So much for labels.
As brands increasingly see the importance of meeting customers where they are, wherever that may be, more are rethinking their original retail model: Digitally native brands are opening stores and direct-to-consumer brands are linking with wholesale partners. There’s an all-encompassing shift to omnichannel, and the resounding message is: A brand is a brand.
In a recent survey of 149 fashion and beauty brand executives from Glossy+’s proprietary research panel of industry insiders, 61 percent said the brands they work for (59 percent identified as being from a beauty or wellness brand and 41 percent were from a fashion brand) are selling through wholesale retailers as part of an omnichannel strategy. An additional 9 percent said they plan to start selling through wholesale channels in 2019.
“The economics of creating a profitable pure-play at scale are very daunting,” said Steve Dennis, president and founder of SageBerry Consulting. “Most digitally native vertical brands will miss growth opportunities by not having a physical presence.”
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Dennis said he prefers to use “harmonized” versus the overused “omnichannel” when discussing retail’s shift, asserting the point is be strategic versus everywhere.
Cheryl Kaplan, co-founder and president of direct-to-consumer footwear brand M.Gemi, said the brand is pursuing a diversified retail strategy, but — because of the brand’s pricing structure — a traditional wholesale relationship doesn’t make sense. To take advantage of the brand awareness a highly-trafficked wholesale retailer can offer, without overhauling the company’s business model, M.Gemi launched this year a shop-in-shop at Bloomingdale’s 59th Street flagship in NYC. It allowed M.Gemi to sell directly to clients, maintain its own inventory and staff the location with M.Gemi’s employees.
“This type of flexibility in retail partnerships will become increasingly important in 2019, as traditional retailers look for newness to consistently engage consumers, and digitally native brands look to expand their audience and physical footprint,” said Kaplan. “It no longer makes sense to deploy a cookie-cutter fleet of stores across the country; you need to instead look at each [retail] location individually and build variety into your physical offerings.”
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Stephanie Cegielski, a spokesperson for the International Council of Shopping Centers, said even generations born in the age of digitally native brands seek a brick-and-mortar experience, pointing to a 2018 ICSC study finding that 95 percent of Gen Z visited a mall at least once over a three-month time span. “As the consumer continues to prioritize convenience when choosing where to make their purchases, it’s essential that brands are utilizing every avenue available to maximize their accessibility and meeting customers wherever they are,” she said.
Jonathan Shokrian, founder of 7-year-old digitally native underwear brand MeUndies, which opened its first store in May in L.A.’s Westfield Century City, echoed Dennis and stressed that a thoughtful migration to new channels is key. “It’s more important to create the ‘why’ first and, when the time is right, test out new retail strategies when the economics actually make sense,” he said. “[Cross-channel] integration is important, but not a must at first. It is important to approach brick-and-mortar as a way to learn from and interact with customers offline.”
Shokrian said he decided to make the move to physical retail because underwear — a tactile product centered around softness and comfort — translates more naturally in person than it does through a screen. He wanted to give customers the opportunity to see first-hand the quality of the material. But he has no plans to follow up the first store with a fleet of additional locations.
“We will probably see a wave of closures at some point as mall owners push to incentivize deal structures, which will eventually fall through for new incoming brands,” he said.
Proving important to brands now backing physical retail stores is meshing the online and in-store customer experience. According to the Glossy+ survey, the store innovation that brands will prioritize most in 2019 is buy-online, pick-up in-store (47 percent of respondents). When shoppers plan to buy online and pick-up in store, 77 percent say they are likely to spend additional money at that store or adjacent stores, according to ICSC.
Another 12 percent of Glossy+ survey respondents said their brands plan to focus on the showroom model, allowing shoppers to try-on in store and order choice styles online.
M.Gemi has four stores, all of which use the showroom model. In addition, store associates have access to all shoppers’ digital profiles, showing the styles they’ve tried and bought, and allowing associates to offer helpful recommendations. “Clients that shop both online and in-store are our most loyal customers,” said Kaplan.
“We’re moving away from physical versus digital retail, and toward one channel: the consumer channel,” said Cegielski “As we see in-store technology and buy-online, pick-up in-store continue to trend upward, retailers have to stay ahead of the curve and ahead of the consumer.”
Dennis agreed, saying any brand that was not making moves and investments toward omnichannel years ago is now way behind. His advice for brands looking to get up to speed? “Go. Fast. Now.”
