Last year, as big box stores struggled to keep pace with Amazon and other tech savvy e-Tailers, “the retail apocalypse” was constantly driving headlines. Now however, the retail industry is proving to be in far better shape than the media has given it credit for — retail isn’t dead, it’s just changing. In fact, Deloitte predicts the retail market will grow between 3.2% and 2.8% this year.
While the outlook for retailers, particularly those embracing e-Commerce, is positive, there’s been little talk about how this industry shift is impacting brands. With today’s e-Commerce options, one might expect brands to ditch retailers and go direct to consumer; however, a recent independent survey of more than 400 brands conducted by NuORDER found that isn’t the case. Rather, brands today are working more strategically and insightfully with retailers, not ditching them. Based on the survey findings, we see five key ways brands are adjusting their retail partnership strategies.
1. Developing a strategy for specialty stores
Specialty retailers can help brands reach a highly targeted audience by developing a personalized strategy. These retailers range from boutique jewelry stores and beach town surf shops to the merchandise available in fitness and yoga studios. Take SoulCycle for example. The company recently shared that their retail merchandise business is growing 20% to 30% annually. While the foot traffic may be less than a big box store, these specialty retailers have earned tremendous credibility and are getting relevant products in front of the right shoppers.
2. Empowering retail buyers with self-serve data and visual merchandising tools
Brands understand that their relationship with retailers must go beyond just supplying products. To remain competitive, brands are working to find innovative ways to help their partners make more informed purchases and ultimately sell more. This includes leveraging tools like visual merchandising to show how products work together, allowing retailers to plan out cohesive displays and collections. Further, NuORDER’s survey found that 46% of brands are sharing real-time sales data, offering insight into high performing products and sales trends over time, enabling retailers to make smarter purchases.
3. Incentivizing buyers with discounts, performance rewards and other benefits
In addition to data and visual merchandising tools, more than half of brands are further solidifying their retail relationship by offering discounts, rewards and incentives. This may include discounts on recurring orders, or free accessory merchandise for meeting sales goals. Not only does this cut costs for retailers, but customizing incentives also offers the opportunity for brands to work closely with their retail partners, furthering the relationship.
4. Adapting to small format and “pop-up” stores
If brands have learned anything about retail in the past year, it’sthat small format stores aren’t going away any time soon. Brands can leverage this trend by partnering with small format retailers and rolling out “pop-up” stores with limited inventory and a refreshed shopping experience. For example, Nordstrom launched Nordstrom Local boutique stores in select locations to meet this trend, which focuses on the experience, including personal stylists, bars, on-site tailors, manicures and a “buy online, pick up in-store” service. By partnering with Nordstrom Local, for instance, brands become associated with this experiential and personalized experience.
According to a recent study from Forrester, small-format stores (those with approximately 10,000 square feet or less) experienced an average revenue increase of 5% in 2016 over 2015, compared with the 4% increase that big-box stores saw. As brick-and-mortar stores continue to shrink in size, 35% of brands are planning to focus on merchandising to make better use of their remaining space in retailers’ physical stores, versus leaving the store entirely. Further, “pop-up” shops offer a sense of exclusivity for shoppers, who often leave a pop-up feeling like they discovered a cool new brand.
5. Investing in technology to serve as a liaison between the brand and retailer
To engage and transact more efficiently with retailers, brands are investing in B2B e-Commerce technology that serves as a liaison to their retail partners. The survey revealed 58% of all brand sales managers are planning to increase spend on technology for ordering tools, mobile and digital catalogs. These tools are enabling brands to provide insights that retailers wouldn’t otherwise have, including real-time data analytics, visual merchandising and streamlined ordering. More than three-quarters of brands’ sales managers say that using their current B2B e-Commerce platform has increased their new business and existing business by at least 20%, according to the survey. Other benefits of B2B commerce platforms include personalized buying experiences, like digital line sheets and catalogs, enabling brands to offer a customized buying experience for retailers.
All brands should recognize the importance of a diversified approach and collaborative relationship with retailers. The shifting retail landscape offers an opportunity for brands to broaden their approach and reach consumers in innovative ways — because retail isn’t dead, or even in an “apocalyptic” state, it’s just changing.
Heath Wells is the CEO and Co-Founder of NuORDER, a B2B eCommerce platform that is revolutionizing the wholesale industry. Prior to founding NuORDER in 2011, Wells created and launched a number of successful companies across publishing, creative and digital commerce. He witnessed first-hand a fashion wholesale model that was antiquated, and saw an opening to revolutionize the entire industry. Today, NuORDER helps 800+ brands & 375,000 retailers transact $6B in GMV annually. Wells’ passion, spirit for positive change and unrelenting drive have been key factors in NuORDER’s current success, while his natural tendency for big thinking continues to propel the company’s creative innovation and shape the industry.