Are D2C Brands in Fashion Losing their Way and Becoming Offline First Brands?

Retail leasing by D2C brands more than doubled to 18% of total leasing in H1 2025, with fashion and apparel brands accounting for nearly 60% of that leasing boom. Many brands that built their identity, customer base, and growth engines online are now aggressively investing in physical retail.  

Digital-only growth has slowed, and in some cases, margins have thinned due to soaring customer acquisition costs, rising returns, and saturated social commerce channels. Meanwhile, fashion shoppers continue to show an unwavering preference for touch, fit, and instant gratification, behaviors that digital experiences still cannot replicate convincingly.

This shift has necessitated a rethinking of what direct-to-consumer means in 2025: If online growth is plateauing, should brands continue to rely on purely digital channels, or is an offline-first strategy now the more viable way forward?

For many, the answer seems to lie in going offline quickly becoming a core engine of brand building, customer loyalty, and profitability once again.  

The Revival of Flagship Stores as Brand Anchors

Flagship stores are back. Only this time, they’re not mere retail outlets but immersive brand destinations. Fashion D2C brands in India are increasingly signing leases in high-footfall malls and premium high-street spaces to create environments that communicate lifestyle, aspiration, and aesthetics beyond the screen.

These flagship stores serve several strategic purposes:

1. Brand Theatre & Storytelling

A flagship location gives brands a physical space to project identity, culture, and visual language, something difficult to achieve through online-only interactions.

2. Higher Conversion Opportunities

Indian retail data suggests that many D2C fashion brands experience much higher in-store conversion rates than on their websites. Shoppers who walk in rarely “browse and leave”, a behavior common online.

3. Micro-Fulfilment & Operational Utility

Flagships increasingly double up as:

• Micro-warehouses supporting same-day delivery,
• Return/exchange centers, and
• Product testing grounds for new collections.

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Consumer Preference for a Tactile Experience

Fashion is fundamentally a tactile category. Whether it’s checking the softness of cotton, the fall of a dress, or the structure of a blazer, consumers crave physical interaction. Online product videos, 360° views, and virtual try-ons help, but they don’t fully close the gap.

1. Offline Drives Higher Value Purchases

A physical store environment often encourages shoppers to:

• Try multiple sizes
• Explore coordinated looks
• Engage with staff stylists

This leads to bigger basket sizes and premium discovery.

2. Impulse Purchases & Cross-Selling

Offline browsing encourages spontaneous decisions which pure e-commerce journeys struggle to replicate. For example, one might think “Since I’m buying these jeans, I might as well get the shirt too.”

Instead of simply increasing SKU counts online, this consumer behavior shift is pushing brands to rethink:

• Collection design
• Quantity allocation
• Store zoning
• In-store curation

Challenges in Scaling Online-Only Models

Digital-first brands once scaled quickly with targeted ads and agile e-commerce. But the economy has now changed dramatically. Pure-play online models are losing efficiency, pushing D2C brands toward more stable, diversified omnichannel strategies.

• High Returns & Logistics Costs

Fashion return rates are a major drag on profitability. In India, over a third of fashion and footwear products bought online are returned. Reverse logistics costs can hit 10-15% of an order’s value, depending on weight and distance.

• CAC Inflation

With CPMs on platforms like Meta and Google rising by 20-25% in a year, the cost to acquire each customer is ballooning. CAC for D2C fashion/lifestyle brands in India now ranges from ₹800 to ₹2,000, often accounting for 40–50% of the average order value.

• Marketplace Commission Pressure

Selling on large platforms is expensive: Amazon’s commission for apparel can range from 14-18%, depending on the SKU price. Myntra’s commission structure too demonstrates pressure, recently dropping to as low as 0-1% for low-ticket items.

• Geographical Saturation

Tier-1 cities are nearing digital saturation, while Tier-2 and Tier-3 markets promise growth but also bring logistical challenges such as fragmented infrastructure, higher delivery costs, and inconsistent fulfilment.

• Limited Brand-Building Opportunities

Relying solely on paid acquisition makes brands dependent on algorithms. Without a physical presence, many D2C labels struggle to build deeper, lasting brand equity, something increasingly critical in a crowded market.

Ready to align your physical stores and online inventory with real-time visibility? Discover how Ginesys ERP can unify your channels today.

Experience First: The Role of Experiential Retail

That said, offline retail isn’t returning in its old form. The new phase is experience-led, aiming to deliver novelty, community, and immersive engagement.

Emerging formats include:

• Pop-up galleries
• AR-powered fitting rooms
• Styling bars
• Capsule collection events
• Customization stations

Why it Works for Gen Z & Millennials

Younger shoppers treat retail as a social activity and content opportunity. A well-designed store provides instagrammable zones, supports stories and user-generated content, and increases brand touchpoints organically.

Content Meets Commerce

Experiential spaces act as content engines. Every walk-in can become a micro-influencer, amplifying discovery online.

This evolving definition of offline retail highlights how stores have gone from being inventory warehouses to experiential hubs designed to drive emotional connection and conversions.

How to Connect the Dots: Key Omnichannel Integration Strategies

As D2C brands pivot offline, the challenge is ensuring seamless cross-channel experiences. However, done right, omnichannel can bridge the disconnect between online and offline brand experiences, ensuring a consistent identity.

