Direct-to-consumer retail models have been growing in popularity, but even digitally native labels are taking their retail distribution beyond their own channels.
Wholesale—or selling through a multi-brand boutique, department store or chain—offers a host of benefits to brands regardless of how young or well-established they are. The value in wholesale is gaining a wider presence, which can support brand building and boost sales. A new report from Fairchild Media Group delves into these operational opportunities and how brands and retailers are collaborating to make the most of these partnerships.
Commercial real estate costs can add up. For labels big and small, wholesale lets them enter new markets and gain proximity to consumers without investing in their own doors. Brands can set up accounts with stores that match customers’ varied interests and lifestyles. For instance, this might mean boutiques in vacation destinations and even gyms. Brands are also thinking outside the traditional retail box by going for subscription alliances, which then introduce their products to new shoppers via curation and styling.
Customer acquisition can be an expensive proposition in the direct-to-consumer digital landscape. Aimee Carroll, president of Sparc Group’s business-to-business operations, estimates that brands are spending about 45 to 75 percent of their profits trying to woo consumers on social media. “Wholesale is so important because there are many more points of distribution,” Carroll said in the report. “We’re able to reach customers who would be very difficult for our own DTC channels to acquire.”
Brick-and-mortar availability is a major boost for brands that would otherwise only have digital DTC retail. While this channel took a hit during the pandemic, brands are sticking with—and even expanding—their physical wholesale relationships.
“Each wholesale partner of ours is carefully selected, and despite interruptions to in-store shopping, we stayed committed to our wholesalers,” said Cortney Ansel, senior vice president of sales at Rhone. “As shoppers return to shopping in-store more and more, we’re extremely pleased with our decision to remain steadfast in our partnerships, and in some instances even grow.”
Particularly during the pandemic, wholesale has helped support both vendors and retailers in adapting to changes in demand. In one example of a mutually beneficial partnership, Liverpool used the extra business from multi-brand retailers to fuel its expansion into new categories beyond denim. The brand provided its own support to retailers as they were reopening with vouchers for products, enabling them to put merchandise on the shelves as buying budgets were tight. In another flexibility move, after retailers downsized their orders during store closures, Faherty was able to reallocate product to its own e-commerce channels. Brands and retailers have also worked together to develop virtual experiences for clients, such as livestreamed sessions.
“It’s just not a seller-buyer relationship anymore,” said Holly Arnesen, executive vice president of Liverpool Los Angeles. “It’s a partnership.”
Part of this partnership also extends to areas such as exclusive merchandise, a practice employed by both department stores and off-price retailers. As merchants face greater competition, having product that is unique differentiates them in the market.
If companies are going wholesale for the first time, they should expect some upstream changes. “It’s a different model, from product development to managing the calendar, and then ultimately how you warehouse and actually ship the product out,” said Andrew Graham, wholesale director at Marine Layer. He added that it requires more mindfulness about not shifting deadlines or adjusting designs, since retailers are depending on products arriving a certain way.
Most brands are not putting all their eggs in the wholesale basket, and are instead using multi-brand retail accounts to supplement their sales in direct-operated channels. This approach enables labels to be discerning when choosing partners, since they are not reliant solely on wholesale accounts to drive revenue.
Cashmere brand Naadam‘s strategy is reaching consumers through numerous channels, reflecting the varied ways that people shop today. “If you want to build a brand that’s at the tip of everybody’s tongue, that’s in everybody’s mind, you kind of have to be everywhere all at once,” said Matt Scanlan, co-founder and CEO of Naadam.
Download the 2021 Wholesale Report to learn why labels are leveraging multi-brand placements and how these partnerships have developed during Covid-19. Click here to get your copy.