The retail industry is an ever-changing market and as a manufacturer you have to stay on top of what’s happening in your niche. The breakdown I’m giving you today of the landscape of the retail market is an ongoing conversation that I have in my Passion Pays series on The Style Weaver, because it’s so vital to stay on top of changes in the market that can affect your business.
Shifts in Mass Retailing
There are many sellers in the apparel market today and an ever-decreasing amount of mass retailers because of mergers, bankruptcies, and a changing retail market. The Internet has provided opportunities for manufacturers to have more control over their retail channels, while simultaneously allowing smaller retail operations to gain traction via social media and low overhead costs. Discounting has become a regular practice in retail as a way for manufacturers to sell aged merchandise and they are increasingly looking to flash sale sites and online discounters as the channel for executing this strategy.
Mass retailers are good for the market because they have the capital to service a variety of consumers, which in turn leads to a variety of manufacturers having a channel in which to sell their merchandise. When these channels are condensed, manufacturers are also forced to condense because there is too much repetition. The consumer generally weeds out those they don’t relate to by no longer frequenting those retailers.
Selling Directly to Consumers Online
Because of the internet, today’s manufacturers are starting their own retail operations online as a way to provide avid consumers a more direct channel to access their brand. This is a great opportunity for producers because it allows them to have a voice that can shape the consumers opinion and induce sales without relying on a retailer. Also, resources such as Etsy, Shopify, Amazon/ Fulfilled By Amazon, and Tradesy are elevating their capabilities to provide full support from sales to distribution for independent manufacturers to sell directly to consumers across the country. These are good starting points to develop a consumer base and to see if there is an audience that wants your product before pitching the items to larger retailers.
Discounting is on the Rise
Discounting has become commonplace in the retail market because of the rise of flash sale sites and the speed at which retailers are marking down underperforming items to quickly move the merchandise out of their inventory. The rate and size of the inventory that a retailer or manufacturer is willing to discount greatly depends on their business model. Off-price retailers take frequent markdowns because they are expected to turn their merchandise at very quick rates whereas luxury retailers expect it could take until the next season to get through a sizable amount of their inventory.
However, recently all tiers of retail are beginning to take more frequent discounts as a way to give the consumer a reason to buy in the challenging retail market. This can be a dangerous business model as once consumers expect frequent discounts, it will be very difficult to legitimize full price offerings. As a manufacturer, be aware of accounts that have recently increased the frequency of their discounts, as they will most likely be looking to vendors to cover the costs of these markdowns, which can become very expensive.
Consumers Exploring More Options
It’s important to be aware of the shifts in the industry, because many of the tried and true retail practices are being tested. Consumers are more informed and have more opportunities to discover apparel and accessories. Interestingly, consumers are even turning retailers and building their own followings on and offline. Keep in mind that true quality and a focused design perspective is not easily replicated. As a manufacturer it is vital to know your limits and to not agree to any terms related to discounting or margins that isn’t sustainable.
Staying informed will help you protect your business and be proactive about navigating today’s retail landscape. Have questions? What are some of the challenges you’re facing today? Share in the comments!