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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
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
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
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
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)
the generational shift of apparel for consumers
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
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
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
“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
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
“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
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
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
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
“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
3 Types Of Brands
        • Vertical Retailer
        • Traditional Manufacturer
        • Licensing
  • 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
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
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
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
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
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
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
“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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