Let’s look at some key strategies to achieve this:

1. Click-and-Collect (BOPIS): Customers order online and pick up in store, reducing last-mile costs and driving store footfall.
2. Unified Returns: Allowing online purchases to be returned in-store improves convenience and reduces logistics burden.
3. Unified Loyalty & Payments: A loyalty system that works across both channels ensures customers feel recognized wherever they shop.
4. Inventory Optimization: Stores increasingly serve dual purposes for walk-in customers, and for online fulfilment from nearest store stock.
5. AI Personalization: Use customer data to tailor offers, experience, and merchandising in real time. AI systems can dynamically adjust promotions, suggested products, and fulfillment paths.  
6. Composable Fulfillment: Implement a smart fulfillment engine that dynamically selects where to fulfill an order from (store, dark store, warehouse) based on cost, speed, and sustainability goals.  

Loyalty Under Strain: Does Offline Dilute D2C Relationships?

The shift to offline retail introduces new loyalty dynamics for D2C brands. Originally rooted in the idea of owning the customer relationship end-to-end, these dynamics can be complicated by intermediaries like store staff, landlords, and mall ecosystems.  

While this transition can risk diluting the brand’s direct-to-consumer bond, it also offers powerful retention levers with in-store services to enable deeper emotional connection and lifetime value. Think:

• Personalized styling
• Alterations
• VIP events
• Early access drops  

To preserve coherence across channels, brands must implement unified loyalty systems so that points or rewards earned online remain redeemable in-store, and vice versa. However, this path comes with a few trade-offs. The fixed costs and pressure to drive store traffic can push brands toward heavy discounting or aggressive in-store promotions, which could erode the brand equity that premium or identity-driven D2C labels have cultivated.

Operational and Capital Considerations

Going offline isn’t just a marketing decision. It demands financial discipline.

• High Fixed Costs: Rent, staff salaries, store interiors, utilities, maintenance, etc. These weigh heavily on profitability if not strategically planned.
• Inventory Risk: Unsold inventory is costlier in physical stores than online. Overstocking leads to markdown pressure; understocking leads to lost sales.
• Omnichannel Logistics Complexity: Brands must manage fulfilment from stores, reverse pickups, cross-channel stock balancing, and real-time inventory syncing. The operational load increases significantly.

Empower your flagship stores to double as fulfillment hubs with Ginesys OMS. Route orders intelligently from store inventory.

Marketing Offline: The Emergence of Offline-First Trends

Offline-first marketing is gaining traction among D2C players. Physical stores offer powerful platforms to build community and trust, especially in markets where digital fatigue is setting in.  

Why it Works

Physical spaces plug directly into digital ecosystems to drive long-term brand growth.

• Offline presence drives local discovery and credibility. Entering a physical space lends real-world legitimacy, helping brands reach new geographies and customer segments.
• On the activation front, brands are experimenting more than ever. We’re seeing store-only capsule collections, influencer meet-and-greets, styling workshops, and event-based activations (city pop-ups, festival tie-ins) that function both as community touchpoints and marketing content generators.  
• These experiences are designed to be highly shareable, with Instagrammable set-ups, QR-code-led product stories, AR (augmented reality) mirrors or styling zones, and curated zones for content creation that drive social buzz.
• Brands capture customer data during in-store events, then retarget these visitors online. Similarly, social media content based on offline events becomes fodder for influencer marketing, email outreach, and community-building campaigns.

Future of D2C Fashion Brands in India

India remains one of the most promising markets for omnichannel fashion growth.

• Tier-2 & Tier-3 Momentum: Rising incomes, aspirational consumption, and growing mall penetration make smaller cities attractive for expansion.
• Phygital Will Dominate: The next few years will see smaller but smarter stores, flexible store formats, high-tech POS, mobile-first staff operations, and AI-driven assortment planning.

Winning brands will combine digital speed (rapid trends and personalization) and physical relevance (trial, experience, and convenience). Brands that remain rigidly online or offline risk falling behind.

Power the Offline-First Pivot with Unified Omnichannel Tech from Ginesys

Ginesys One is a next-generation, unified retail platform designed for modern connected commerce. It brings together ERP, POS, order management, and warehouse systems into a microservices-based architecture, providing a single, real-time view of customers, orders, and inventory.  

As D2C fashion brands transition to offline-first models, Ginesys One provides the critical retail-technology backbone to make this shift scalable.

• Its retail ERP gives brands real-time, unified visibility of inventory across online channels, warehouses, and physical stores.
• Ginesys’s Order Management System (OMS) intelligently routes orders using ship-from-store or click-and-collect logic, ensuring seamless coordination between webstore, marketplaces, and retail outlets.
• The Warehouse Management System (WMS) module, integrated with ERP, manages bin-level inventory, automates stock reservations, supports Android-based mobile scanning for picking and audits, and optimizes fulfillment in real time.
• On the storefront, Ginesys POS supports billing, returns, and inventory sync closely with the ERP, ensuring that offline stores remain tightly connected with backend inventory and finance.

For D2C brands recalibrating their growth models, Ginesys offers the foundation for scalable, profitable omnichannel retail.

FAQs

How can experiential retail (pop-ups, AR/VR, styling zones) help fashion brands engage younger consumers? 

By creating interactive, visually rich environments that encourage participation, content creation, and community engagement, making the brand more relevant and shareable.

What capital and operational risks must fashion brands manage when expanding offline? 

High rental costs, inventory risk, staffing, utilities, and complex omnichannel logistics require disciplined planning and robust technology integration.

How can offline-first marketing and store activations support brand discovery in tier-2 and tier-3 cities? 

They create local buzz, physical touchpoints, influencer-led engagement, and community-driven trust, critical where digital-only reach may be limited.

What key indicators should brands monitor to assess whether their offline investment is delivering incremental value? 

Store conversion rates, average bill value, cross-channel fulfilment efficiency, loyalty activation, and contribution margin uplift.