The Evolving Relationship Between Brands and Retailers

We’ve said it time and time again: the retail landscape is changing. While big box and department stores are contracting, big Internet retailers are exerting greater influence over retail. This has raised a lot of concern about how brands and retailers will conduct business beyond this shift and what this means for the future of wholesale. Is this “retail apocalypse” as detrimental as media would have us believe?

As a result of retail’s digital transformation and a decrease in physical retail space, it would be easy to believe that brands might distance themselves from retail partners. However, according to a survey we conducted with 400 U.S. wholesale brands, we have learned this is not the case. Brands recognize the ongoing importance of retail to their business and will continue to invest in retail partnerships. Rather than walking away from big box and department stores, they’re focused on doing more with less space.

Below are three ways brands are adapting to compete in the quickly changing retail environment:

1. Brands are diversifying their mix of retail partners

With department store business is declining, there are less doors and less shop floor space for brands. Brands are responding to this by thinking of new ways to maintain and grow their business, and new channels that are in growth trends to sell into. According to our survey, 32% of brands are deciding to focus more on new business models, including subscription services such as Stitch Fix and Trunk Club, personal shopping and daily deals as a way to generate awareness among consumers. Additionally, 22% of brands reported that partnering with specialty stores has become a key strategy, and 20% are focusing more on Internet retailers.

 

2. Brands are selling wider and deeper into existing accounts

Despite the reduction in square footage, retailers are still hugely important to brands. According to our survey,  34% of brands say their primary strategy for achieving 2018 revenue targets is selling wider and deeper into existing accounts. While brands are diversifying their distribution channels, they are not giving up on big box and department stores. Brands plan to use personalized merchandized presentations as a way sell deeper into their existing accounts, and showcase products as “collections” rather than “units”.

 

3. Brands are supporting retailers with more incentives, tools and data

While incentives and discounts are important, they are not enough to help retailers drive sell through with customers. Brands need to provide comprehensive support to their retail partners. According to our survey, 54% of brands plan to incentivize retailers with discounts, performance rewards and other benefits, while 48% plan to provide better tools for discovering product and placing orders, and 46% plan to give retailers visibility to real-time data and sales trends.

To learn more about how the relationship between brands and retailers is evolving following this shift, check out our survey findings here.