Direct-to-consumer retail models are increasingly popular, but even digital-native labels are taking their retail distribution beyond their own channels.
Wholesale – or selling through a multi-brand boutique, department store, or chain – offers a multitude of benefits to brands, whether young or established. The value in wholesale is gaining a wider presence, which can support brand building and boost sales. A new report from Fairchild Media Group looks at these operational opportunities and how brands and retailers are working together to make the most of these partnerships.
The costs of commercial real estate can add up. For labels large and small, wholesaling allows them to enter new markets and get closer to consumers without investing in their own doors. Brands can create accounts with stores that match the varied interests and lifestyles of customers. For example, it could mean shopping at vacation destinations and even gyms. Brands are also breaking out of the traditional retail framework by switching to subscription-based wedding rings, which then introduce their products to new buyers through curation and style.
Customer acquisition can be an expensive proposition in the direct-to-consumer digital landscape. Aimee Carroll, president of business-to-business operations for Sparc Group, estimates that brands spend around 45-75% of their profits trying to entice consumers on social media. âWholesale is so important because there are a lot more distribution points,â Carroll said in the report. âWe are able to reach customers that would be very difficult to acquire for our own DTC channels. “
The availability of brick and mortar is a major boost for brands that would otherwise only have DTC digital retail. While this chain was hit during the pandemic, brands are sticking to their physical wholesale relationships, if not expanding them.
âEach of our wholesale partners is carefully selected, and despite in-store purchasing interruptions, we have remained committed to our wholesalers,â said Cortney Ansel, senior vice president of sales at RhÃ´ne. âAs buyers increasingly return to shop in-store, we are extremely pleased with our decision to stay true to our partnerships and, in some cases, even grow. “
Particularly during the pandemic, wholesaling has helped to help sellers and retailers adjust to changes in demand. In an example of a mutually beneficial partnership, Liverpool used the additional business of multi-brand retailers to fuel its expansion into new categories beyond denim. The brand provided its own support to retailers when they reopened with product vouchers, allowing them to put merchandise on the shelves as purchasing budgets were tight. In another move for flexibility, after retailers reduced their orders during store closings, Faherty was able to reallocate products to its own e-commerce channels. Brands and retailers have also worked together to develop virtual experiences for customers, such as live sessions.
“It’s just not a buy-sell relationship anymore,” said Holly Arnesen, executive vice president of Liverpool Los Angeles. âIt’s a partnership.
Part of this partnership also extends to areas such as exclusive merchandise, a practice employed by both department stores and low-cost retailers. As traders face increased competition, having a unique product sets them apart in the market.
If companies are going wholesale for the first time, they should expect changes upstream. âIt’s a different model, from product development, to schedule management, and then ultimately how you actually store and ship the product,â said Andrew Graham, director of wholesale at Marine Layer. He added that more care needs to be taken not to shift deadlines or adjust designs as retailers depend on products that arrive in a certain way.
Most brands don’t put all of their eggs in the wholesaler cart and instead use multi-brand retail accounts to supplement their sales in the directly operated channels. This approach allows labels to use good judgment in choosing their partners, as they don’t rely solely on wholesale accounts to generate revenue.
The Naadam cashmere brand strategy reaches consumers through many channels, reflecting the different ways people shop today. âIf you want to create a brand that is on everyone’s tip of the tongue, it’s on everyone’s mind, you kind of have to be everywhere at the same time,â said Matt Scanlan, co. -Founder and CEO of Naadam.
Download the 2021 Wholesale Report to find out why labels are leveraging multi-brand placements and how these partnerships developed during Covid-19. Click on here to get your copy.