Retail consolidation the continuing saga
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Retail Consolidation The Continuing Saga!. Retail Consolidation. Cause / Effect - What’s driving retail consolidation? The Retail Landscape ( Next 5 Yrs.) - Survival Of The Coolest? Life Expectancy Of Labels Vs. Brands - Will the consumer figure this out?

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Retail consolidation the continuing saga l.jpg
Retail ConsolidationThe Continuing Saga!


Retail consolidation l.jpg
Retail Consolidation

  • Cause / Effect

    - What’s driving retail consolidation?

  • The Retail Landscape ( Next 5 Yrs.)

    - Survival Of The Coolest?

  • Life Expectancy Of Labels Vs. Brands

    - Will the consumer figure this out?

  • Small / Mid Sized Apparel Manufacturers

    - Where do they fit?

  • “The Vanishing Middle”

    - Goodbye Generic!

  • “Generational Evolution of Apparel”

    - Youth Meets Boomer!


Cause effect what s driving retail consolidation l.jpg
Cause / Effect -What’s driving retail consolidation?

  • The Taste Level Of America -“Forever Changed”

    - Thank You…Mickey Drexler and the Gap

  • Once Upon A Time…

    • Higher price points equated to better product

    • Lower price points meant poor quality / “no taste”

  • Now Its:“Good, Better, Best” Vs. “Cheap or Expensive”

    • The Consumer doesn’t want cheap

    • They want “Good, Better, Best” at a discount

  • Added Value Isn’t A Bonus…

    - It is a requirement!


  • What s different l.jpg
    What’s Different?

    • Apparel is declining in importance to the consumer

    • Lifestyle is driving apparel decisions

    • Apparel must adapt and provide relevance

    • Provide what they want…Not what they need

    • “Good taste is expected” …”Good deal is desired”


    The changing consumer l.jpg
    The Changing Consumer

    • “Live Young, Work Young, Look Old

      - The Aging Boomer will not go quietly…Dressing Younger is Cool

    • The 40 yr old of 1981

      vs.

      The 40 yr old of 2006

      • Single Biggest change…

      • Father / Son and Mother / Daughter all dress alike

    • Price is the ultimate vehicle of change

      • Price / Value equation much more important vs. past

    • The “25-35 Year Old” Consumer Has A Different Perspective

      • Based on exposure to all outside influences of Media

      • Grew up with different “Tools” (Instant Access)


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    The “Generational” Shiftof Apparel For Consumers

    • Effect of “Younger vs. Older”

      - Clash of lifestyle apparel choices

    • “Everyone looks good in a “Suit and Tie”

      - Casualization of America = Men with no clue

    • “No one buys an outfit to go out on Saturday Night”

      - Your Lifestyle dictates what you wear

    • “Households with children under 18 dramatically alter

      what parents wear”

      • Inherent awareness of what’s cool / what’s not


    Changes in the game today l.jpg
    Changes In The Game Today

    • Technology

      - “Warp Speed” visibility to brand awareness - Good & Bad

    • Old Adage:Better Product = Better Taste Level = Better Distribution

      - Throw it out the window

      - New School: Cool product at lower price points in broader distributional channels

    • Apparel Spending Grew In 2005 (+4% [2005] NPD)

      • Mens Stronger Than Womens

      • Lifestyle Segment Driven

      • Price Factor: Important more than ever

  • New Consumer Profile Emerging

    • Non “Brand / Channel” specific

    • Buy what they want / where they want


  • The retail landscape next five years l.jpg
    The Retail Landscape -Next Five Years

    • The Dept. Store Format Stabilizes And Prospers

      - Federated / Macy’s streamlines and further separates from mid/tier and discount to create “Reason To Exist”

    • Brand Direct Retail Over-Expansion

      “Rush To Direct Retail”

      • Survival Of The Fittest = Weeding Out

      • “One Dimensional Brand Retail” Platform Fails

  • Outlet Store Malls Re-Focus

    • Good, Better, Best Brands = Better Product Offering

    • Less “Outlet Private Label”

  • “Neighborhood” Niche Specialty Stores Emerge

    • Non Mall Based “Cool” Stores: “Lifestyle Center”

    • Destination Locations - I.E. Abbot Kinney


  • Slide9 l.jpg

    • “Uncool” Stores Cease To Exist

      • Mass / Midtier Customer Once Identifiable > Becomes Invisible

      • Everyone Wears Cool Product

    • Big Box Players “Modernize” Assortments

      • Generic Product = Gone

      • Lifestyle Focus

      • Picture Multiple “Target” Formats

    • “Transformational” Brands Impact Retail Formats

      • Think J.C. Penney / Sephora

    • The Mall Reinvents Itself

      • “Plastic,” “Food Court,” “Non-Traffic Driven” Retail Space

      • Picture “Farmers Market Of Apparel” (Mixed Category / Real Life Experience )


    Cool stores l.jpg
    Cool Stores

    • Costco

    • Home Depot

    • Victoria’s Secret

    • Target

    • Whole Foods

    • American Eagle

    • Best Buy

    • Pac Sun

    • Abercrombie & Fitch

    “Common Thread”

    • Lifestyle Focused

    • Clear Point Of View

    • Category Dominant

    • Modern / Relevant Business Model

    • “Speed To Market”


    Retailers in transition l.jpg
    “Retailers In Transition”

