For the past few years, every article I have read about the retail industry indicates an e-commerce apocalypse that was prophesized in the late ‘90s. To me, this data and message are more reflective of big box stores, which have always tried to compete on price alone since the ‘70s. While the internet is here to stay, independent retailers should remain optimistic and think outside the box. There is a synergy between online brands and retail that has yet to be tapped much less reach its full potential.
Nearly 20 years after the dot com bubble, Google search and social media changed the landscape of consumerism forever. The youngest generation of Americans now entering the workforce grew up with smartphones and were raised with online purchasing at their finger-tips. In addition, the clothing industry is no longer controlled by corporations along with U.S. trade quotas in textiles. Any person can gain access to overseas manufacturing and with a few targeted Instagram ads, a brand can get off the ground faster than ever before.
This must spell the end of brick-and-mortar retail as we know it right? First off, the e-commerce market is now completely saturated much like the micro-brewing industry. While brick and mortar stores talk about overhead, e-commerce platforms are knee-deep in marketing and advertising budgets with a lot of time invested in digital strategy. Second, it’s easy to forget that humans are hyper-social creatures. When buying luxury goods, people (men in particular) need to see and touch a product. In addition, they need a salesperson to explain the justification in various price points before separating with their hard-earned dollars.
As a former retailer (and now custom clothier), I can say, there are so many activities in the business that do not directly contribute to the bottom line and take up considerable time. From buying, receiving, adding SKUs, tagging and merchandising – just getting the product on the shelf is a lift in itself. Further, several boutique brands at the trade shows make an amazing product but they don’t have a marketing budget and are truly dependent on the retailer to create brand recognition and customer loyalty. Retailers have the steak but rarely the time to create the sizzle to keep the floor traffic rolling. This includes content creation, marketing and the like.
The retailer is limited in their marketing bandwidth but that’s where e-commerce thrives. Building a brand through expertise with Google SEO and retargeting ads, online companies have the data to truly hone in on who their client is…and fast. They’re also more focused on selling a lifestyle and telling a story through photos and videos.
I’ve had e-commerce brands come to me and say “Robert, I’ve got this really great product but at my price point, it’s hard to get people to take that risk online.” Like retail, e-commerce is still dependent in its own way on referrals, whether they are through online reviews or in-person. E-commerce brands like this would love to get into stores but they face an uphill battle in two ways: 1. Retailers won’t let them in the door for fear that the customer will merely use the store as a “try on” then purchase directly from the e-commerce company. 2. Many online brands have priced themselves in such a way that moving to a wholesale model would require a hard adjustment in pricing which might not be feasible.
E-commerce is the sizzle but retail is the steak and the future of this industry has them working hand and hand. For online brands, the key is to establish trust with retailers that they won’t undercut them. This is done by creating a unique and separate product line or perhaps alternative colors of a given garment style. The online platform can show such items as “only available in stores” with a quick Google Map as a guide. E-commerce brands can also provide local sales data to prospective retailers as proof of success. For the retailers, this is a way to sell emerging brands that are making money without the race to the bottom margins that have become all too familiar in the industry.
An innovative company that is currently working on this strategy is Beardbrand. Under ten years old, it is now an eight-figure business that is selling in Target stores. They were one of the first brands I worked with from an introduction by Fred Derring of DLS Outfitters. With two separate product lines from its website to wholesale, this created a win-win situation where both parties benefited. As the online market becomes more saturated, smart e-commerce companies will pivot and seek to build long-term partnerships with retails. What seems like an unlikely marriage will actually be the best for both worlds and they don’t even know it yet.
Robert Ordway is the owner of Capitol Hill Clothiers. He is the former owner and founder of Rusted Oak, a menswear store in Indiana.