It seems almost daily headlines report the fall of yet another large, reputable brand or the downsizing of a big-box retailer. In recent years, iconic retailers like Burberry, Ralph Lauren, Michael Kors and Kate Spade, to name a few, have all lost significant shares of their market value.
Where large brands are hurting, big-box retailers are feeling it, too. The face of retail is changing, and this macro trend is making way for small and midsized brands.
So, how can these brands capitalize on the massive opportunity in front of them? Basically, it’s all about the consumer.
Many smaller brands that traditionally sell wholesale into stores like Macy’s or Nordstrom are exploring new ways to expand and have more direct engagement with their customers — on the customer’s terms. Here are a few strategies for growing your retail business while embracing current trends.
Go Direct to Consumer
While big-box retailers are floundering, many of them are setting in place more stringent regulations on how smaller brands sell into their stores. The frustration from these added constraints, coupled with the fact that modern technology makes testing new sales channels easy, has made it a better time than ever to consider a direct-to-consumer strategy.
Direct to consumer allows retailers to preserve or increase their margins, while also building relationships with customers who love their products. Having a direct line to customers means you gain the ability to respond directly to concerns, access feedback more readily, and foster brand loyalty in a way that’s near impossible without a direct-to-consumer strategy.
Embrace the Consumer Choice Economy
Today’s customers want to feel connected to the brands they use and wear. When it comes to shopping, consumers have more power than ever before. They’re shaping retail buying experiences with their desire to buy anything, from anywhere, at any time. They expect seamless, multichannel experiences; simple payment processes; fast delivery; and easy returns. This is where many large brands are floundering. Take Ralph Lauren, for example. The brand has failed to react quickly enough to the consumer choice economy, and over the past two years its sales have plateaued and profits have declined by 50 percent. These older brands are often using antiquated systems and may be less open to rapid innovation and change, thus paving the way for more tech- and customer-forward brands to excel.
While there are obvious characteristics of a shopping experience a consumer is likely to rave about (e.g., excellent and quick customer service), forward-thinking brands realize that much of the customer experience is behind the scenes. How well you manage your inventory and operations directly impacts how happy your customers are. An inability to have the product your customers want, when they want it, where they want it (and how quickly they want it) affects your customer experience and, ultimately, your revenue growth. In the same way you might invest in exceptional customer service representatives or a savvy social media strategist, consider how an automated, connected back-end inventory and operations solution will prevent stock issues and increase profitability and customer happiness.
Get on Board With Amazon
With Macy’s, Sears and Kmart all closing dozens of stores across the country, brands that want a selling outlet outside of their own brick-and-mortar or e-commerce site might want to consider looking outside of the traditional model of selling into big-box retailers. On Fox Business’ “Varney & Co.,” financial coach D.R. Barton said, “Amazon has won the distribution war. That’s over. That’s done. Everybody trying to do their own gig online is going to migrate to Amazon.com.”
Where consumers used to go to the mall, they’re now logging onto Amazon. So, for retailers that want to recapture that audience, it’s a clear path to expanding their presence in a new market. Some brands and retailers tend to shy away from Amazon, as they see it as a place for arbitrage sellers who may not have the same dedication to branding and customer loyalty. It may not be the best fit for every brand, but seller central does allow you to be more creative with marketing, optimization and strategy. At any rate, Amazon isn’t going away and it’s at least worth strong consideration and evaluation for retailers looking to expand the way they reach and sell to new audiences.
How to Seize the Opportunity
It’s an exciting time for SMBs, and there’s seemingly no end to the innovative and creative approaches these retailers are taking. Take Taylor Stitch, for example. Started in 2008, Taylor Stitch is a customer-inspired apparel brand making quality, affordable tailor-made clothing for men and women. The brand gives customers more control while also closely managing its inventory. Taylor Stitch designs new products every week, then lets its customers essentially crowdfund them by having them commit to pre-ordering the item if it reaches its funding goal in a set amount of time. Only if the funding goal is met will the brand manufacture and fulfill those pre-ordered items — making extras of popular items to be sold as limited-edition pieces in its brick-and-mortar stores. This customer-centric, tech-forward approach has led to rapid revenue growth and a loyal social following that’s over 100,000 users strong.
Whether you’re crowdsourcing the perfect product or expanding into new channels, keeping the customer first is the way to succeed in today’s commerce landscape. With this mentality and the right operational tools to back you, you can provide the seamless experience traditional retailers have failed to deliver, which is creating endless opportunity for modern, tech-forward and customer-obsessed brands.
Brandon Levey is the CEO and ThinkerUpper at Stitch Labs, an inventory management solutions provider.