Which DTC Categories Are Thriving vs Struggling in 2025?
In 2025, direct-to-consumer (DTC) brands find themselves navigating a divided landscape: some sectors are enjoying a boom, while others face significant challenges. As operators on Shopify are acutely aware, the current environment demands agility and insight. So, where is growth flourishing, and where is it stalling? Let's dive into a founder-focused analysis of the DTC sectors riding high and those struggling to keep pace.
Thriving: Beauty, Wellness, and Everyday Indulgence
Despite economic pressures, certain categories continue to thrive, thanks to consumers' desire for self-care and everyday indulgence. Beauty, wellness, and select food & beverage brands are leading the charge, buoyed by the "treat yourself" mentality that many are adopting.
Beauty & Personal Care: The Lipstick Effect Holds Strong
Beauty remains a powerhouse in DTC. Even amid cautious consumer spending, products offering affordable luxury and emotional satisfaction are thriving. Procter & Gamble's Q3 2025 results show a 4% increase in beauty product volumes, outpacing other categories and exceeding revenue expectations (Investing.com). Unilever's U.S. beauty brands also enjoyed double-digit sales growth.
The "lipstick effect" isn't just theoretical. e.l.f. Beauty's budget-friendly lip oils and skincare are outperforming the retail market, with Gen Z driving demand (Reuters). Prestige fragrance sales in the U.S. rose 13% in early 2024 (DTC Dispatch), illustrating the sector's ongoing strength. As Olaplex’s CEO notes, there's notable resilience in prestige beauty and hair care, as consumers prioritize well-being even in uncertain times (Retail Dive).
Operator Take: Human Touch Wins in Beauty
In the competitive beauty market, personal connection is crucial. Tools like LiveRecover, an SMS cart recovery platform with human agents, offer a personal touch that automated systems lack. By engaging customers directly, LiveRecover helps close sales and builds loyalty—a key advantage in a trust-driven industry.
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Health & Wellness: Subscription-Driven, Habit-Forming Growth
Post-pandemic, consumers remain committed to health, driving growth in DTC wellness categories like vitamins, supplements, and telehealth. Shopify operators in this space report robust subscriptions and retention, with one leading vitamins brand on track to exceed $100 million in sales this year (DTC Live).
Telehealth is also flourishing. Hims & Hers expanded internationally in 2025, capitalizing on the demand for convenient, direct-to-door healthcare (Reuters). Despite regulatory challenges, the focus on stress relief, sleep, and immunity remains strong. As an industry CFO aptly noted, wellness is a "replenishable category with strong growth tailwinds."
Food & Beverage: Indulgence and Function Win the Day
During tough times, consumers may trade down, but they don't stop indulging. Everyday consumables, such as snacks and functional beverages, are proving resilient. Candy sales are up 3.1% year-over-year, reaching $40 billion, despite a dip in units per shopper (FoodNavigator-USA). Functional beverages like Olipop, which holds 60% of the global prebiotic soda market, continue to expand (DTC Live).
Aleena Hassan
Struggling: Apparel, Home, and the Big-Ticket Squeeze
While some sectors thrive, others struggle with consumer fatigue and saturated markets. Apparel, home goods, and big-ticket items are under pressure, forcing operators to rethink strategies from the pandemic era.
Apparel & Fashion: From Pandemic Highs to Promotional Lows
The post-pandemic apparel boom has faded. With budgets tight, consumers are avoiding discretionary purchases, impacting brands like Allbirds, which saw an 18% revenue drop in Q1 2025 (Retail Dive). Promotions are widespread, with discounts often reaching 30-50% (Tom’s Guide), eroding margins and brand value.
Sarah Chaney
Despite challenges, some niches and brands with loyal followings are surviving by focusing on core products and exploring omnichannel strategies (Retail Dive). The key takeaway: lean operations and strategic focus can filter out the frivolous.
Cara Salpini
Home & Living: From Pandemic Darling to Demand Desert
The demand for home goods and furniture that soared during the pandemic has waned. Consumers are deferring big-ticket purchases, leading to a 21% revenue drop for Purple Innovation (Retail Dive). Brands are cutting ad budgets as online acquisition becomes more challenging.
Peloton's struggles highlight the shift away from at-home fitness investments. Facing job cuts and cost reductions, the company is pivoting to third-party retail to sustain sales (Reuters). The lesson for operators: focus on today's cautious buyer rather than past pandemic splurges.
Operator Playbook: What’s Working, What’s Next
The divide between thriving and struggling DTC categories is clear. If you operate in essentials, self-care, or affordable indulgence, it's time to double down. For those in apparel, home, or high-ticket categories, embrace efficiency, creativity, and core value focus.
Strategies for Founders in 2025
- Double Down on Resilient SKUs. Channel resources into hero products with proven demand, whether expanding consumables or launching safe adjacent products.
- Tighten Operations. For struggling verticals, adopt leaner marketing, explore pricing strategies, and consider redesigns or fresh storytelling to rekindle interest (Retail Dive).
- Lean into Omnichannel. Successful brands in 2025 blend DTC with retail, social commerce, and subscription models.
- Humanize the Customer Journey. In trust-driven spaces, combine automation with human connection. Tools like LiveRecover demonstrate the power of personal engagement at critical moments.
E-commerce growth is real, with U.S. DTC e-commerce sales projected to exceed $226 billion this year (Shopify). The playbook has evolved, and smart founders are reallocating resources and staying attuned to shifting consumer sentiment. If 2024 was about survival, 2025 is the year for strategic, data-driven growth.
Ashley R. Cummings
We're all navigating the same challenges, but with the right data and operational grit, DTC brands can forge a smarter path. Let's continue sharing insights and make 2025 a year of founder-driven success.
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