    • Federated / Macy’s : Big Upside

      - Macy’s West: Prototype Future Better Department Store

    • J.C. Penney:Big Opportunity

      - “Transformational Brands” (Sephora) Drive The Business

    • K-Mart: Big Question

      - Create Reason To Exist

    • Walmart:Big Challenge

      - Modernize Apparel Assortment And Add Brands


    Definition of brand vs label l.jpg
    Definition Of Brand vs. Label

    • “Versions”: according to Webster

      • A name given to a product or service

      • A type of product manufactured by a company under a particular name

      • The name or trademark of a fashion company


    My version l.jpg
    My Version

    • Labels Have Recognition • Brands Have Loyalty

    • Labels Get Your Attention • Brands Get Your Heart

    • Labels Serve A Purpose • Brands Serve A Consumer

    • Labels Offer Value • Brands Offer Value - Added

    • Labels Trust Consumers • Brands Consumers Trust

    • Labels Are For Now • Brands Are Forever


    Life expectancy of labels vs brands l.jpg
    Life Expectancy OfLabels Vs. Brands

    • 3 Types of “Labels”

      • Direct Retail Private Label

      • Generic Vendor Label

      • Niche Specific / Category Expert Label

    • Direct Retail Private Label

      • Continued Evolution Of Superior Price Value Equation

      • Future Upside in Better Design And Quality Execution / Investment

      • Specialty Retail Dominates Execution Vs. Department. Store / Midtier


    Slide15 l.jpg

    • “Generic Vendor” Label

      • “Vulnerable To Extinction”

      • Price Driven

      • “No Reason To Exist”

    • “Niche Specific / Category Expert” Label

      • Future Is Bright

      • Creating Expertise In Category

      • Flexible Sourcing / Design Capabilities


    Slide16 l.jpg

  • Vertical Retailer

    • 100% in Control

    • Direct Access to consumer

    • Best price / value equation

    • Fastest “Trend to Market Provider”

    • Sales Comps: “True Barometer of Success”


  • Slide17 l.jpg

    • Traditional Manufacturer

      • Reliance on retail distribution

      • “Middleman to Consumer

      • “Limited” control

        - Pricing, Point of Sale, Positioning

      • “Wholesale Sales” growth

        (vs. Retail Sales Success )

  • Licensing

    • “3rd Party” Control

      - Licensor to licensee to retailer

    • Management of diverse licensee cultures: “One Voice”

    • “Direct correlation of success

      - Degree of brand promise kept

    • “Brand Extension” - revenue growth

    • “Difficult” control

      - Wide variations: “Best to None”


  • Life of a brand l.jpg
    Life Of A Brand

    • 7 Stages Of Development

      • “Emerging”

      • “Cool”

      • “Aspirational”

      • “Accessible”

      • “Mainstream”

      • “Declining”

      • “Gone”

  • Direct correlation to sales volume & stage of development

  • The hotter the brand gets - The younger the consumer that embraces it.

  • Define brand strategy before stage 4 ( “Accessible” )


  • Brands today l.jpg
    Brands Today

    • Adults “Dress Younger” - “Less Serious”

      - Subtract 10 years of age from your dated consumer profile

    • “Being Cool” vs. “Dressing Cool” 2 Different Things

      - Cool Products exist at all distribution points vs. 5 years ago

    • Remaining “Separation Factor” of cool: “Brands”

      • “Tribe Differentiator”

      • “Lifestyle Statement”

  • Price / Value Equation: New Dynamic

    • More choices to spend money on

    • Apparel facing new competition


  • The vanishing middle l.jpg
    The Vanishing Middle

    • “The Modern History Of Apparel”

      • 3 Parts:

        • Luxury / Premium

        • Generic / Mainstream

        • Mass / Commodity

    • “Educated Consumers Changing The Game”

      • Better Fashion, Better Quality, Cheaper Price

      • “Polarization” Of Retail Landscape

      • Direct Brand Retail Replacing The Middle

      • Generic Product Rapidly Vacating Middle Tier

      • Mass Getting “More Sophisticated” On A Daily Basis


    Slide21 l.jpg

    • The Term “Moderate Department Store Is An Oxymoron

      • Squeezed From Both Ends (Luxury / Premium and Big Box / Mass)

    • Growing Trend:

      • Luxury / Premium Fashion Mass / Commodity Prices

    • Generic Product:

      • Forces Consumer to search for lowest common denominator price point


    The lifecycle of the small midsize apparel company l.jpg
    The Lifecycle Of The Small /Midsize Apparel Company

    • “State Of The Union”

      • Highly Competitive, Price Driven, Lack Of Predictable Future / Long Term Status

      • Forced To Compete With Large Public Apparel Firms ( Chargebacks, Allowances, Discounts )

      • Increasing Margin Pressure

      • 100% Of Existence Held In the “Hands Of Retail Distribution Or Wholesale Brand”


    Requirement for survival l.jpg
    Requirement For Survival”

    • Qualifications

      • Strategic Plan

      • Specific goals / objectives

      • Proper due diligence

      • “Realistic diagnosis of the patient”

      • Time frame - you can live with

      • Financial support to execute

  • Tools

    • Sub-Branding

    • New product launches

    • Multi-channel distribution strategy

    • Category extensions

    • Trade Advertising

    • “Exclusive” brand extensions


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