As major brands increasingly turn to direct sales, they need to develop skills in retailing and product marketing. Since opening their own locations might be too risky, companies are now exploring alternatives that de-risk their retail ventures while also reaching out to potential clients without intermediaries.
Decreasing risk by renting floor space
The way established brands are now entering the retail industry is through Shop-in-Shops, which allow them to sell directly to customers without the commitment of managing an entire store. In this model, brands pay retailers to merchandise and organize their products within a dedicated space in their shops. This business model changes the way suppliers and wholesalers work together, as the pressure of absorbing inventory losses decreases since the stock is limited and is carefully selected.
Collaborating to win together
Although the idea of leasing spaces within a shop is not new, currently suppliers and distributors are more open to implement joint strategies in which the brands focus on the product while retailers take the decisions regarding inventory volume, display, promotion and sales transactions.This is a break from the traditional hierarchical model in which responsibilities were defined and clear from the start. The latest retail ventures from top brands have a more diffused structure, with fewer clear roles, and a bigger pressure on getting things done.
Licensing to sell
Aside from shop-in-shop, brands are also exploring retail through licensing. They basically rent the rights to make articles on their name in different product categories: makeup can be made with a particular business, shoes with another, and fashion with a third. This approach might be challenging since each licensor will have their own way of managing products, so it will require a lot of coordination. Aeropostale, Bebe, Juicy Couture, Nine West, and Sports Illustrated are some of the companies that participate in retail via licensing. The benefit of this model is that brands have the chance of reaching more consumers without having to invest in opening a location.
Making the most out of pop-up stores
Pop-up stores have thrived (or popped out) more than ever in recent years. The most successful ones open for short, determined periods of time hence reducing the pressure of holding and displaying stock. Pop-up shops have appeared in all kinds of spaces, including the lobbies of exclusive hotels in which there is a bigger chance that consumers will want to spend their money. Pop-ups shops have been set up even in private homes, in which homeowners host sales events that are vaguely reminiscent of the old-fashioned Tupperware parties.
There are now companies dedicated to create pop-up shops on demand, a service that helps brands to test potential locations for physical stores, improve their customer experience, and off-load risk.
Not everyone has to become a retailer
The common thread to all these alternatives is that brands are no longer pressured to become full-time retailers. Shop-in-shops, licensing, and pop-stores offer them channels in which they can sell directly their products without having to manage everything on their own. In order for retail to thrive, more alternative approaches to retailing are needed that do not rely just in opening and managing a physical location.