts are becoming more rigorous and shippers can't gamble on avoiding duties by not accurately disclosing the country of origin, Barnett said. For example, shipping provider Chit Chats said its border crossings from Canada to the U.S. were denied on May 2 and May 3 due to some misdeclared China-origin shipments from customers.

"The fallout from getting the country of origin wrong can be pretty wide-ranging and painful," she said. "For example, US CBP can deny entry for shipments or worse, actually seize your goods. You could also be hit with hefty fines much more serious than a slap on the wrist."

Mabelitini didn't bring up any specific compliance issues that emerged after the May 2 de minimis changes. However, the CBP official said during the May 7 panel that the agency is still pushing importers to provide more detailed product descriptions. Vaguely describing the contents of a shipment as a gift or a shirt won't cut it, and the intended recipient should also be accurately listed.

"No one's putting Santa Claus, which we've seen before," Mabelitini said. "There were a lot of superheroes who received packages last year from de minimis.”

In 2019, DTC brands Casper, Away and Glossier were touting $1 billion-plus valuations, all of them reaching that threshold within five years of being founded. They were riding high on cheap capital, a strong economy and the hype the direct-to-consumer model had generated.

The next couple of years would see Casper go public, alongside retail darling Warby Parker and sustainable footwear brand Allbirds. At the same time, all three trumpeted big plans for brick-and-mortar footprints and category expansion, and touted the strength of the DTC model. 

It seemed DTC brands could do no wrong. Then, things changed.

Casper was sold to private equity just two years after it went public, Allbirds announced store closures and a shift to a “more profitable” distributor model globally, and Outdoor Voices abruptly shuttered its fleet of stores before being snapped up by the same firm that owns Draper James.

“Everyone believed the mantra should be DTC or die because they wanted to eliminate the middle person and make more money,” Simeon Siegel, managing director at BMO Capital Markets, said. “What they finally realized was: No one eliminates the middle person, they simply become the middle person, and that brings its own set of costs. So for a period of time, people became so obsessed with where they sell rather than what they sell that they lost track of who they were.”

Precipitous sales declines at former disruptors, including those buoyed by the pandemic like Peloton, became somewhat of a norm. The bike company and its peers also grew steadily more interested in other sales channels, including Amazon and more traditional wholesale partners. The more established brands that had jumped on board the DTC bandwagon when it was chugging along also began pulling back, recognizing some of the same challenges, and the allure of purely DTC brands faded.

“If Allbirds had remained on its strong growth trajectory, if Peloton had maintained the growth tear it was on, the models probably wouldn't have pivoted that much. But they did change — and both companies fell into difficulties,” GlobalData Managing Director Neil Saunders said, noting those challenges pushed both brands to expand their sales channels. “Now that genie has been let out of the bottle, it's not going to be put back in.”

Even brands like Lululemon, which sells mostly DTC, have wholesale accounts, Saunders noted. “The term DTC is still used as a shorthand. I'm just not quite sure it's all that relevant now,” he said.

Asked if we’ll still be talking about DTC brands in five years, Siegel put it more bluntly.

“In a derogatory, backwards-looking fashion? Sure.”

What went wrong

As the direct-to-consumer model matured, a slew of factors that helped DTC brands flourish began waning. The general retail market slowed, customer acquisition costs on social media surged, venture funds dried up, the cost to fulfill online orders grew and brands started hitting their own growth ceilings.

“There's a lot of things that moved and shifted in a relatively short period of time that meant that DTC went from being almost the darling or the hero of retail, to being a channel that had a lot of challenges and problems,” Saunders said. “And had a lot to prove that it wasn't necessarily, in some cases, proving.”

The model itself was flawed from the start, according to Siegel, whose firm has done multiple reports on the impact selling direct-to-consumer has on key metrics like gross margin. Critically, Siegel found that brands pivoting to direct did not see a relative increase in revenue, gross profit, gross margin, operating profit or operating margin.

“It just didn't happen. Back then, obviously, that was controversial — and it triggered a lot of fights,” Siegel said. “But now people are looking at the results and they're acknowledging wholesale, when done right, is truly a powerful thing.”

Some up-and-coming brands, including Vuori, may have dodged some of the growing pains in the sector by embracing wholesale from the start. Founder Joe Kudla has said before that the company saw a place for key wholesale partners from the beginning of its business and touted those relationships as part of the reason it was able to achieve profitability.

