Like cassette tapes and hand phones, the traditional wholesale model of fashion industry seems to be out of date. The so-called wholesale is to sell products to department stores at a certain discount price, and then the department stores are responsible for the external sales.
As a fashion leader, retailers have become averse to the risk overlap brought about by discount cycles. Over the past five years, prada has been trying to rectify its wholesale business to maintain its high-end positioning, and has decided to gradually replace these reduced wholesale channel businesses with new online channel businesses. Small brands that used to rely on big shopping malls to convey information can no longer do business with them. At the same time, the rise of direct consumer oriented channels makes the wholesale model look like a thing of the past.
Prada derives 82% of its sales from direct retail channels, including more than 630 Direct stores and e-commerce businesses. However, it is a move that can not be ignored to publicly announce further reduction of wholesale distribution channels.
The wholesale model is indeed out of date, but it will never die out.
For more than a decade - at least since the 2008 financial crisis - retailers have been considering possible ways to refresh their stores through franchises, flash stores and social retailing. However, it is often the first time that the original price has been sold, and the discount is started earlier and earlier, and then the unsold goods are returned, which makes the seller very upset.
Retailers are beginning to ask brands and designers to launch exclusive capsule series more frequently, asking them to make more things so that they can continue to sell products to customers in a topical way. So that discount stores, charity stores and landfills are finally packed.
Vid-19, a new cognitive model of fashion and sustainability, has suddenly emerged.
Franck delpal, a French economics professor, says that in the past 30 years, the market share of independent multi brand retailers in France has fallen from about 40% to less than 10% today, and retailers in Italy have also been hit hard.
According to an in-depth report by Roland Berger and the Federation Francaise Du pret a porter feminin, the wholesale channel lost more than 50% of the women's wear market share between 1990 and 2015.
From 2011 to 2015, this trend was echoed around the world, with the share of women's clothing wholesale market falling from 42% to 30% in Italy, from 60% to 45% in China and from 34% to 27% in Japan, the report said. In the United States, the share of the wholesale market has stabilized at around 42%, while the share of online retailers has risen sharply.
Most industry observers agree that retailers must change their thinking and business models as soon as possible.
They believe that stores should put customers first; cooperate more actively and effectively with the brands they sell; rely on data rather than intuition when making decisions; and understand that "less is more.". In order to be successful, multi brand retailers must differentiate between brand and product planning, exclusive sales or experience, and products that are closer to the market and closer to the season. Customer oriented, not business oriented.
Ed Burstall, who has worked for luxury retailers Bergdorf Goodman, liberty London and Neiman Marcus, said: "the wholesale system is not in line with reality, consumers are constantly bombarded by social media and their attention is constantly shrinking. Social responsibility around equity, the earth's environment and sustainable development has now become the mainstream. You can't predict fashion trends six months from now. "
David Dubois, associate professor of marketing at INSEAD, agrees. He believes that stores need to give priority to sustainability, reduce periodicity and improve transparency, and brands should also consider local production, personalization and being close to seasons and consumers.
Brands should shift from "value chain" (channel) to "circular chain" (recyclable, sustainable materials). For stores and brands, what is needed is a "bottom-up" drive, not a "top-down" approach, and "a truly data centric Omni channel strategy combining online and offline," which most brands and retailers still have today But separate the two.
One of the biggest risks a store can take is to invest money in a brand, designer or specific collection, and then let them wait for customers to leave in the store storeroom.
Christopher Suarez, founder of London fashion brand SS ō ne, who has been working with matchsfashion.com to reuse retailers' excess inventory, believes that stores need to adopt a data-oriented, consumer oriented model.
"Retailers need to get better products and then let the data guide them, they can minimize the risk of the goods they buy, and the fashion director can act as a 'relationship builder' between the store and the brand, without having to pay attention to it from season to season," he said
Luxury goods giants such as Chanel, Dior, Gucci and Saint Laurent know exactly how to reduce the risk of retailers buying. Gachoucha Kretz, a marketing professor at HEC in Paris, said the well-known brands have learned to fill the space of stores and franchises with enduring iconic products that can continue and gain greater pricing power.
Nicholas Kirkwood's co-founder, Suarez, directly addressed the needs of large department stores such as Harrods and Selfridges, as well as other multi brand retailers, by betting on smaller brands to limit risk and help them grow. He said the focus needs to be on "less volume and better sales," allowing stores to give emerging brands "enough time and space to grow and show them a clear path to expand their influence in stores."
Both Selfridges and Le Bon March é in France have adopted the business model of combining wholesale and franchising, which can guide the brand by providing the overall data of department store consumers. At the same time, department stores don't have to worry too much about overstocking at the end of the season.
Earlier this year, Bernstein's Luca Solca also talked about the demise of the wholesale model, but he said wholesale still has a place in the luxury fashion ecosystem. Independent retailers with high reputation and multi brand will survive, but it will be a niche market,
Burstell agrees that retailers still have a lot of room to help them grow after they discover new brands. Unlike well-known brands, small brands or start-ups without financial support may be vulnerable to sustainable sales models. "This is where the wholesale model can flourish - by investing and promoting new, diverse products to consumers."
"Wholesale is very important because not all brands are suitable for retail. In Balmain, for example, luxury brands rely heavily on wholesale channels," Kretz said
JW Anderson is also a brand that relies on wholesale mode. Designer Jonathan Anderson still takes great pains to ensure that buyers can purchase goods normally under the dangerous situation of prohibiting international travel. "I'm not going to give up on our buyers," he said in an interview at the studio
At the same time, the wholesale model is still the main channel to enter such huge and dynamic markets as China, India and the Middle East. It is actually a good thing to have wholesalers at this time. You can understand the market demand more intuitively.
Selfs should be able to diversify the scope of their own products and purchase products in such a way as to diversify the scope of their own business, and at the same time, they should be able to maintain a diversified business model for their own customers.