Sustainable lifestyle brand Allbirds, best known for its footwear, announced a pivot back toward ecommerce, closing the vast majority of its remaining physical stores.

The company, which began online with direct-to-consumer sales, detailed its plans in a press release dated Jan. 28. There, the company explained it would close the last of its full-price stores in the U.S. by the end of February 2026. As a result, it expects to dedicate more resources toward its ecommerce platform, wholesale partnerships and international distributorships. The company cited “greater reach, flexibility, and operating leverage” as benefits of this move.

“This is an important step for Allbirds as we drive toward profitable growth under our turnaround strategy,” said Joe Vernachio, CEO. “We have been opportunistically reducing our brick-and-mortar portfolio over the past two years. By exiting these remaining unprofitable doors, we are taking actions to reduce costs and support the long-term health of the business.”

Allbirds is No. 477 in the Top 2000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. Digital Commerce 360 categorizes Allbirds as an Apparel & Accessories retailer.

Why Allbirds is closing stores in February

Allbirds’ store closings come after an extended period of struggles for the footwear company, which previously closed stores that failed to be sustainable. While full-price stores will be eliminated, Allbirds indicated that two U.S. outlet stores and two London-based full-price stores would continue operating as brand touchpoints with capital-efficient growth as a priority.

Dana Connell, director of external scholarships and associate professor of fashion studies at Columbia College Chicago, noted that brick-and-mortar comes with high overhead costs, with rent and staff being the most expensive.

“Unless you are able to scale your retail operations, it’s more cost-effective to leverage the DTC model,” Connell explained.

She adds that for a brand like Allbirds, there’s greater control over storytelling in the digital space.

“With the influx of try-on technology and AI, Allbirds can get significant data about what their customer is looking for and pivot to solve those pain points and opportunities quickly,” Connell said.

She noted that it can be a good investment to drive business through technology. As a result, making that move could get Allbirds not only closer to the customer but also faster.

DTC advantages for Allbirds

Beyond the digital selling space, Allbirds can also reach customers globally. It could do so by telling authentic stories associated with the environment. In addition, it could serve up fashionable products aimed at a variety of markets, Connell stated. She pointed out that technology development can also be costly, but it is evolving quickly with a wide range of third-party partners to bridge the gaps.

“Digital DTC offers consumer insights, allowing Allbirds to test quickly,” she said. “If you have to ship 10,000 pairs of a new shoe to stores and it doesn’t sell — it’s a markdown. If you offer it DTC through web and social, you can offer significantly fewer pairs to test and respond.”

Connell added that young shoppers from Gen Z and Gen Alpha are digital natives, driving new DTC online businesses.

“Their first instinct and move is on their phone, not to drive to a mall,” Connell assessed.

David Loranger, assistant professor of fashion marketing and merchandising at Sacred Heart University, agreed that physical stores have weighed on Allbirds’ business.

“To my knowledge, the brand’s locations were in high-rent upscale shopping districts, and they had a small footprint,” he said. “The issue here is that stores have to move a certain amount of stock at a certain profit margin to cover the cost of these locations.”

Loranger proposed that adding small stores with less stock could mean less room for multiple sizes and colors in backstock.

“The shoe business is one apparel classification that is not only stock-intensive but also requires lots of stock space,” he explained. “Remember that just one shoe style may have a dozen pairs in a single size run, then multiply that by various colors and styles.”

A DTC model may eliminate the need for these physical footprints and bloated inventory, he suggested. In turn, that move could align well with Allbirds’ customer demographics.

“Based on the demographic and psychographic makeup of their customer, it may be that the target market is one that chooses to shop online instead of in-store,” Loranger said.

Do you rank in our databases? 

Submit your data and we’ll see where you fit in our next ranking update.

Sign up

Stay on top of the latest developments in the online retail industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News. Follow us on LinkedIn, TikTok, X (formerly Twitter), Facebook and YouTube. Be the first to know when Digital Commerce 360 publishes news content.