“The partners we selected at the start in the U.S., and those we work with today globally, are very intentionally picked, and our distribution is deliberately limited to only the best accounts,” Andy Lawrence, vice president of international at Vuori, said via email. “While I wouldn’t say wholesale insulates any brand from all DTC challenges, at Vuori, it does add a critical component to our success. Wholesale, if done correctly, allows brands like us to connect authentically with the local customer.”

Still, for a time many DTC brands simply didn’t invest in wholesale as a channel because selling directly to consumers was working. And investors were enthusiastic about funding DTC brands, profitability challenges or not, because capital was cheap and consumers had disposable income to spend on new brands and discretionary products.

“There was so much money sloshing around, it was very difficult to do badly,” Saunders said. 

But in a more discriminating market, the value proposition of some of retail’s startups became far more important — and was often found wanting. Expensive exercise bikes and fancy sheets are harder to sell in a more risk-averse economy.

“It's very important not to confuse problems with DTC — which, there are problems — with problems with the brand,” Saunders added. “Allbirds primarily has a brand problem. It doesn't really have a distribution problem, as such. So Allbirds could push itself into more stores, do more things — it's still not going to resolve the issues of the company because the problem is with the product and the position and the brand, it isn’t with the distribution method.”

As startups and traditional brands alike recognize the limits of DTC, many are embracing a more measured model that values both DTC and wholesale. The sensibility of that approach has been touted frequently over the past few years as brands have moved away from strictly digital approaches, with one report earlier this year saying wholesale is still the most profitable investment channel for brands.

Matt Katz, a managing partner at SSA & Company, describes what’s happening now as a “reset” driven by overinvestment in DTC and underinvestment in stores. The importance of stores and wholesale is now sending investments back in the other direction, and retailers are unlikely to lean back into DTC as hard as they did — that is, unless investors start funding it again.

“Silly as it sounds, people chase simplicity when it seems to be intuitive. This is not the first time, and it certainly will not be the last time, that everyone chased a buzzword,” Siegel said. “When companies don't need to be profitable, profit and loss statements are not scrutinized. When companies don't need to be profitable, expenses are not scrutinized. That makes it much easier to chase a hope and a belief versus being held accountable for the actual results.”

A reality check for DTC — and wholesale

The swing to DTC — and the correction since then — has taught both brands and wholesalers some important lessons. Take Nike, for example. The rise of DTC brands spurred a huge investment from the sportswear giant in its own digital capabilities and stores, and at the same time caused Nike to cut ties with a slew of wholesale partners it deemed less important to its overall strategy.

First, that led to exceptional growth. Then came a retraction, as Nike determined it had taken things too far and, in fact, did need those wholesale partners after all. Throw in layoffs, a cost-savings plan, a lawsuit surrounding the success of the DTC strategy and an abrupt CEO swap and you have a pretty good summary of the fallout to date.

“DTC serves a lot of Nike customers, but it doesn't serve all of Nike's customers. A lot of product discovery, a lot of buying of Nike products is done by people who might go into a department store, especially some of the older age cohorts,” Saunders said. “These people are not going to go online directly to Nike. They want to buy it through the channels that they shop in. And if Nike disappears or pulls back from some of these channels, they lose the sales — it's as simple as that. And they underestimated that. They were almost a little bit arrogant as to the power of the Nike brand.”

And make no mistake, Nike is a powerful brand. A $50 billion-a-year brand. 

But as Nike was learning its lessons, both good and bad, about DTC, its wholesale partners were also learning theirs. Foot Locker, one of the retailers Nike spurned and is now again seeking closer ties with, has unveiled its own turnaround actions to lure brands to its shelves, including revamping two-thirds of its Foot Locker and Kids Foot Locker stores over the next few years. Macy’s, too, which received similar treatment from Nike, has been undergoing store refreshes at its go-forward locations as it looks to keep customers and brand partners coming back.

“I think that the wholesale side really had to pull its socks up as well,” Saunders said, noting that retailers like Macy’s and Foot Locker have realized they are “serving two masters” now. “‘One of our masters is the consumer, but the other master is the brands. Because the brands don't have to be in our store necessarily and what we've got to prove to them is that we're a worthwhile partner.’”

