Written by Peter Sayn-Wittgenstein, Partner at Big Day The Agency, a top 10 Branding agency in the world.
No one needs a reminder that consumers are under pressure right now. Inflation remains stubbornly high at 3.5% as of March 2025, interest rates are still elevated after repeated hikes by the Fed to tame price growth, and geopolitical tensions are disrupting supply chains. A recent survey from the National Association for Business Economics found that 58% of economists believe the U.S. will enter a recession by early 2026.
For brands that primarily sell direct to consumer (DTC), this economic climate is sounding alarms. DTC businesses typically rely on aggressive customer acquisition and streamlined marketing channels—so even modest drops in discretionary spending can cause serious strain. Worse still, there’s no tried-and-true recession playbook for the DTC space. The last significant downturn in 2008–09 predates Instagram, TikTok, and the modern influencer economy.
Stock prices for DTC darlings reflect the unease. Warby Parker, Allbirds, and Blue Apron are still trading at fractions of their post-IPO highs. While individual company struggles vary, the economic headwinds certainly aren’t helping.
And now, there's another factor adding pressure: tariffs. The U.S. has recently imposed new tariffs on a range of goods from China, raising costs for raw materials, packaging, and manufacturing. Many DTC brands, especially those dependent on overseas production, are seeing tighter margins just as consumer budgets are shrinking.
But before hitting the panic button, DTC brands should take a breath. According to data from the National Bureau of Economic Research, the average post-war recession lasts around 10 to 11 months. Brands that navigate the downturn wisely can emerge stronger, leaner, and more customer-centric.
Here’s how to stay resilient—and maybe even thrive—through what's ahead:
It may feel counterintuitive, but slashing ad spend is short-sighted. Kantar reports that brands maintaining or increasing visibility during downturns often see stronger long-term growth. Advertising typically delivers a 4–5% short-term sales lift, and Metrilo data shows that DTC customer loyalty is only about 30%—significantly lower than traditional CPG brands. Out of sight truly is out of mind. Maintaining awareness is crucial for acquiring new customers and reinforcing value with existing ones.
Most DTC companies become masters of a few key platforms—Instagram, TikTok, maybe Amazon. But as media prices soften due to lower overall ad demand, now is the time to diversify. Consider emerging channels like addressable TV, podcast sponsorships, or retail media networks. Even legacy platforms like YouTube and Pinterest offer untapped potential when other brands pull back. New channels can also help you hedge against volatility in any one ecosystem.
Avoid outright discounts that erode long-term brand value. Instead, get creative. Break larger product sets into smaller, lower-priced bundles or offer mix-and-match packages that give customers flexibility. For instance, a 9-piece skincare regimen could be repositioned into a 3-step starter kit. You can also cross-promote with adjacent brands for co-branded bundles that attract new eyeballs without slashing margins.
Repeat customers are gold. Metrilo found that repeat buyers make up 60–65% of total sales for the average DTC brand—and the numbers are even higher in categories like pet care, supplements, and activewear. Invest in your loyalty program, communicate regularly, and show customers they’re valued with exclusive offers, faster perks, and early access to new products.
If you’re dealing with increased costs from new tariffs, now is the time to assess your supply chain. Can you nearshore or source from countries not impacted by trade penalties? Transparency is also key—consumers are more understanding when brands are upfront about pricing changes due to external factors. Consider introducing a “transparent pricing” model that breaks down costs and builds trust.
Yes, there’s a chance the recession talk may fade—March’s job numbers beat expectations, and consumer sentiment is holding steady for now. But DTC brands that take this period seriously, plan for turbulence, and lean into long-term relationships will be far better positioned when the economy rebounds.
The goal isn’t just to survive the storm—it’s to sail out of it ahead of the pack.
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