The change in ‘retailing’ models has passed another milestone (or rather, another off-ramp) this week with Crabtree & Evelyn deciding to no longer sell its own branded beauty, gift and homewares through its own branded physical retail stores in Australia. To use a double negative, it wasn’t unexpected, with the retail brand exiting physical retail in many other parts of the world.
For clarity, Crabtree & Evelyn will still sell lovely looking and smelling items under its brand. It just won’t use a store network to do it. It’ll use other retailers’ stores and online retailing.
Following the holiday season, we can expect to see many more retailers implement their plans to migrate sales from a physical own-store model to a blended distribution and online model. These retailers will sell their own brands to retailers who sell competing brands, and they’ll sell via their own online store and other online stores direct to shoppers. Think of major surf brands Ripcurl and Hurley selling boardies via CityBeach stores as well as their own websites and Surfstich online. It really is untenable for any retailer who is seeing a 3% decline in same-store sales (SSS) and a 2.5% increase in store rents and payroll costs, to run stores.
Shoppers still want your brands, just not as many items or as frequently. You’re no longer a growth brand that warrants its own store network.
Across the world, the own-brand retailers that have enough strength left in their balance sheet are looking to restructure and sell their brands through other multi-brand retailers, physical and online. Multi-brand retailers both physical and online, are looking to secure those brands. It’ll lead to higher sales going through fewer retail stores and online sites.
I first saw it walking City Beach stores in the US and was amazed to see empty Ripcurl and Billabong stores and buzzing and busy City Beach stores. The breadth of brands was more attractive to shoppers than a single brand store. Fast forward to today and we know one of the top five key attributes online shoppers look for is a breadth of choice when they shop.
So what does that mean for physical retail in 2019 and beyond?
Well, if you’re in a sector with lots of own-brand retailers and you’re doing a really good job of old-fashioned retailing — that’s to say you have great store layouts, well and consistently trained staff and good systems, plus a well delivered online offering with BOPIS (buy online pick-up in store) — then you’re in the box seat to grow.
For fashion, high-end giftware, cosmetics and, wait for it, department stores, your tide may have turned. However, the caveat is you have to have used your time and money in the past decade to have built a great omnichannel offering.
I hope 2019 does see the turn of the tide for well-run retailers, because the tide’s been out for a few years now.