Allbirds Closing Stores as Retailers Feel the Burn of Shopper Cutbacks

Not long after touting its brick-and-mortar expansion, footwear brand Allbirds is becoming the latest merchant to shutter stores — a move that comes as consumers’ budgeting behavior amid financial challenges takes a hit on retailers.

The brand, which began in direct-to-consumer (D2C) and expanded into wholesale, reported in its fourth quarter and full year 2023 financial results Tuesday (March 12) that, in the three-month period, the company the company experienced a 14.5% drop in net revenue year over year. Against this backdrop, the company shared that, over the course of this year, it aims to close 10-15 retail stores in the United States.

“The ones that we’re closing for the year are really some of the newer ones that were designed with a little bit of a larger store footprint and probably best served with a more robust apparel offering,” departing CEO Joey Zwillinger told analysts on a call. “And as we refocus the product line really sharply on those iconic franchises in footwear, we wanted to make sure that the fleet was right size for the go-forward product as well as a great optimized US marketplace.”

D2C brands tend to resonate with high-income consumers, but amid ongoing economic challenges, even these shoppers are pulling back. The PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces,” created in collaboration with Adobe, which drew from a survey of more than 3,500 U.S. consumers, found that 31% of those who bring home more than $100,000 annually reported that they “definitely or probably” prefer a brand’s own online store versus a retailer’s digital shop, higher than the 28% who said the same across other income groups.

Yet even these big earners are pulling back. The February/March PYMNTS Intelligence report New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck finds that the majority — 56% — of high-income consumers said they have cut down on nonessential spending in the last year due to retail product price increases. Additionally, 28% have cut back on product quality.

The same study found that two-thirds of middle-income consumers and 69% of low-income consumers have cut back on nonessential purchasing.

Amid all this pullback, retailers are shuttering stores in an effort to cut costs in the face of softer demand. Macy’s recently announced the upcoming closure of 150 locations over the next couple of years. Signet Jewelers — owner of Kay Jewelers, Zales and Jared — is closing up to 150 American and British locations by the middle of the year. Last year, Bed Bath & Beyond’s bankruptcy kicked off the closure of 360 Bed Bath & Beyond stores and 120 buybuy Baby locations.

Still, Allbirds, for its part, aims to continue to leverage stores to meet the demands of omnichannel consumers.

“Stores remain a highly effective way to meet new customers and drive omnichannel purchasing and omnichannel purchasing is the most profitable consumer journey we can generate, with their lifetime values far surpassing single-channel repeat customers,” Zwillinger said.

The PYMNTS Intelligence study “2024 Global Digital Shopping Index: The Rise of the Click-and-Mortar Shopper and What It Means for Merchants,” commissioned by Visa Acceptance Solutions and drawing from a survey of nearly 14,000 consumers in seven countries, found that 39% are now Click-and-Mortar shoppers, engaging across digital and physical channels.

Also Tuesday, Allbirds announced that Chief Operating Officer Joe Vernachio will take over as the new CEO and join the board of directors, effective March 15, succeeding co-founder Zwillinger, who will remain on the board and will advise the company.