How blending physical and digital helped this ecommerce brand grow through uncertainty

British lin­gerie brand Lounge Under­wear has achieved phe­nom­e­nal growth since its incep­tion, in the liv­ing room of co-founders Daniel and Melanie Mars­den in 2015. 

On track to hit sales of £100 mil­lion in the cur­rent 2022–23 finan­cial year, the social-first brand has used a pure­ly direct-to-con­sumer (D2C) ecom­merce strat­e­gy com­bined with influ­encer mar­ket­ing to pro­pel the brand for­ward. 

But, with the cost-of-liv­ing cri­sis and soar­ing infla­tion like­ly to result in chal­leng­ing times ahead for many busi­ness­es, the entre­pre­neur cou­ple reveal how a shift in mar­ket­ing strat­e­gy, an omnichan­nel approach to retail and their new low­er-price-point “every­day” col­lec­tion will help keep the brand on track.

“We will always be an ecom­merce-first busi­ness,” says Daniel. “But the idea mov­ing for­ward is to have flag­ship stores in major cities in the UK and main­land Europe, to serve as a brand piece, where peo­ple can pur­chase, touch and feel the prod­uct,” he explains. 

And as a social-first ecom­merce brand mov­ing into phys­i­cal retail post-Covid, they’re not alone. British ath­leisure brand Gymshark is due to open its first bricks-and-mor­tar store in Regent Street, Lon­don, at the start of Octo­ber, as it looks to engage with its cus­tomers in a real-life expe­ri­ence. 

But rolling out phys­i­cal stores comes at a cost, so Mars­den says they’ll dip their toes in the waters at first, which could mean expe­ri­en­tial pop-ups or brand acti­va­tions before they com­mit to a per­ma­nent base.

“To be a true glob­al brand, you need a phys­i­cal pres­ence,” says Melanie. “As a very human and val­ue-dri­ven brand, we want to give peo­ple an expe­ri­ence as they step into the space. We want peo­ple to walk out of the store hav­ing felt emo­tion and expe­ri­enced a con­nec­tion in real life, then have con­ver­sa­tions with their friends about it,” she adds.

This new approach to omnichan­nel retail for the ecom­merce brand is part­ly owing to a shift in mar­ket­ing strat­e­gy, which will focus more on brand aware­ness rather than just push­ing prod­uct.

Melanie says: “We are look­ing at some of the more tra­di­tion­al mar­ket­ing meth­ods, such as brand aware­ness pieces and PR. Peo­ple see us as a social-born brand and, as a busi­ness, we have been focused on prod­uct with­in our mar­ket­ing. But we believe what will real­ly dri­ve growth is switch­ing that dial. 

“Prod­uct is still impor­tant and the way that we com­mu­ni­cate to our com­mu­ni­ty, but the focus of our mar­ket­ing will be what’s the pur­pose and what are our val­ues. It will be a huge brand-aware­ness piece,” she adds.

And part of this will be about con­nect­ing and com­mu­ni­cat­ing with peo­ple in dif­fer­ent ways, says Daniel. It will be mar­ket­ing cam­paigns that focus on dri­ving a mes­sage to their com­mu­ni­ty, which isn’t just about buy­ing the prod­uct. 

But this change of tack is also in response to chal­lenges around social media and dig­i­tal mar­ket­ing. “We can’t shout as loud­ly as we used to be able to through dig­i­tal and social, due to the algo­rithm changes,” says Melanie, with con­tent no longer reach­ing the same num­ber of eye­balls in the same way it once did. 

And soar­ing influ­encer mar­ket­ing costs (in some cas­es 1,000% high­er) over the past few years have prompt­ed a rethink for the brand. “Influ­encers and part­ners have helped grow our com­mu­ni­ty to 3.2 mil­lion on Insta­gram and to become the biggest under­wear brand on Tik­Tok,” says Melanie. “But the way we work with part­ners will shift going for­ward.”

She says they will look to influ­encers who have gen­uine rela­tion­ships with Lounge Under­wear to become con­tent cre­ators for the brand, so the com­pa­ny would retain own­er­ship of the con­tent.

