Welcome to Executive Action Items, a Glossy+ member-exclusive series driven by monthly focus groups with subject matter experts. The bi-weekly series will offer immediately actionable takeaways for workers navigating the rapidly evolving beauty and fashion industries.
To kick off the series, Glossy compiled a group of retail-focused executives to share their thoughts on the state and future of physical retail. As they compared notes and shared solutions to current challenges, the conversation landed on four main topics. Below is a recap of the final two: how to strike the right wholesale-retail-online distribution balance and how to provide an in-store experience that works to your company’s, and your customers’, advantage.
Click here for highlights from their discussions on how to choose the right store location, and how to win and keep valuable store associates. And check back in two weeks for additional recommendations from a new, marketing-focused executive focus group.
Focus group members:
Wendy Kunkle, president and owner of Kemo Sabe, the 35-year-old high-end Western wear maker and retailer with six experiential stores in Aspen, Vail, Jackson Hole, Park City, Round Top and Whitefish.
Amish Tolia, co-founder and CEO of Leap, the 6-year-old retail-as-a-service company powering 106 stores across 12 markets for 53 brands, from Godiva to Ring Concierge. Leap’s top markets include New York, L.A., Chicago and Miami.
Angela Dotson, svp of client and new market development at Fashionphile, the 26-year-old luxury handbag reseller with two showrooms, four stores and counting, and selling salons at 10 Neiman Marcus stores.
Melissa Gonzalez, principal at the 54-year-old global architecture and design firm MG2. Melissa leads MG2 Advisory, experiential design, brand development and thought leadership for the global firm, which has offices in Seattle, Irvine, Washington, D.C. and Shanghai.
Establish a strategic wholesale-retail-online distribution balance.
Tolia: “It all starts and ends with the shopper, at the end of the day, and [depends on] what the individual experience needs to be to sell your product or service to that individual. When you look at the confection category, the route to market and what channels you play in are very different than that of when you’re selling in the home category. The [sales channel] proportion of where your volume comes from really is dependent on what category you’re in. The bulk of our brands are in the apparel space. For them, I do think [the split] is fairly proportionate: You do have to be [split] a third, a third and a third across [distribution channels]. It’s an amazing strategy for building brand awareness, and it’s generally highly profitable — but it does put an incredible amount of pressure on your general supply chain. But that gets relieved over time as you scale up. If you have a third of your business in the wholesale channel, that positions your brand really well. You can use some of the cash flow from that channel to fund your direct-to-consumer online strategy. As you build that [DTC business] and drive deeper penetration in particular markets to build awareness and customer acquisition and then repeat [shoppers] thereafter, the resulting repeat [shopper base] and loyalty are really important. To be able to extract that, you need a strong brick-and-mortar strategy. I love that phasing [approach]: In the apparel world, you start wholesale, you go online, and you follow it up with a nice brick-and-mortar omnichannel strategy to drive repeat [conversions] and retention and long-term customer value. That’s generally what I like to see. Now, some brands in apparel have very limited SKUs. They sell 30 styles. They’ve got a very minimal amount of breadth, but they’ve got a ton of depth, and they sell just online, and they make that online channel work. It works fairly well because they’ve figured out how to grow it and take very little inventory risk because their inventory doesn’t age.”
Kunkle: “We do not do things the normal way. Not everybody starts from wholesale — we went the opposite way. We started in brick-and-mortar. We had three great brick and mortars. Then our [brand] partners that were trying to give us what we needed never, ever succeeded. So we had to go into our own wholesale business — but we don’t even wholesale to anybody but ourselves. We had to start making our own things, because, one, we could never get the product in time. And, two, it was never what I wanted — it always showed up wrong. We have to cater to people. We’ve been in business with our customers for 35 years, and they need new, different things that they don’t see next door. Plus, [other retailers] knock us off.”
Gonzalez: “Wholesale is [ramping up], for sure. You’re seeing the end of the narrative of, ‘We don’t do that, we’re only direct-to-consumer.’ You need all of those [sales channel] components because you’re leveraging different opportunities. And they all complement each other. In wholesale [channels], you’re gonna leverage foot traffic marketing and cross-selling to people who [also] want other brands. But then it’s definitely much more of a brand-owned experience when it’s your store — you can have your brand moments. And, of course, you can’t survive without digital. The only company that is somehow managing to get away with it is Trader Joe’s.”
Take a customized approach to your in-store experience.
Gonzalez: “It depends on the brand, and it depends on the opportunity in this touch point. We have a footwear brand client, and the most important thing that needs to happen in their stores is that somebody puts their foot in that shoe for the first time — because of what it unlocks. … They’d never get that same type of conversion if they didn’t have a physical environment. The question [when considering the store experience] is: ‘What can this location be the nucleus of?’ If it is community, then how are you facilitating that community? … With the younger generations — Gen Z and Gen Alpa — community is going to be a big thing. But what they want out of the community experience is important to know. … Brands need to think, ‘If we’re gonna bring something additive to this environment, what are we gonna do in a meaningful way?’ And there’s not a blanket answer for everybody. When we worked with Nordstrom Local, that was the exploration, right? Nordstrom has Nordstrom Rack — and when you go to a Rack, you want a deal. When you go to a Nordstrom department store, you want higher-end designers. When you go to a Nordstrom Local, you want high touch around fulfillment. So, brands really have to do the homework.”
Kunkle: “We’re an experience store. We have bars in every one of our stores. It’s wild. It’s loud. There are lines out the door. … We have our “black card holders.” They’re our top customers. We give them this access card, and in every one of our stores, they drink for free. And when there’s a line outside the store, they walk right in the door. They get free shipping. We send them gifts every season. They’re our best friends, on top of it. And we throw events. We have event spaces. They have their birthday parties and wedding events with us. … It is so personal that … how could they not come back? … I think it’s important that retail spaces figure that out, because walking into a store and having someone say, ‘Hi,’ is not going to cut it anymore. You better be on your A-game.”
Dotson: “There’s nothing like that in-person relationship. The customer does come back more frequently when it is in person. People want to go places where somebody knows them, where the staff is not only knowledgeable but they’re also fun. People are looking for great, positive, inspiring places to go to. And for those of us who can create those spaces and create the connection with people, we should. At the end of the day, for all the money people are spending now, they really want access and they really want a connection, and they want to feel good about what they’re doing and where they’re doing it.”
Tolia: “There’s this looming threat of increased tariffs. So, there are the questions of, ‘What does that really mean, in terms of the consumer landscape?’ ‘Are consumers willing to shop at the same velocity that they have in the last 12-18 months?’ Because, at the end of the day, if these tariffs come through, every brand and retailer under the sun will have to pass those additional costs through to the shopper. But, does the shopper have more wage dollars in their pocket relative to the increased consumer pricing? We don’t know yet. That’s why it’s going to be really important to have stores, right? Because if you can build authentic relationships — if you can be in customers’ lives and at their weddings — they’re going to have a much higher likelihood of shopping once with you, shopping three times with you, shopping 10 times with you over the next couple of years. Price merely becomes an object, particularly for the premium and the luxury brands.”