In this excerpt from our latest eBook, we cover why apparel brands and manufacturers are increasingly seeking direct routes to market, especially when they want to recover or protect their brand value and image.
In their respective roles as buyer and seller, retailer and manufacturer relationships are in a constant state of evolution, with most acknowledging that in recent years, retailers have had the control. The consolidation of power into a relatively small number of large national grocery and mass discount retail chains has undercut brands’ negotiating leverage but some brands are now realising that they have another option: to stand alone, utilising the Direct to Consumer model which has become popular with some high-profile names. In the online world, the dominance of Amazon provides a new challenge for both brands and retailers alike, with its ability to influence the brands that shoppers are most likely to see (and consequently purchase from).
Aside from Amazon, the internet continues to change the way consumers buy products, and therefore how brands are required to sell them. This is true whether the change comes in what they sell, how they sell it, or the price point they sell it at. This trend is most apparent on the high street, with 2018 being the worst year since the Millennium for store closures in the UK. Department stores are the worst affected, with House of Fraser announcing the closure of 31 stores, Debenhams’ woes last year and the closure of BHS in 2016. M&S has been particularly badly affected following the announcement that it'll be closing over 100 stores by 2022 as the group struggles to improve its clothing business performance in recent years, with ASOS now reporting a higher market cap.
As most of the years over the last decade, 2018 will prove to be a pivotal year for retailers looking to stay ahead, and as usual, Amazon is at the steering wheel.
Over the last few years, Amazon has made it a point to do two things:
Get established brands to buy in as vendors and/or third- party sellers
Launch more of their own private labels
The first goal lends Amazon credibility and could potentially open doors for even more apparel brands or manufacturers looking to make the most of this opportunity and continue to grow as the retail industry changes.
Nike is a notable giant who has started selling on the platform, but there are still others in apparel such as Rolex, Vans, Patagonia, The North Face, and Ralph Lauren that have not.
Selling Direct-to-Consumer is nothing new for apparel brands, and it isn’t going to necessarily be a profit margin miracle, but brand value and protection has always been a priority to brands within this industry and rogue resellers, on marketplaces especially, are a cause for concern.
Read more on how brands protect their image and value online by selling directly to consumers in our latest eBook.