Indeed, while the pendulum has swung back toward wholesale, some brands are still moving away from certain retailers and could continue to do so if their partners don’t serve them well. Levi’s in its Q3 earnings report touted that its wholesale business now makes up less than 20% of its revenue, down from 30% in 2015. Analysts at the time pointed to Levi’s sales and profit growth as a sign that its DTC strategy is working, at least for now.

“I think we've moved from retailers having the advantage. The retail-brand wholesale relationship used to be heavy, heavy retail. That was your point of distribution and the retailer chose which brands were most important, right?” Katz said. He noted that the balance shifted when brands developed their own access to customers through DTC. Now, Katz says, the consumer is in charge. “Consumers have taken over the leverage point and they are buying on availability and price and experience.” 

That means brands need to focus on being wherever the customer wants to buy, which might sometimes be wholesale and might sometimes be DTC and might sometimes be Amazon. 

During the height of DTC mania, companies like Nike and Adidas became very focused on what percentage of their revenue was DTC versus wholesale. Nike had a goal of upping DTC from 40% of its revenue to 60% by 2025, while Adidas aimed to reach a 50% DTC split by the same time period. Even with wholesale coming back in vogue, there is no universal answer for what that split should be, according to Siegel, and brands should be adjusting those percentages based on their individual needs.

Having a strong DTC business also doesn’t have to come at the expense of wholesale. For Vuori, having wholesale partners has helped it gain brand awareness in new markets like the U.K. and Japan.

“From that initial interaction, we then begin to see these newcomers start to interact and shop with us via our DTC channels too,” Lawrence said. “The omnichannel approach, including wholesale, is our best answer for how to expand in a profitable, brand accretive way.”

DTC and wholesale have different strengths, according to Siegel, with DTC theoretically offering first-party data, higher margins, greater control over the brand and greater connection to consumers, while wholesale ideally gives brands a partner with experience distributing products economically and efficiently.

“It became a battle,” Siegel said of how brands began approaching DTC and wholesale a few years ago. “It became a battle of players within the ecosystem — who could edge out their collaborator, as opposed to a holistic partnership where all sides could win.”

A case could be made that the battle is largely over now, with hybrid models being embraced across the industry and wholesale-brand relationships becoming more collaborative. But what does all this mean for future brands?

‘You should not aspire to be a DTC brand’

While most analysts agree that a hybrid model is the future, they also tend to agree that DTC will continue to be important for retail’s newest entrants. The channel is easy to set up and has lower initial costs, which makes it ideal for upstarts, but as the era of DTC brands fades, retail could also see more brands launching with partnerships already in place.

When Vanessa Hudgens relaunched her beauty brand Know Beauty, for example, she did so with Amazon. And beauty brand Pretty Smart entered the market through an exclusive deal with Walmart as well as its own website, even working with the mass merchant to develop its product line prior to launch.

“I think you'll see some of these brands may launch with very small strategic partnerships that give them their presence,” Katz said. “And if you can prove that the brand has staying power and pull, then you'll see continued investments in flagship real estate models.” 

That could range from pop-ups to permanent stores or limited geographic partnerships with retailers, Katz said, but regardless, there is likely to be a greater emphasis on how quickly a brand can grow its points of distribution. Some up-and-coming brands already offer prime examples of this: Actor Millie Bobby Brown launched her fashion brand at Nordstrom within months of its debut online.

While they took slightly longer to branch out, intimates brands Skims and Savage X Fenty have both also pursued wholesale relationships, including internationally, in addition to their DTC channels. Pursuing wholesale partnerships isn’t without its challenges, though, particularly for young brands.

“The problem with wholesale is you will go into a company and you will say to that company, ‘Look, I want you to stock our product’ and the first thing they will say is, ‘Our shelves are full,’” Saunders said. “So it's very difficult to break through. And then when you do break through, for a younger company, there are a lot of issues that you have to resolve. You have massive working capital requirements because if you're a brand-new brand and you're trying to get into a Walmart — even if Walmart agrees to take you into a fraction of the stores that they have — guess what? Your volume is terrific and most companies don't have the manufacturing capacity.”

The model of the future may look a lot more like that of running brands Hoka and On, which have both surged in popularity recently and have benefited from strong DTC sales and also a healthy presence in wholesale.

