Nordstrom has been gaining an edge on fellow department stores by befriending emerging direct-to-consumer brands — despite having to sacrifice margins and bend longstanding distribution schedules.
As a result, it’s become the first wholesale partner of buzzy players including Everlane, Reformation and Thinx.
It was only a matter of time before other major retailers started moving in on the DTC space.
At the opening of its Hudson Yards location this month, Neiman Marcus launched Senreve, a direct-to-consumer handbag brand started in 2016. Co-founder Coral Chung said Senreve is the first direct-to-consumer brand Neiman Marcus has sold. It will eventually roll out to more stores and to neimanmarcus.com.
Senreve first launched with a wholesale partner, Nordstrom, early last year — it’s now selling on the retailer’s website and in select stores. The brand, which does not have stores of its own, chose to also link with Neiman Marcus to have a physical presence in its biggest market, New York. (Nordstrom is set to open its first women’s store in NYC later this year.)
“It’s challenging to be a small startup, where we’re flexible and highly focused on digital, and work with a large company that’s more traditional and more focused on their brick-and-mortar infrastructure,” said Chung. “The difference in culture and philosophy is a pretty fundamental challenge. Both sides have to make adjustments.”
The key hits:
- Distribution schedule: Senreve doesn’t do seasonal collections, though Neiman Marcus is used to operating on a regimented calendar, said Chung. (They’re used to going to market, meeting with brands, previewing product and placing orders,” she said. “We fall outside of that process.”) The retailer is making exceptions to accommodate the brand.
- Control of brand messaging: Chung said Senreve can weigh in on store displays and how the new product is marketed, and can even host in-store events and activations, like offering customization. Events are a must for the brand, she said, as they’re proven sales engines, plus they’re good for community building and customer acquisition.
- Dedicated staff: As for now, Senreve is not directing NYC-based shoppers to the Hudson Yards store. “We want to first make sure the associates are trained properly on the brand, the story, the product,” said Chung. “We’re providing them with collateral and tools, and we’ve got some product knowledge sessions with them in the works.”
- First-hand data: While Senreve sees less customer data from stores than through its direct channels, Chung said that after years of selling DTC, retailers’ data is not critical. What is helpful is the feedback that comes from associates about what styles are resonating and why.
Though most sales are through its own e-commerce site, Chung said the brand’s sales grew 300 percent in 2018, its first year with Nordstrom. She said, rather than push volume, the Neiman Marcus partnership is more to align the brand with a leader in luxury and access a new customer base.
“Brands have to balance the potential number of new customers that an opportunity like [selling through a department store] can afford with the percent of their business they are comfortable coming from a third-party channel,” said Richie Siegal, founder of retail adviser firm Loose Threads. “From the department store perspective, DTC brands help bring in newness, especially around core products, and put their operation and real estate in front of new audiences. It’s just a question of how much is too much.”
Apple Card’s ramifications for retail
Among other news, Apple announced on Monday the Apple Card, a credit card that’s an extension of Apple Pay. There are some implications for retail, according to industry experts.
“We’ve moved from cash is king to just a swipe of a credit card, to now the swipe of a phone or just looking at your phone. It’s just become so easy to spend money, and that’s why credit card bills and balances are the highest they have ever been. For retail, the biggest impacts will be speedier checkouts and more small retailers updating their point-of-sale systems to accept Apple Pay. Especially in the fashion and beauty space, where it’s a lot of impulse buying and trend buying, and where things are happening more minute-to-minute than in other industries, it’s important to be an early adopter.” — Jill Gonzalez, analyst at WalletHub
“It’s going to help to bolster Apple Pay as a payment method, in-store but also online; many merchants have not yet integrated this into their e-commerce sites. Every Apple iPhone user has an Apple wallet, but not everybody has it populated with a credit card or is aware of the convenience that can be had when using this instead of plastic. You can now survive entirely with your phone. And soon, retail stores will be run entirely by smartphone apps. Overall, it gives us a clue to Apple’s aspirations — I’m convinced their long-term plan is to disrupt the credit card industry, which is ripe for disruption; it has the brand cache and the access to a user base to create a credit card alternative that really sticks. It’s the beginning of the end for traditional credit card networks.” — Stephan Schambach, founder of NewStore
5 questions with Ghizlan Guenez, founder and CEO of The Modist
Luxury modest e-commerce site The Modist announced Monday that it’s secured an undisclosed investment from Farfetch and Nicola Bulgari. The round marks the latest investment by Farfetch, which acquired Stadium Goods in December for $250 million. According to The Modist (which was already a direct retailer on the Farfetch platform), it’s the global leader in the luxury modest retail space, featuring more than 180 designer brands and shipping to more than 120 countries. The modest clothing market is set to grow to $484 billion by 2019.
