How multi-brand retailers offer irreplaceable value
While enthusiasm about business models such as D2C (Direct-To-Consumer) is easy to find, there are numerous ways that multi-brand retailers can continue to retain a vital role in the market. They are able to provide irreplaceable value to the consumer, and the brands they come to buy.
Some ways that multi-brand retailers offer irreplaceable value:
- Provide exposure to a ready market – People will always want to go out shopping. When they do, they will see brands in the store. MBRs therefore provide a ready, willing, and captive audience of potential customers who are more likely to buy and less likely to return or ‘bracket’ purchases.
- Handle the service burden – Brands don’t need to handle the service burden when MBRs do this for them. MBRs can also offer omnichannel shopping, and offer all the convenience of online, mail-order, Buy Online Pickup In Store (BOPIS) or in-store shopping.
- Multi-purchase power – Brands who offer D2C miss out on the power of multi-purchase or ‘complementary’ shopping, and the value provided by expert merchandising. This enables additional sales to be captured by grouping dissimilar items and different brands that are frequently purchased together, because of the customer intention.
- Advertising has a broader appeal – While a brand can leverage ultra-specific advertising that targets their best customers, they miss out on selling to their other customers. MBRs can execute broader marketing campaigns that capitalize on bigger trends – Brands cannot do this alone.
- No brand loyalty for most customers – The super-fans might love a particular brand, but most consumers do not care. Is it Adidas, Puma, or Nike? For them it doesn’t matter. They’ll look around the store at several shoes (and many other products) and choose whichever is most attractive or on promotion at the time.
DTC versus multi-brand retailers
Firstly, it’s important to recognize that D2C isn’t an island – it’s a peninsula which is firmly attached to the rise of omnichannel sales, generally.
Consumers will continue to purchase in whatever way is most convenient for them, and sometimes this might by via a brand’s own app or website, and sometimes it isn’t.
D2C is just one of the ways that consumers want to buy right now, and this will continue to be the case until something more convenient comes along.
Recognizing that D2C is just part of the broader omnichannel trend, it’s vital that brands retain the value that is provided by retailers, and use this value by working more closely together in the future.
Through collaboration, brands and retailers can absorb and deal with the challenges of the other just as ‘one hand washes the other’. Physical stores make an essential part of the ‘omnichannel’ formula – this is why Digital Native Vertical Brands (DNVBs) have expanded to physical stores from wholly online D2C models.
Retailers therefore can still provide a part of the ‘D2C model’ by potentially shipping to the customer directly from their inventory, or allowing pickup in store, for example.
Multi-brand retailers are more than the sum of their parts
When brands and retailers work together, they can generate strong synergies. While it’s great that brands can collect more detailed customer insights, it is a waste to not use these in physical stores too.
Taking a deep understanding of the customer and applying it to the MBR’s physical store and website, brands can potentially sell even more of their products via those outlets, for example.
And this works in the other direction too, as the retailer gets a different perspective on the consumer – for example when they help them try out an item and get consistently similar qualitative feedback, or when they process returns and see patterns there.
These qualitative insights can add a different dimension to our understanding of the customer, by sensing the customers that aren’t captured – the walk-aways.
D2C initiatives are largely blind to this area, as they are focused on the ‘lowest-hanging fruit’; their superfans, loyal customers, and the high-margin items that sell best.
For these synergies to manifest, brands and retailers need to work in close partnership – and this requires trust and transparency.
In essence, they must act like a vertical company, even when they aren’t, and work in total alignment – instead of naively pursuing their own, quixotic goals.