Wholesale - a losing game? How brands are preparing for the new D2C strategy.
S.Oliver, Adidas, Nike want to do what Dior and Bottega Veneta have been doing for years. Direct to consumer - from the classic wholesale model to direct sales!
But why are more and more brands deciding on this strategy these days? Especially when you consider that many brands with their own stores have already taken this step. At the time, many retailers threatened to delist and were gleeful to see how difficult the brands found this step. The traditional retail structures with their multi-label department stores were not so easily pushed out of the playing field. Why a new attempt now?
Here some reasons. One, of course, is the reaction to the market and its growing online sales channels (+16% in Germany & +20% in the Netherlands). Digitalization makes it possible and the pandemic has only accelerated the online growth channel! The brands have a real experience advantage over the established multi-label retailers. In addition, the online shop promises the desired independence that has been missing in decentralized wholesale for many years. And today's marketplaces create an enormous reach that could never be achieved in offline shops in this way.
Moreover, many brands have realized one thing through the pandemic and the continuing staggering losses. Many wholesale addresses will no longer exist in the future!
The tectonic shift of the wholesale business.
Does this now mean the end of the wholesale business? No. D2C will also drive the re-evolution of the classic wholesale business. Responsibilities, Risks, and controls will be more carefully shared between the retailer and the brands - not a classic wholesale or concession model.
The retailers become marketplaces that inspire customers and guests with outreach, atmosphere, and emotion. The brands take over the entire merchandise management at the POS. Of course, this also means more risk for the brands, but also more control and the use of the missing retail know-how.
Digitalization is advancing.
An optimal D2C strategy, with the new responsibilities in merchandise control for the brands and the changed consumer behavior, also means more responsibility and effort. Due to the enormous availability of products through various channels for the consumer, the demand for dynamic and consumer-driven merchandise management is increasing. Classic systems such as 1-to-1 or static stock levels have not been able to keep up with consumer buying behavior for a long time. Due to the high degree of availability, the classic product life cycles have also changed. Jumpers in winter and T-shirts in summer - these are old-fashioned concepts and nowadays product life cycles are no longer easily assigned to these patterns. Likewise, with increased availability, products have grown in width and depth in recent years, which drastically increases the effort required for so many pieces. Traditional manual analysis by humans has long been unable to keep up with dynamic consumer behavior.
Turn hours into seconds.
This is where dynamic and intelligent solutions come into play that can autonomously analyze millions of information, decision-making processes, and external factors, to make automatic decisions for replenishment, next best offers, or price reductions. By analyzing each product and all options (style, color, size), in relation to the POS and all external information, the solution is able to make accurate decisions for further steps in the value chain. For example, the re-production of fast movers in a growing life cycle or a forecast for the ideal production quantity within the collection planning.
For a successful D2C strategy, intelligent and dynamic merchandise management based on buying behavior is a must and gives the necessary control and speed to provide the optimal availability of the right products for all channels & POS.