“You will get businesses that start off in both ways, but I think what is fortunate is … we've moved on from simply condemning a channel,” Siegel said. “There's no such thing as a bad channel. There are bad partnerships and there's bad execution.”

Another challenge for new brands, according to Saunders, is the simple fact that “there’s a lot of stuff out there” already. Any startups in retail now have to make it through a noisy landscape and offer a valuable enough proposition to gain shopper interest. Identifying as a “DTC brand” just doesn’t much matter anymore.

“We went through an era where companies identified themselves, and were known by others, by the outside world, based on where they sell, not what they sell. That's silly, right?” Siegel said. “Are you an apparel retailer? Are you a mattress retailer? Are you a connected fitness bike brand? Or are you a channel? … The idea of where you sell should always be a very important part of your business decision making. But it should not be who you are. You should not aspire to be a DTC brand. You should aspire to sell something special and figure out how to reach your consumer in the most economic, healthy, brand-appropriate way. I think, fortunately, we've moved a lot closer to that.”

Lord & Taylor’s new owners have barely embarked on a comeback plan for the nearly 200-year-old department store, but step one has already been accomplished: reinstating its iconic, sweeping cursive logo.

Saadia Group, which acquired the department store during a bankruptcy auction four years ago and ran it until early 2023, in 2022 had replaced the familiar, idiosyncratic logo with a Helvetica font. Saadia relinquished Lord & Taylor’s intellectual property, and that of other brands, after a New York County court in early 2024 found it was in default on more than $45 million in debt.

Sina Yenel, chief strategy officer at Regal Brands Global, which now runs Lord & Taylor, calls the disposal of the classic logo in 2022 “the biggest betrayal of the brand.”

“I understand going after young customers, but this is not a startup,” Yenel said, speaking by video conference. “This is a brand that’s been out here for 198 years. Lord & Taylor has such a huge profile, among different generations and different cultures.”

Along with the return of the historic logo, Regal Brands’ new 75-person Lord & Taylor retail team is working on a merchandising strategy based on elevated style, without being super-luxury, and eschewing fast fashion. Contrary to reports published elsewhere, it will not be an off-price business. While there are plans to use drop-shipping for fulfillment, the company won’t be a marketplace, either, according to Yenel.

“Lord & Taylor always brought the best stories, the best experiences to people,” Yenel said, adding that much of retail now lacks such “fun and entertainment” — and human connection.

Without stores, such intangibles will be more difficult to convey. But according to Yenel, tech updates will help revamp the retailer’s e-commerce site. To make high-touch interactions easier remotely, customer service will be based in the U.S. However, returning to brick and mortar is part of the plan, if only in the long run. Plus, because Lord & Taylor is employing a licensing model, brick-and-mortar opportunities like shop-in-shops and pop-ups could happen sooner, according to Yenel. 

It’s been a while since Lord & Taylor had any sort of physical presence — its Manhattan flagship was sold to WeWork and then Amazon following its bankruptcy filing — and its suburban mall stores have also disappeared. But Lord & Taylor’s IP has also been on quite a journey in the past few years. In 2019, fashion rental company Le Tote acquired Lord & Taylor for $75 million, just before the pandemic roiled the industry, and Saadia Group snapped up Le Tote about a year later for $12 million.

In 2024, Lord & Taylor’s IP — along with that of New York & Company, Lerners, RTW Retailwinds and Fashion to Figure — was part of the cache of assets forfeited by Saadia. In that process, various Lord & Taylor trademarks, domains and IP were later sold for $1.5 million to an entity called ADJHA LT, affiliated with Harry Adjmi, per court documents. ADJHA LT now holds at least some of those rights, per the U.S. trademark office. Adjmi is founder of apparel wholesale company One Step Up.

Regarding the venture with Regal, terms of the latest deal are undisclosed, according to family office firm Parkrise Capital, the investor behind Regal Brands Group. As of August, Regal is the sole owner of the Lord & Taylor trademark, according to a Parkrise spokesperson. The trademark registration has not yet been updated: Neither Regal nor its Lord & Taylor operation is affiliated with ADJHA LT or Adjmi.

This all makes Lord & Taylor both the oldest department store in America, and the newest, with Yenel working in the last six months on market research and assembling an experienced team. Vendors are being onboarded now and are enthusiastic; preparation for a “soft launch” that includes home, dresses and footwear has begun, Yenel said.

