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Tailoring Your Multi-Brand Apparel Strategy Sewing up the Competition

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Tailoring Your Multi-Brand Apparel Strategy Sewing up the Competition “UBIQUITY IS THE NEW EXCLUSIVITY.”1 CEO, THE KAPLAN THALER GROUP, LINDA KAPLAN THALER RETAILERS: TAKE NOTE. At a time when industry EBITDA has reached a six-year low (at 6.6 percent2), successful companies need to expand their brand strategy beyond traditional outlets to capture growth. Exclusivity, as we have traditionally known it, can kill your business. Many mid-market retailers have eschewed online marketplaces such as Amazon, ASOS, and NET-A-PORTER—but do so at their peril. A majority (94 percent) of retailers have an online presence, but only a fraction–less than one-fourth—have embraced multi-brand e-tailers.3 The lack of retailer enthusiasm is counterintuitive. In January 2016 alone, mono-brand sites averaged 600,000 unique monthly visitors, while leading multi-brand e-tailers averaged six times as many at 3.6 million unique monthly visitors.4 And that figure does not include Amazon. Many companies are still relying on a strong offline brand, but that brand often does not transfer proportionately online. It is an understatement to say most brands find it challenging to have a strong stand-alone-position on the web. Yet, these same retailers are losing market share to brands that have moved beyond a mono-brand strategy. To succeed in an increasingly digital future, retailers need to recognize that routes to market are changing. They must adapt their online distribution strategy to embrace the opportunities presented by multi-brand e-tailers. With brands like Nike already testing partnerships with Amazon,5 the industry shift is already gaining momentum. Retailers need to move beyond solo online approaches to truly capture digital advantage—and they need to do so quickly. 2 | TAILORING YOUR MULTI-BRAND APPAREL STRATEGY SEWING UP THE COMPETITION THE FACTS ARE HARD TO IGNORE: the UK apparel industry grew by one percent in 2016, while in-store sales shrank by three percent.6 And during that same period, e-commerce sales grew a robust 7.5 percent.7 Similar scenarios have played globally over the past several years. In the United States, the apparel industry grew by two percent in 2015, in-store sales shrank by two percent, and e-commerce sales grew 19 percent during the same period. Offline, there is a clear preference for mono-brands, however, online sales are driven by multi-brand retail with six times more traffic. The breadth and depth of product etailing platforms is something no individual apparel company can provide. The benefits of creating partnerships with powerhouse e-tailers abound: a growing and focused customer base, increased brand reach through high-traffic channels, and a strong international presence that translates to greater sales. 3 | TAILORING YOUR MULTI-BRAND APPAREL STRATEGY DIGITAL INSIDE AND OUT? NOT YET. SO WHY AREN’T MORE BRANDS EMBRACING MULTI-BRAND E-TAILING? Part of the problem lies in a brick-and-mortar heritage, with a distribution model unsuited to working with multiple third parties. Retailers’ “outsides” are digital (e.g., digital marketing, ecommerce, social media), but their “insides” (e.g., operations, organization) are decidedly analogue. Many retail companies are still run like traditional wholesale organizations. What does that mean? First, many brands forego using e-tailers because they fear losing control of the positioning of their offerings. Second, too many companies rely on the perceived strength of their brands and forego partnering outside their own organizations. And those that do join forces with e-tailers lack the capabilities necessary to effectively manage them, ultimately failing to capture the value inherent in working with third-party e-tailers like “shop-in-shops” and cross-channel online campaigns. In fact, nearly half of fashion brands fail to generate first-page “hits” on either traditional retail partners or pure-play e-tailers like NET-A-PORTER.8 In today’s digital environment, no retailer can go it alone. Linking digitally to strong online platforms is essential not just for success, but for survival. 4 | TAILORING YOUR MULTI-BRAND APPAREL STRATEGY LOSE MONO-BRANDING, NOT CONTROL WINNING WITH MULTI-BRAND E-TAILERS MEANS TAKING CONTROL of your shopping presence by controlling your online storefronts and actively managing stock flow from the wholesale channel. This includes developing a proactive strategy for selling on sites like Amazon, and participating in emerging platforms like Farfetch (a multi-brand marketplace of luxury goods) and 24 Sevres (a new multi-brand e-tailer from LVMH group, which launched in June 2017 and sells 150 labels including 20 of their own brands.)9 Dave Powers, president and CEO of Deckers, the umbrella company for brands like UGGs and Teva, noted that with more and more young consumers online, the company needs to beef up its Amazon presence, noting, “…it's important for us to show up with all of our brands in a positive way on that platform.”10 Winning also involves engaging on social media, something few brands do extensively: While 98 percent participate on at least one platform, only five percent are active on all four (Pinterest, Instagram, Snapchat, Facebook).11 Moreover, using these for one-way communication or through influencers only does not exploit the full potential of social media, which provides retailers with an opportunity to communicate directly with consumers. And increasingly, these channels are becoming shopping channels and marketplaces themselves. 