Reposted from MR Magazine, May 8, 2019
There’s no doubt that the American consumer is changing, especially in menswear. Baby boomers are headed toward retirement while Millennials have become the largest part of the workforce. In addition, technology has disrupted an industry that has long been stagnant, from garment design to point-of-sale. While some independent menswear retailers think it’s now a good time to sell or retire, I see many opportunities to rethink retail and expand one’s footprint in a new way.
Margins
It was the most frequently used word I heard during my time as owner of Rusted Oak, a (now defunct) menswear retailer in Northwest Indiana. Every shop is looking for ways to either cut costs or increase margins. In a world of buying in bulk, cost averaging and race-to-the-bottom retailing, independent stores should reexamine (but not eliminate) the old ways of doing business because the days of “stack it high, watch it fly” are gone.
Private Labeling
This is easier for the bigger retailers but in this age of low minimums, the little guys should seek out opportunities to do their own thing. Companies like Target have teamed up with Champion to create C9 and I find their workout gear to be excellent. Other retailers are looking for an exclusive line. Barbour has a line made just for Macy’s and Costco has one-offs with both Levi’s and Orvis, to name just a few. While name brands keep customers coming through the door, exclusive product keeps retailer margins intact. No doubt, this is a modern win-win strategy.
Independent retailers are already spending money marketing their own stores; it seems only logical to have one’s own product lines as well. While at Informa’s Mrket show a few years ago, I met with a company that did private labeling. With a small minimum of 144 pieces across four garment types, I was able to do 4x my cost and price it slightly below some of the name brands of similar quality.
Digital Marketing
E-mail strategy seems to be a challenge for bigger stores as their approach is a one-size-fits-all shot in the dark with near zero personalization. I’ve been shopping at one store for over a decade and have never bought pants from them. But low and behold, they’re always telling me about their new pants or sales on the old ones.
During my time in the political campaign world, it was all about microtargeting voters. While a person may have an opinion on a slew of issues, the trick is honing in on the top three that drive them to the polls. What is your call to action? A small retailer that does a good job of managing SKUs through their Point of Sale will have untold access to filter and sort customers, to market with direct mail, emails and invitations to special events. Also, using holidays or major sporting events to create competitions or drawings for prizes is a good way to increase engagement and get your customers to forward your marketing to others.
Online Brands
For consumers, the big selling point for online brands is that they’ve essentially eliminated the middle man. By going straight to the consumer, they’re able to offer a high-quality product at a lower price. Some brick and mortar suppliers see these direct sellers as the enemy, a rival with an overhead advantage. Yet there are online brands that sell quality merchandise and are looking for a home to display their product. While there’s always the fear that an online brand will ultimately back door the local retailer, this is where new thinking is required. If an online brand can create an exclusive line for brick and mortar retailers, host collateral and other content online (“available only in stores”) and drive customers to the store, this can build a long-term partnership. This allows the retailer to benefit from the years of learning curve online that brands have put into digital marketing and search engine optimization (SEO). Other opportunities might be where the online brand gives the store (on consignment) an entire collection but no back-end inventory. From here, the store can enter in selling online and take a cut of every transaction without dealing with actual product.
Luxury Goods and Relationship Building
It was mentioned to me by a lobbyist here in DC that Amazon was not penetrating much in the luxury market. Apparently, there’s still something to be said for being able to see, touch, taste and smell things. It’s how we’ve lived for thousands of years and the idea that the internet, much less free shipping, could cannibalize retail entirely is nonsense.
I like to ask other men, despite their years of loyalty to a brand, when was the last time one of their sales reps sent them a thank card or personal note? The reality is that value is relative. A $1000 suit seems expensive at first, until it’s placed between a $100 and $10,000 suit. There are many content creators out there and some have large followings because they’ve established trust through consistency of message and display of knowledge. This is what has allowed folks like Sven Raphael Schneider from The Gentleman’s Gazette to sell luxury items online through his blog. He is, however, the exception, not the rule. The better menswear industry is one that will long be governed by brick and mortar. History teaches us that men have always belonged to tribes with a loose framework for codes of conduct but a strong element of trust. Men go to independent stores because, at the end of the day, they want answers that are fast and dependable from people they know, like and trust. This is well described in Dick Hite’s 2016 book ‘The Art of Developing Loyal Clients’. Quality equals price and price equals quality. With a firm handshake, a man can see the convictions of another. As the digital age seems to engulf us, looking at new avenues to learn and grow is important but maintaining real relationships with customers and leveraging them to develop the next generation is still the best way to build a business for the long haul.