“There are good things about being small. We can make decisions in an instant and that gives us a lot of flexibility,” Yenel said. “Lord & Taylor should be about fashion that is going to last.”

When Vuori raised $400 million in 2021, it raised eyebrows. Then, founder and CEO Joe Kudla said the brand didn’t really need the money, but was using it to reward early investors.

Now, with a new $825 million investment from General Atlantic and Stripes that more than doubles its last raise and gives the brand a $5.5 billion valuation, Vuori still doesn’t need the money.

“This was also to provide liquidity opportunities for early investors as well,” Jon Kossow, a managing partner at Vuori’s first institutional investor, Norwest, said. “The business is operating profitably. It doesn't need funds for operating cash or for investment. And so this too was an opportunity for earlier stage investors — angels, high net worth folks — to get partial liquidity.”

Vuori declined an interview request with Kudla and did not respond to questions about what it plans to use its new funds for or what its future growth plans are. But Matt Powell, senior adviser with BCE Consulting, said raising money to reward investors isn’t that unusual for a later-stage company, since early investors likely want to cash their money out — and new, long-term growth investors want to get in.

Norwest is still Vuori’s largest institutional shareholder. The company calls its initial investment in Vuori a contrarian one, but even when Norwest invested $45 million in the brand in August 2019, Vuori was already touting its profitability. Kudla told Retail Dive a few years ago that Vuori has been profitable since 2017, just two years after its launch.

“It's truly remarkable that they've been profitable almost from the beginning because most companies just simply can't be — the startup costs are huge, the product development costs are huge,” Powell said. “Typically, brands lose money in the early years as they're building out, until they reach a tipping point and then turn profitable. So it's a real tribute to what they've done.” 

Kossow, who is an active board member at Vuori, confirmed that the brand is still profitable on both an EBITDA and net income basis.

“It's profitable the old fashioned way,” Kossow said. “There's no financial engineering here.”

That’s thanks to an emphasis on growing at a sustainable rate, with leadership approaching both international and domestic expansion methodically (Vuori has had a long-term plan since 2021 to open 100 stores by 2026) and keeping a tight hold on wholesale along the way. 

Being available in multiple channels “makes customer acquisition more economical,” Kossow said, but controlling wholesale orders is critical to more sustainable growth. “A lot of brands, the challenge and the pitfall they run into is growing at all costs — and that's usually through the wholesale channel. We've taken a very different approach. The wholesale channel always wants more and we kind of keep it in a measured growth fashion to protect the brand and sustainable growth focus.”

Vuori’s profitability and continued growth rates are a big part of what has drawn investors in, Kossow noted, saying the brand has been “pursued by a number of investors” since the 2021 deal with SoftBank thanks to its strong financials. Kossow could not provide specifics on Vuori’s performance, but said it’s seen consistent, high growth rates over the years.

“It's a self-sustaining company that hasn't needed capital to continue on the clip it's on, so I think that's attractive for folks as well,” Kossow said. “It's a big market. I think people can clearly look at brands like Lululemon and how big they’ve become and understand that there's no reason why Vuori can't be as big, if not bigger.”

The success of a multitude of brands in the activewear space — from Lululemon, Alo Yoga and Vuori to footwear companies like Hoka and On — points to a larger trend that has positioned performance-inspired apparel as fashion, according to Powell. The athleisure movement has been on the rise for years, but now even items like tennis skirts and running shoes are being treated as everyday wear, Powell said, which creates opportunities for ambitious brands to rise.

An Earnest Analytics report from 2024 pointed to the success of both Alo Yoga and Vuori in gaining share with shoppers, a trend that has also held true with teens.

“There's a tremendous amount of junk in this market and a tremendous amount of noise — brands that don't even know how to make activewear making activewear,” Powell said. “So I think there probably is a ceiling [for Vuori]. But I think Lulu was a good example of the fact that it turned out to be a multibillion dollar brand, even in what's a very, very crowded market.”

And much like Lululemon, which has expanded far beyond traditional activewear to offer products more akin to work pants and polo shirts, Kossow sees Vuori’s potential to bring the customer into a variety of new product categories. The loyalty that comes from one good product can lead shoppers to be more willing to try whatever Vuori comes out with next, like button-down dress shirts or new outerwear products, Kossow noted.

