Why this DC neighborhood is becoming a hub for DTC brands

This audio is auto-generated. Please let us know if you have feedback.

After putting brick-and-mortar plans on ice at the onset of the pandemic, DTC brands are back in expansion mode.

Companies like Brooklinen, Sav X Fenty, Burrow and ThirdLove have announced to open more stores as the selling almost entirely online plans become apparent. As many DTC brands grapple with the high cost of customer acquisition — which sometimes can come at the expense of profitability — stores have become an additional marketing vehicle.

DTC brands are strategically mapping out physical locations of their stores, and are starting to look beyond New York City for viable options.

“If you look at the old retail playbook, it was kind of: Put down stores until the profit per square foot doesn’t make so much sense,” Katherine Black, a partner in the consumer practice of Kearney, said. “What we see really with DTC brands is their stores, their location strategy is really used to lower their cost of customer acquisition to their online store. So they’re really looking for locations that have very high traffic.”

Among the regions gaining popularity with DTC brands is Washington, DC’s Georgetown neighborhood.

Warby Parker, Everlane, Faherty, Allbirds, Brilliant Earth, Bonobos and Outdoor Voices are just a handful of brands that have opened in the area in recent years.

But the neighborhood hasn’t always been a hotbed for online brands.

The last decade of retail in Georgetown

When a shopper walked down Georgetown’s popular M Street 10 years ago, the retail scene looked different.

“The most noticeable, notable change — retail space wise — over the last 10 years has been the fact that restaurants have basically abandoned M Street. Not entirely, but almost entirely. And what seems to replace them almost every time is some sort of, generally women’s clothing store,” said Topher Matthews, writer of the Georgetown Metropolitan blog and resident of the neighborhood since 2003. “Out of every five new stores, four of them are some sort of clothing store.”

In addition to restaurants exiting M Street, Matthews said a lot of college bars that had once been mainstays in the neighborhood, like Rhino Bar, have since disappeared as well, replaced by national apparel retailers.

“It probably was about 10 years ago, I had some tourists walk up to me on M Street, and they basically were like, ‘So where are the shops?’ And I was like, ‘Well, you’re here,’” Matthews said. “They were like ‘These are just what you’d see in a mall.’ I sort of shrugged my shoulders. Like yeah, that’s what we got. Ten years ago, it was probably even more of a mall than it is now.”

But some of those traditional retailers, like Brooks Brothers and Loft, that operated stores on popular streets in the neighborhood have filed for bankruptcy and closed many stores as a result, including their Georgetown locations. This, Matthews said, has added to the number of vacancies or perceived vacancies in the area.

“Generally, vacancies are always, always a story with Georgetown where it seems to be high,” he said, adding “that’s one thing that locals complain about all the time. It doesn’t matter how far back they’ve been complaining about vacancies, particularly on Wisconsin Avenue. … There’s just increasing numbers of vacant spaces down there, which in the past, it had these very stable national brands.”

“Ten years ago, it was probably even more of a mall than it is now.”

Topher Matthews

Georgetown Metropolitan writer

More recently, the vacancy rates in the neighborhood spiked in 2020 following the murder of George Floyd and subsequent protesters, according to Joe Sternlieb, CEO of Georgetown’s Business Improvement District. “I think we had vandalism in 57 businesses when they came through, and a bunch of places didn’t reopen, and some places reopened and closed,” Sternlieb said. “We had a net loss over the pandemic of about 60 brick-and-mortar retail and restaurant businesses. Last year, we had a net increase of 27 between openings and closings, and I think we’ll do something similar this year.”

Vacancy rates have started to come down in recent months

The vacancy rates in Georgetown, as a percent, from September 2018 to May 2022.

The increased vacancies coupled with the fact that rents became more negotiable opened up an opportunity for DTC brands to move in, Kearney’s Black said.

Leave a Comment