Wholesale versus direct mix shifts: what apparel brands report in 2026

Apparel brands are pursuing divergent channel strategies in 2025 and 2026, with some accelerating direct-to-consumer expansion whilst others rebalance towards wholesale partnerships. Annual reports and earnings calls reveal that major companies now report direct sales ranging from the mid-30s to mid-40s as a percentage of total revenue, reflecting different approaches to market access, profitability and inventory control.

Which brands are increasing direct-to-consumer penetration?

Nike has continued to grow its direct business, reporting that direct sales represented 44 per cent of total revenue in fiscal 2025, up from 42 per cent in the prior year. The athletic apparel giant has invested heavily in its owned stores and digital platforms, viewing direct channels as critical to customer relationships and margin enhancement.

Levi Strauss & Co. reported that direct-to-consumer accounted for 43 per cent of net revenues in fiscal 2024, the year ending November 2024. The denim brand has expanded its company-operated retail stores and e-commerce presence, particularly in North America and Europe, as part of a multi-year strategy to reduce reliance on department stores and other third-party retailers.

VF Corporation, parent of Vans, The North Face and Timberland, reported that direct-to-consumer business represented approximately 36 per cent of revenue in fiscal 2025. The company has maintained a balanced multi-channel approach, investing in both owned retail and digital whilst preserving strong wholesale relationships.

Are any brands shifting back towards wholesale?

Several brands have recalibrated their channel strategies after aggressive direct-to-consumer pushes in prior years. Nike, despite its high direct penetration, announced in late 2024 and early 2025 that it would re-engage with key wholesale partners after pulling back from some accounts. The company acknowledged the importance of wholesale distribution in reaching broader consumer segments and maintaining brand visibility.

Industry analysts note that the pendulum is swinging back towards a more balanced approach. Brands that over-invested in direct channels during the pandemic years are now recognising the value of wholesale partnerships for customer acquisition, geographic reach and inventory flexibility. Department stores and specialty retailers provide access to shoppers who prefer to browse multiple brands in a single location.

What factors influence channel mix decisions?

Profitability remains a primary driver of channel strategy. Direct-to-consumer sales typically deliver higher gross margins because brands eliminate the wholesale discount, but they also carry higher operating costs for retail staff, store leases and fulfilment infrastructure. Companies must balance margin improvement against the fixed cost burden of owned retail.

Customer acquisition costs also shape channel decisions. Wholesale partners provide built-in traffic and brand discovery, particularly for emerging labels that lack the marketing budget to drive consumers to owned channels. Established brands, by contrast, can leverage existing customer relationships and brand equity to justify direct channel investments.

Inventory risk varies by channel. Direct sales give brands greater control over pricing and promotional cadence, reducing the risk of steep markdowns at third-party retailers. However, wholesale partnerships allow brands to shift inventory risk to retailers, who purchase goods upfront and manage their own selling cycles.

• Gross margin improvement from eliminating wholesale discounts
• Higher operating costs for retail infrastructure and staffing
• Customer acquisition efficiency through wholesale partner traffic
• Inventory risk transfer in wholesale versus direct models
• Geographic reach enabled by multi-brand retailer networks
• Brand control over pricing, merchandising and customer experience

How do channel strategies differ by category?

Athletic and activewear brands have generally pushed harder into direct channels, capitalising on strong brand loyalty and high average order values that justify the cost of owned retail. Nike and Adidas have both prioritised direct growth, though Nike's direct mix is notably higher.

Denim and casualwear brands occupy a middle ground. Levi Strauss has grown its direct business substantially but maintains significant wholesale partnerships with department stores and specialty chains. The company views wholesale as essential for reaching value-conscious consumers and maintaining presence in key geographic markets.

Outdoor and performance brands often maintain strong wholesale channels because their products are frequently purchased through specialty retailers where staff expertise and product curation add value. VF Corporation's portfolio reflects this reality, with direct penetration in the mid-30s allowing the company to serve both owned and partner channels effectively.

What are the implications for retail partners?

Department stores and specialty retailers face ongoing pressure as brands invest in direct channels, but the recent rebalancing suggests a more stable outlook. Retailers that offer strong customer service, curated assortments and efficient inventory management remain valuable partners for brands seeking broad market coverage.

Multi-brand retailers are emphasising their role as discovery platforms, particularly for younger consumers who prefer to shop across brands rather than visiting individual brand stores or websites. This positioning provides a defensible value proposition in an increasingly direct-to-consumer landscape.

Wholesale accounts are also adapting by integrating digital and physical operations, offering services such as buy-online-pick-up-in-store and enhanced mobile experiences. These capabilities help retailers compete with brand-owned channels whilst maintaining the convenience and breadth that consumers value.

What channel trends are likely in 2027?

Industry observers expect channel strategies to stabilise around current levels, with most major brands maintaining a balanced approach that spans direct and wholesale. The dramatic shifts towards direct that characterised the pandemic era have largely played out, and brands now recognise the complementary strengths of each channel.

Technology will continue to blur channel boundaries. Brands are investing in systems that provide consistent inventory visibility, unified customer data and seamless experiences regardless of where a purchase occurs. This omnichannel infrastructure reduces the strategic importance of channel mix percentages, as brands focus on total customer lifetime value across all touchpoints.

Emerging brands will likely maintain higher wholesale penetration as they build awareness and scale. Direct channels require substantial investment and marketing spend, making wholesale partnerships an efficient path to growth for companies that lack the resources of established players.