Vuori’s website already highlights a variety of activities, like running and tennis, as well as a “travel” category that features more everyday styles.

As to the future, Kossow wouldn’t say whether the company was considering an IPO, but noted that “exit opportunities present themselves” to brands that build a strong business.

“I would say the future looks quite good for them,” Powell said. “I'm never really good on valuations — they always seem too much money to me, but again, I think the future for the brand looks really bright.”

A few names come to mind when the phrase “DTC darling” is uttered — Warby Parker, Casper, Allbirds, Bonobos.

While they’ve all taken their own paths as they've evolved — from IPOs to mass store expansion — Bonobos' journey has included several ownership changes over the past decade.

About 10 years after launching, the men's apparel brand was scooped up by Walmart for $310 million in a move questioned by industry experts. The acquisition came amid a wave of similar deals made by Walmart to purchase digitally native brands such as ModCloth, Eloquii and Moosejaw.

However, as the mass merchant’s priorities around its e-commerce strategy shifted, it began offloading those brands, including Bonobos, which in 2023 was sold to Express Inc. and WHP Global for a fraction of what Walmart purchased it for.

Not even a year after that sale closed, though, Bonobos found itself in bankruptcy court as its parent company Express Inc. filed for Chapter 11.

With a new entity composed of three mall owners and a brand management firm purchasing both Express and Bonobos out of bankruptcy, what challenges remain ahead for the DTC brand?

Ownership changes

Bonobos was launched by Andy Dunn and Brian Spaly in 2007 and quickly became popular for menswear — particularly its pants.

The brand redesigned khakis, featuring a more tailored thigh for a better fit, a curved waistband and a medium rise style.

Bonobos was among the first class of DTC brands that helped change the way consumers shop for goods, with Dunn early on packing and shipping the brand’s pants directly to customers from his Union Square apartment in New York City.

The brand continued to expand, taking its products offline by opening stores, launching wholesale partnerships — including with Nordstrom — and attracting more funding from investors.

Bonobos eventually caught the attention of Walmart, which acquired the DTC brand in 2017. At the time of the acquisition, Bonobos said it was profitable and generating $150 million in annual sales. 

But onlookers questioned whether Walmart — a mass merchant focused on value and saving its customers money — and the higher-end Bonobos brand would make a good fit.

“I remember, as a Bonobos-aware and Bonobos-liking consumer, thinking, ‘This is the end. Walmart’s going to kill it. They’re going to really destroy the quality. They’re going to just change everything,’” said Peter Fader, professor of marketing at The Wharton School of the University of Pennsylvania. “And they didn’t.”

The deal, however, did fit within a strategy Walmart was employing of scooping up other digitally native brands.

And Bonobos’ Dunn remained involved following the deal, transitioning to a new role overseeing Walmart’s collection of digitally native brands, which at the time included shoe retailer Shoebuy, outdoor retailer Moosejaw and women’s apparel retailer ModCloth. 

But as Walmart’s e-commerce strategy shifted, it began selling off several of the brands it acquired — including Bonobos, which Walmart in April 2023 sold to apparel retailer Express and brand management firm WHP Global for a combined total of $75 million.

Coinciding with the closing of the deal, former Express Inc. CEO Tim Baxter in May 2023 said Bonobos had “delivered strong sales growth” over the past three years and generated $200 million in sales in 2022.

Baxter on earnings calls described Bonobos as a “very compelling addition to our brand portfolio” and said that the acquisition “represents a significant growth opportunity for [Express].”

And Bonobos did help boost Express for a time. In November 2023, the brand helped Express Inc. post a 5% year-over-year sales increase in Q3 to $454.1 million, by contributing $52.1 million in sales. The gains at Bonobos during the period were offset by declines at the company’s namesake brand and UpWest brand, which fell 7% to $402 million during the period. 

But Express Inc.’s challenges proved too great. The company faced declining in-store sales as well as “challenged vendor relationships and funded debt obligations,” leading it to file for Chapter 11 in April this year with a plan to close over 100 stores — though no Bonobos locations — and sell itself to a group which included WHP Global, Simon Property Group and Brookfield Properties.

About two months later, the newly formed entity (which also included mall landlord Centennial) dubbed Phoenix Retail received court approval to acquire Express Inc’s assets out of bankruptcy for $174 million.

