As digitally native direct-to-consumer (DTC) brands eye growth in 2025 , the question of opening physical stores is critical—and nuanced. Does going into retail cannibalize a DTC’s core online sales, or does it unlock synergistic growth?
The answer, according to industry analysts, recent studies, and leading brands, is that physical retail can be both a risk and a major opportunity. The Cannibalization Myth: What Actually Happens? For years, DTC leaders worried that opening a brick-and-mortar location would
simply steal purchases from their online store , not add new revenue. However, current data and expert commentary show that this view is outdated. In reality, physical stores can expand the brand's pie—creating a halo effect that benefits both online and offline revenue.
A 2025 study by the International Council of Shopping Centers (ICSC) found that: For every $100 spent at a physical store , the same customer would spend an additional $160 online . Conversely, customers who shopped online with a DTC would spend an average of $231 in-store .
In a previous 2023 study, ICSC’s “Halo Effect III” study , emerging DTC brands experience an average 13.9% increase in online sales following the opening of a new physical store. The research analyzed data from 69 retailers and 2,103 stores , finding consistent uplifts across nearly all categories.
How Physical Retail Boosts Digital Sales-“The Halo Effect” This halo effect plays out in several distinct ways. Stores offer tactile engagement, boosting trust with customers who discover or test drive a brand offline before making their next big online order…
