As traditional mall landlords watch their aging retail lineup fade, a curious evolution is happening.
Online-only “direct-to-consumer” brands are hauling their goods out of cyberspace and moving to storefronts.
The migration runs from big brands to small. Amazon, for example, is opening a clothing store in a Glendale mall. The custom-fit menswear brand Bonobos, trendy eyewear maker Warby Parker, and the eco-conscious footwear maker Allbirds have all moved into mall spaces.
Why leap now when online shopping is all the rage? For many online businesses, advertising costs have soared 60% in five years, according to ProfitWell, which measures “customer acquisitions costs.” Those rising costs and a focus on growing profits are pushing more DTC brands into store leases.
“No digitally native brand has achieved a billion dollars in annual revenue without a store,” Jason Goldberg, chief commerce strategy officer at advertising firm Publicis, told CNBC last September.
ThirdLove is one popular brand making the pandemic leap to the mall. The lingerie maker chose the tony suburbs of Orange County to plant its first store, blending online sales with an immersive shopping experience at Fashion Island.
The 9-year-old company known for its broad variety of sizes and a comfortable, stylish lineup is going bra-to-bra with top-selling brands Victoria’s Secret and Aerie.
We spoke with co-founder CEO Heidi Zak about why she brought her San Francisco-based company to Southern California first and what’s ahead for ThirdLove.
Q: You launched ThirdLove after working at Google. What made you pivot from advertising to lingerie?
A: The goal originally was to build this online brand so that women didn’t have to go to the store, and to also build better products. From the very beginning, it’s always been about creating higher quality, more comfortable products.
So, little things we do on our bras, like, we don’t have tags on the back. We use really lightweight foam, really soft fabrics, flexible wires, and offer 70 bra sizes. Your average product line has about 35. And we’re the only brand in the world that has half-cup sizes. So, it’s really about the fashion and the fit coming together.
Q: So, why Newport Beach and not your home base in San Francisco?
A: California is our number one state (for sales), and that probably doesn’t come as a surprise. San Francisco and LA are two of our strongest markets. We’re opening two stores in San Francisco later, and we’re opening another one in March in LA.
But as for Newport Beach, in general, it’s a premier shopping destination. Our core customer is a busy mom. We knew that from looking at both the demographics here and our selling patterns that this location would be really great for us.
Q: It doesn’t get much more suburban than Orange County, right?
A: Exactly. And that’s part of it, right? Not that we’re not an urban brand, but we’re absolutely a suburban brand as well. And so that was really part of what we’re doing with both of our stores in these two markets. We have downtown San Francisco, and then Walnut Creek, in the East Bay suburbs, similar to Newport Beach.
Q: You launched the store plans during a pandemic. How did that go?
A: We actually had a pop-up in New York that we closed when the pandemic started. So, we learned a lot from that store and customer feedback. In the past year, we’ve added tons of wireless styles, our lounge and sleepwear, and recently we launched athletics. All of those products were developed and then launched during the pandemic.
Q: So the pivot to brick and mortar happened fast?
A: I think we started in September-October last year and now this opened (early February in Newport Beach), so it was quick.
Q: Why now?
A: I think real estate’s more affordable than it’s ever been. But it is getting more expensive again, because everyone is out now, as you see today. Physical retail is not dead. People like to go out with their friends, especially in an environment like California, where you can be outside year-round. It’s also a way to see what’s new, so that’s never going away.
We could either say we don’t play there or yes, we’ll play there because there’s opportunity. With our category, there are some women who might not ever feel comfortable making that first purchase online, because they need to make sure it fits.
Q: You make a bra in full and half-cup sizes. How did that come about?
A: When we started the company, our goal was to create a better T-shirt bra, which is our 24/7 bra, our number-one seller. I think we’ve sold 3 million of those bras or more. When we started testing the product, what we found was that I was actually a half-cup and there were a lot of women who didn’t squarely fit into a B or C or D. And so we were like, you know what, we’re going to create a half-cup … and we sampled it out.
I always said it’s like the half-sizes in shoes. I’m a 6-and-a-half. I could wear a six, but it’s way too tight, and I can wear a seven, and it’s going to be big. So I needed the same thing with my bra.
We had these women come back when they tried on the half-cup, and they were like, ‘Oh my God’ — just like me.
Q: But manufacturing those half-cups in bulk wasn’t easy, right?
A: We went back to our factory and said we’re gonna do half-cup, and they’re like, no, it’s too complicated; it’s too expensive. Here are all the reasons. Why doesn’t anyone else do it? It’s a terrible idea.
But we were going to do it, and we did, and today, probably a quarter of our sales are half-cup bras. We’re the only brand in the world that I know of that sells them.
Q: Before I forget, what about the name? What does ThirdLove mean?
A: So the idea was creating a third love for women, a third option. Before, women always had to make a choice: You can have a comfortable bra but it’s not gonna be that pretty, or you’re gonna have a really pretty one but it’s not comfortable. So, now you have this third-love option, a beautiful and comfortable bra.
Five things about Heidi Zak, CEO of ThirdLove
Favorite ThirdLove bra? Our 24/7 Classic T-Shirt Bra is my forever favorite. It’s the “little black dress” of bras, looking amazing under even the tightest T-shirt
2. Any pandemic hobbies (besides expanding ThirdLove): Pickleball! I love being active so making time to get outdoors and get moving has been something that has carried me through the pandemic.
3. Biggest lesson learned launching a company: Don’t sweat the small stuff. Learn and quickly move on from small setbacks.
4. Best advice for budding entrepreneurs: Choose one thing and do it really well.
5. If I had to do it all over … I would have hired experts — especially those outside of my comfort zone — earlier.
More about ThirdLove
Founders: Heidi Zak, CEO, and Dave Spector, president, and Ra’el Cohen, chief creative officer.
Launched: 2013
Employees: 200
Investor funding: $68.6 million
Customers: 18 million
Giving back: $40 million worth of products donated to charitable causes including women in need and clasps for sea turtle recovery.
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