So it’s time for some real talk about the retail industry. Yes, it’s a hot mess right now, and frankly, this is going to be the case for the foreseeable future, until the inevitable and necessary contracting and consolidation of the industry occurs. But rather than weigh in with more doom and gloom, let’s take an objective look. Which areas illuminate what’s broken, what’s salvageable, and where opportunity exists?
Look At Distribution Partners
A brand’s distribution relationships are its lifeblood. When they thrive, the brand thrives…and vice versa. Which is precisely the trouble in which many brands today, with the bulk of their sales through U.S. department stores, are finding themselves. They might be marking those products as shipped on their books to the department stores, but how much are they taking in markdowns at the end of the season? If a brand has put all their eggs into one troubled basket, then this is surely a red flag that their distribution strategy is falling behind and needs triage.
Benchmark Their Performance Relative to Their Competitive Set
We oftentimes talk with clients about how they do see competitive analysis as an integral part of strategy, yet it can get quickly de-prioritized when other initiatives take precedence. But that’s actually a major mistake; shifts and the resulting opportunities happen on a daily basis in the realm of e-commerce. Moreover, if competitive analysis is merely skimmed over from the highest level, the category and product-level opportunities can be easily overlooked.
What’s Up With Their Target Market?
In the same way that the health of distribution partners should be tracked, you should also be assessing how well a retailer or brand is keeping up to speed with their target demographic. Are there major shifts in priorities underway amongst their target demographic? If a brand is selling to an aging population, is extinction a reality or are they willing to double-down to ensure relevancy to tomorrow’s consumer?
It’s also worth unearthing the extent to which consumer insights are valued to the organization. Consumer insights groups are not just about running surveys and focus groups; they must be strategically and internally aligned, so that they can quickly highlight and mobilize internal teams to address changes in consumers’ needs as they happen. An inability or unwillingness to do so is a death knell in today’s retail reality.
Have They Made Attempts To Experiment Early On?
Smart brands and retailers embrace the weird and nebulous areas of their business out of the gate, with partnerships and products that make consumers sit up and take note. One of our favorite brands that continually explores the wacky and wonderful world of co-branding is MAC Cosmetics; whether they are launching Simpsons lipsticks or Trolls colored eye-shadows, there’s also something new and different on offer (and keeping their die-hard fans coming back for more). We think fashion brands can and should take note.
Oh, and don't forget to take note of how quickly innovation projects get shelved the moment things start to look dicey. A company with a true focus on innovation doesn't trash an idea the first moment it faces challenge.
Take these areas as a starting point to look, both qualitatively and quantitatively, at the opportunities and gaps of the brands and retailers you are assessing. It’s all in the details.