In a recent blog post, The Future Looks PUNY, I outlined that many of the success stories amidst today’s retail malaise have centered on the ideas of Premium, Unique, New and Young (PUNY). These niche concepts fall under a broader, overarching theme: in the words of Seth Godin, “Small is the New Big.”
Across the retail landscape, from food to fashion, we see examples of PUNY. Small craft brewers, in their aggregate, are taking considerable share from the mass mega-brands. NPD published news recently on the growth of micro-restaurant chains and their impact to the future of the restaurant business.
In outerwear, we see that smaller brands are taking chunks of share from the larger established brands. Consumers are still buying fleece and puffer jackets; they just want a “unique” logo on the front.
We could even argue that some of Adidas’ recent U.S. success was due to the fact that Adidas was in many ways a “new” and “small” brand in the U.S. In 2015, at the low point of their history, Adidas had only 4 percent share of the footwear market; since then, Adidas has nearly tripled its share.
In his book Microtrends, author Mark Penn explained that if 1 percent of the population does something, this equates to 3.3 million people and is therefore a trend. Chris Anderson posed in The Long Tail that the future of business is selling “less of more.”
All of this adds up to trouble for the mega-brands that try to be all things to all people. Large brands are clearly under threat from small upstart brands that capture the essence of PUNY. This raises the question, “Can big be small?”
My gut is yes, but big brands will have to make adjustments.
Brands and retailers need to think globally, but act locally. While the world is clearly flat today, brands must exploit the local nuances and differences in every market. By being hyper-aware of local needs, large brands can effectively exist.
Large brands must exploit the “markets of one” and offer many options for customization and personalization. Mega-brands must offer broad and varied assortments. Narrow assortments create sameness and boring products. Offering a program in 15 colors is not the solution.
Mega-brands must constantly be updating and changing assortments, even at the risk of killing off an item ahead of its time. Items that are terminated prematurely can always be brought back. Items that are run into the ground are dead a long time.
At the same time, mega-brands must move away from the proliferation of tiny collaborations with artists and celebrities. These collaborations are a major waste of resources that do little to drive sales or traffic. Rather, they merely provide self-gratification for marketing departments.
With the emphasis on PUNY, the concept of unrequited demand becomes even more important. Not having enough product to meet demand makes those products more unique.
All in all, the shift to PUNY and to “small” presents many challenges for mega-brands. The consumer is in more control today than ever before. How brands respond to this change will have great bearing on their future.