“The val­ue is in our community’s engage­ment with the con­tent then, rather than rely­ing on their audi­ence to engage with it,” she says.

Build­ing strong cus­tomer rela­tion­ships has always been intrin­sic to the Lounge Under­wear from day one, a key fac­tor for suc­cess­ful D2C brands. “Our cus­tomers have always received more from the brand than just prod­uct,” says Melanie. 

She explains: “We are very per­son­al in how we speak to them. I used to spend hours talk­ing to every­one on Insta­gram when we first launched, so peo­ple felt like they’d had a gen­uine con­nec­tion.

“It was about build­ing a com­mu­ni­ty, so peo­ple felt like they were part of some­thing; we were not just an under­wear shop. From our tone of voice, to how we speak with cus­tomers and the ser­vice we can offer, from next-day deliv­ery to free returns, this still remains true,” she adds.

And serv­ing this com­mu­ni­ty was part of the rea­son behind cre­at­ing a new low­er-price-point “every­day” col­lec­tion, which Lounge Under­wear has spent the past 18 months devel­op­ing. 

It is due to debut in Octo­ber and an under­wear set will be around 50% cheap­er than any cur­rent­ly avail­able from the brand, with a full “foun­da­tion­al offer­ing” on the shelves by April next year. 

“We are look­ing to build out our prod­uct offer­ing over the next 3–12 months,” says Daniel, “to build Lounge to be an every­day brand”, which he says will help the busi­ness grow and scale.

“To grow and be the glob­al play­er, we need to com­pete with com­peti­tors and have the foun­da­tion of an under­wear brand. We will be offer­ing bras sep­a­rate to bot­toms and the abil­i­ty to buy bun­dles, with bras from £20 and under, and bot­toms from £10 and under, which makes the entry point for the cus­tomer a lot more acces­si­ble,” he adds.

And although Daniel is quick to point out that the con­cept was devised long before the cur­rent cost-of-liv­ing cri­sis, he admits that the tim­ing is spot-on, as cus­tomers’ dis­cre­tionary income is squeezed by rock­et­ing ener­gy costs and soar­ing infla­tion.

The cur­rent cli­mate is putting increas­ing pres­sure on the D2C busi­ness mod­el over­all, with ris­ing cus­tomer acqui­si­tion and ship­ping costs, sup­ply-chain headaches and a crowd­ed mar­ket­place. Daniel says: “We saw insane growth through Covid but the fol­low­ing 12 months after that were real­ly tricky, as peo­ple were ven­tur­ing out to phys­i­cal stores. 

“We’ve man­aged to main­tain all the cus­tomers we acquired through Covid but the cost of acquir­ing new cus­tomers now is a lot high­er than it was through that peri­od. It’s been a tricky year but the past cou­ple of months, we’ve been trad­ing real­ly well,” he adds.

How­ev­er, despite a tough mar­ket, he says inter­na­tion­al sales offer big growth oppor­tu­ni­ties for the busi­ness, with Ger­many now over­tak­ing the UK as the brand’s biggest mar­ket. 

“We’re see­ing the same spike as we had in the UK, with the work we’re doing on our influ­encer pro­gramme in Ger­many,” Daniel explains. “They are very recep­tive to it. We’re expect­ing north of 100% growth in Ger­many this cur­rent finan­cial year.”

He says 80% of their sales now come from inter­na­tion­al mar­kets, dri­ven by main­land Europe, the US and Aus­tralia. But owing to the lack of com­pe­ti­tion in Europe, they are lean­ing more towards Europe, which he says offers “low­er hang­ing fruit”, with mar­kets such as Spain and Italy next on their radar.

With a grow­ing prod­uct offer­ing and the “every­day” col­lec­tions, a shift in mar­ket­ing strat­e­gy and new inter­na­tion­al mar­kets on the hori­zon, Lounge Under­wear is tack­ling the chal­leng­ing winds head on, stay­ing true to its roots as an ecom­merce-first brand but also test­ing new waters with a phys­i­cal retail push to achieve future growth.