Digital Brands Group (DBG), a curated collection of luxury lifestyle, digital-first brands, has recently disclosed its intent to open its first retail store in March this year.
The company is anticipating a significant boost to its revenue and cash flow, projecting more than $1.5m in annual revenue and over $500,000 in annual cash flow.
These projections are based on historical metrics and the performance of this store, coupled with excess Sundry inventory from a prior acquisition.
Using excess inventory to maximise margins
One notable aspect of this strategic move is DBG’s plan to use the retail store as a platform to clear excess inventory, with the aim of achieving higher margins compared to selling through the off-price channel.
The company emphasises that there will be no additional costs associated with these excess units, as they have already been paid for and are currently stored in the company’s warehouse.
Operationalising a three-pronged growth strategy
Hil Davis, the CEO of DBG, expressed enthusiasm about the company’s venture into the retail sector, outlining a three-pronged growth strategy.
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Davis stated: “We believe the best performing retail brands will have three legs to their growth story: (1) wholesale, (2) e-commerce, and (3) retail stores.”
The decision to initiate this phase of growth with an outlet location is attributed to the availability of finished goods inventory already paid for and stored in the company’s warehouse.
Historical metrics and performance of this specific store further influenced this strategic choice.
Looking ahead to retail store expansion
As DBG embarks on this new chapter in its growth trajectory, the company’s leadership anticipates that the retail store will play a pivotal role in amplifying its market presence.
The planned March opening represents a milestone in DBG’s overarching strategy to diversify its brand outreach through various channels, marking a significant step in its retail-focused approach.