5 | TAILORING YOUR MULTI-BRAND APPAREL STRATEGY THE LARGEST U.S. APPAREL SELLER IS AN ONLINE GIANT Retail giant Amazon has taken the lead as the largest apparel seller in the US. While Macy’s sales are expected to drop by 4% to $22 billion USD, Amazon has seen astonishing growth of 30%, resulting in an expected $28 billion USD sales.12 By investing in its online design and user experience, Amazon has wooed and won a portfolio of high-end designers and two international fashion weeks now carry the etailer’s name: Amazon India Fashion Week and Amazon Fashion Week Tokyo. 6 | TAILORING YOUR MULTI-BRAND APPAREL STRATEGY DRESSED FOR SUCCESS Brands that want to break out of a mono-brand mindset and gain the growth potential of multi-brand e-tailing need to put strategic partnerships with leading platforms in place. Logical first steps include: GAIN MORE CONTROL OF BRANDING AND PRICING: By participating in partner programs like the one offered by Zalando, one of Europe’s leading online multi-brand fashion and apparel e-tailers, brands can provide content, merchandising and promotions, and can link to Zalando to drive transparency into inventory levels.13 So, if a consumer orders a pair of sneakers that Zalando doesn’t have in its inventory, the order can be passed through to the manufacturer and fulfilled seamlessly by the brand. DEVELOP NEW ONLINE DISTRIBUTION SKILLS AND CAPABILITIES: To support relationships with third-party e-tailers, brands need to improve their skills in analytics, campaign management, and search optimization, among others. This involves clarifying roles within the business and reshaping them. The sales team that manages key accounts offline, should be closely connected with, yet distinct from, the team responsible for online—otherwise, they’ll underutilize the full potential of third-party online retailers. PUT IN PLACE NEW STOCK MANAGEMENT STRATEGIES: Traditionally, brands had complete control of stock. Now, with wholesalers and third-party e-tailers in the mix, stock can be sold at discounted prices, which can lead to degradation of brand perception. To mitigate the effect, brands need to more proactively manage partners, and offer terms that protect the integrity of their pricing and stock. 7 | TAILORING YOUR MULTI-BRAND APPAREL STRATEGY DIGITAL ADVANTAGE CONTINUES TO CONSTITUTE A GREATER PART OF ANY APPAREL RETAILER’S WINNING FORMULA. Retailers who act now to participate in major e-tailing platforms put themselves in a position to capitalize on where the industry is headed, rather than pondering where it went. 8 | TAILORING YOUR MULTI-BRAND APPAREL STRATEGY JJOINOIN TTHEHE CONCONVERSATIONERSATION @AccentureStrat @AccentureStrat wwwww.linkedin.com/company/accenture-strategyw.linkedin.com/company/accenture-strategy CONTACT THE AUTHORS CONMORITZTA HAGENMÜLLERCT THE AUTO RS Tmoritz.hagenmü[email protected] [email protected], Germany LosRICHARD Angeles, WOLFF California, USA [email protected] London, United Kingdom [email protected] Amsterdam, Netherlands FOOTNOTES 1 http://www.nytimes.com/2007/01/15/business/media/15everywhere.html E2 http://www.eulerhermes.com/economic-research/sector-risks/Global-Retail-Report/Pages/default.aspx C [email protected] Digital IQ Index, Activewear 2016 Atlanta,4 Digital IQ Index,Georgia, Activewear USA 2016 5 http://money.cnn.com/2017/06/29/technology/business/nike-amazon-shoes/index.html 6 https://www.drapersonline.com/news/uk-clothing-market-to-rebound-in-2017/7016153.article C 7 https://www.drapersonline.com/news/uk-clothing-market-to-rebound-in-2017/7016153.article [email protected] Digital IQ Index, Fashion 2015 Amsterdam,9 https://www.businessoffashion.com/articles/news-analysis/lvmh-confirms-launch-of-multiple-brand-website Netherlands 10 https://retail.emarketer.com/article/amazon-scales-up-its-ambitions-fashion-sales/5903a710 ebd4000a54864b45 11 Digital IQ T Index, Fashion 2015 [email protected] http://www.businessinsider.de/amazon-becomes-the-biggest-clothing-retailer-in-the-us-2016-10?r=US&IR=T Toronto,13 https://www.zalando.co.uk/partner-programme Canada 11 9| P| OTAILORINGRTRAIT OF YOUR A PRO MULTI-BRANDCUREMENT M APPARELASTER STRATEGY ABOUT ACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders.
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