What are your priorities for your new investment dollars?
Funding will go into further expansion to new markets, deeper tech investment as our platform and personalization advancements develop, and a continued increase in brand awareness.
How reliant is the brand on digital advertising for customer acquisition?
It’s part of our suite for acquiring customers — brand marketing, PR and digital marketing all go hand-in-hand. We have a very strong and growing community of women with shared values who follow, support and engage with us, and that’s essential to our strategy as we grow and expand our reach.
To what extent has your success in the Middle East fueled your growth?
The Middle East is an important and core market of ours and an exciting one given the nascency of e-commerce in the region, but the U.S. is just as large a market for us and is showing exciting growth. Where we are strategic for brands is in being the platform that opens up the global modest market, which is a market that’s entirely underserved; it takes depth knowledge and understanding of modesty to speak to the customer in a relevant way, and there are no players doing that in the luxury space.
So how are you connecting brands to modest shoppers?
We show brands in a new light that renders them more relevant and exciting to modest dressers globally while also respecting their DNA and integrity. We are also a very strong content platform through our online magazine, The Mod, and we feature the brands in our fashion-forward editorials and styling inspiration. We also feature stories of women tackling topics relevant to The Modist’s core values of diversity, inclusivity and empowered choice.
What are your goals for the next five years?
We want to continue to be the preeminent destination for modest dressers globally seeking a fashion-forward curation. We will continue to grow our brand list while staying curated, and we will also continue to develop our own brand, Layeur. As a platform, we also are focused on technology and using innovation to serve our customers better, and make their experience more personalized, meaningful and exciting.
How Rhone is building customer communities on Facebook and Reddit
Call it the Glossier effect. Brands are working harder than ever to build steadfast communities, Here’s how 5-year-old men’s activewear brand Rhone is tackling the challenge, according to CMO Adam Bridegan.
“It’s amazing what can happen on the marketing side when you actually listen to the community and have the customers involved. We’re building communities on Reddit and Facebook. We have an exclusive Facebook group that anyone can join who’s a customer or interested in becoming a customer. This is an area where we interact closely with our audience and the community. We’ll ask them questions about referral programs, about loyalty, what they like and what they’ve seen. We’ve gotten some amazing ideas that way.
It is very different on Reddit. We talk to the audience through influencers. One of the important parts of Reddit is you have to have a really high score as far as interacting with the community. With a brand, there’s distrust. Reddit shies away from brands; nobody there wants to feel like they’re being sold something by a brand. It’s more of an authentic place. So we work with a lot of influencers who are active in the Reddit community; they’re power users, and they love the brand. We verse them on the product, and they’re in there responding to questions for us. There’s an authenticity that comes from them responding to questions and posting things about Rhone, rather than us doing it ourselves.”
What we’ve covered this week
How Tmall is shaping the male beauty market
As Tmall continues to be the go-to destination for beauty and personal-care brands embarking on international expansion, China’s male beauty customer has increasingly come into focus.
Beyond ‘shrink it and pink it’: Brands are rethinking their approach to women’s sneakers
“There are a lot of men’s silhouettes that are unavailable to women, so they’ve been left out of the conversation.”
Marijuana company Beboe launches a beauty brand
The cannabis beauty game is continuing to heat up.