Through the deal, Phoenix Retail agreed to operate all DTC commerce in the U.S. for both the Express and Bonobos brands. The company also said more than 450 stores would remain open, including 49 Bonobos Guideshops, down from the 60 the brand operated in September 2023. 

A future under Phoenix

As Bonobos settles into new ownership once again, it faces several challenges ahead — namely remaining relevant to new and existing customers.

To the brand’s benefit, Bonobos sports a loyal customer base, making the numerous ownership changes less impactful in a sense, according to Liza Amlani, principal and founder of Retail Strategy Group.

“It doesn't actually matter who owns the brand,” Amlani said. “There are so many die-hard fans — the chinos that they’ve been buying and the pants that they've been buying for years and years, no matter the ownership.”

For the most part, Bonobos’ previous owners have largely left the brand alone in that from the customer’s perspective, nothing has really changed, according to Fader and Amlani.

“Just going in and seeing the product in the last few years, there has been consistency in the quality, in the materials, in the fit, which tells me that they kept the ethos alive,” Amlani said.

Dunn has also been involved in Bonobos in some capacity for much of its existence. He served as CEO for the first 10 years after the brand’s founding, and following its acquisition by Walmart in 2017, he took on a new role overseeing the mass merchant’s digitally native brands, including Bonobos. While Dunn stepped down as Bonobos CEO in 2018 and left Walmart in 2020, he rejoined Bonobos in June 2023 as an adviser under WHP Global, a role WHP Global confirmed he still holds.

But it’s yet to be seen how deep his involvement as an adviser is.

“How much of it was kind of real and operational versus optics? It was never clear to me that Andy's heart and brain were in it as was the case when they were founded,” Fader said. “It just seemed like almost window dressing that, ‘Hey, Bonobos is going back to its roots.’ We don't really see any manifestation of it. … It's not to say that they've been mismanaged. It's not like anyone’s done anything horrible to it. But I do think there have been some opportunities that just didn't really turn into anything.”

On the other hand, having someone of prominence at the brand could ensure continuity as it eases into new ownership. “I think it's going to be great for the brand,” Amlani said, noting, however, that “it really depends on what the new ownership wants to do with the people in the brand.”

But that consistency might be negatively impacting Bonobos’ growth.

“They kind of lost their momentum,” Fader said. “They had their original founding story from Andy Dunn stitching up pants in his dorm at Stanford. That whole story is just ancient history now and they never really replaced it with anything.”

Other DTC brands, like Warby Parker and Harry’s have been able to “keep it fresh and interesting,” expanding into other product categories, while remaining true to their brand identity, he said.

“They've just lost a lot of their distinctiveness — not their fault — but they haven't really done much to maintain their mind share,” Fader said.

The menswear space is increasingly becoming more competitive, especially with digitally native brands. Rhone has been opening more stores and expanding into additional product categories to reach new customers, while Indochino has been steadily building out its physical presence.

Bonobos’ own brick-and-mortar footprint also represents a potential area for growth for the brand.

Bonobos, like many other digitally native brands, set out to take its products offline, opening its first physical store in 2011. Dubbed “Guideshops,” the locations allowed consumers to try on products, without actually carrying inventory. While customers couldn’t walk out of the store with merchandise, associates could help them place their orders to have their items shipped to them.

That concept has largely remained unchanged. What did change, however, was the brand’s store footprint goal.

Back in 2016, years prior to the pandemic upending and changing the retail landscape, Dunn said that the men’s apparel retailer was planning to open 100 stores by 2020. Bonobos’ current footprint is half of that. But with mall owners Simon, Brookfield and Centennial as its part-owners, there’s potential for brick-and-mortar growth.

“Having that access to physical space, allowing [the] brand to scale — that is where I think we could really see some interesting things coming out of the deal,” Amlani said. “What happens to physical retail, and will Simon and Brookfield give Bonobos access to premium retail spaces that are innovative, that are new?”

What’s important for the brand moving forward, though, is finding a way to connect with its customer base to give them a reason to keep coming back and broaden its appeal to attract new customers.

“Its narrative has just disappeared. They sell a quality product. I still admire some of the ways they go to market, but no one talks about them,” Fader said. “They're just kind of off the radar compared to the days when they were kind of a DTC darling.”