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quarantine definition

New Rules of Quarantined Economics

6

New rules of Quarantined Economics – Opportunities amid crisis.

As the world has quarantined itself with the emergence of Covid-19 or coronavirus as a global pandemic.

Quarantine definition states “a state, period, or place of isolation in which people or animals that have arrived from elsewhere or been exposed to the infectious or contagious disease are placed.”

The impact of Covid-19 is being felt across industries and sectors. No country seems to be immune to this coronavirus.

Few statistics of its impact..(as I pen this article)

– Over 300,000 affected and over 11,000 causalities.

– Lockdown in major business hubs of the world.

– Cancellation of all the major global business events.

– Curfew imposed in major cities.

– Air travel has come to a complete halt affecting travel retail.

– Shock waves in the financial markets across the globe (Nasdaq, dow jones, Sensex, etc)

– The hospitality sector is worst hit with major cancellations etc

– Entertainment sector (family entertainment units, movie theatres, fine dining options) & the list goes on.

The Retail sector is also not immune to covid-19 either.

Retailers have responded to the COVID-19 pandemic by shuttering their doors. In the last few days, a number of major retailers and brands announced their temporary closures in the U.S., and also in our Middle East region major shopping centers are now closed for a period of two weeks.

Governments across the world and various financial institutions are providing stimulus to safeguard their economies.

learn more about the impact of covid-19 on retail, read here.

New rules of Quarantined Economics – Opportunity amid Adversity

With so much negativity in Media, let me narrate a few examples from retail & brands which are proving beneficial for the industry.

 Beating the Covid-19 with creative marketing – For the quarantined economy.

The automotive industry has been one of the first to adapt, shifting its offering from showroom to social media.

In China, Mercedes Benz ran a campaign on the WeChat app that let their customers see a 360-degree interior view of its GLB SUV.

Nike has been posting at-home workout videos on TikTok, replacing weights with water bottles. Fitness apps, that offer home workout routines, have also reportedly seen an upsurge of downloads.

Finding the CSR purpose: Defeating covid-19.

Meanwhile, in the UK, beauty brand Lush made reference personal hygiene vigilance with their recent hand-washing campaign. Store posters – which encouraged customers to come inside to wash their hands for free. A perfect example of showing “You Care” and gather some traction in difficult times.

Diageo (the liquor giant) is pledging more than eight million bottles of hand sanitizer, by donating up to two million liters of alcohol to manufacturing partners, to help protect frontline healthcare workers in the fight against COVID-19.

In a bid to protect small and medium-sized beauty businesses such as salons and perfume shops from folding under the economic impact of the crisis, L’Oréal group has said it will defer payments due from its distribution networks.

In Switzerland, fragrance maker Firmenich has adapted its production to donate 20 tons of disinfectant solution to the Geneva University Hospital (HUG), and medical and emergency services.

New rules of Quarantined Economics- Reallocate human resources to different areas

Instead of immediate cost-cutting measures, one thing most retail companies can do and should do is to reallocate their manpower i.e. post mall closures to boost their eCommerce deliveries.

(Note- I am glad to state that the MAF group has already allocated their staffs from leisure division to their hypermarket division.)

New rules of Quarantined Economics- Pivoting to eCommerce & Social commerce.

One of the major malls in the Middle East announced its plans of taking the entire mall offerings i.e. all the tenant’s brands to their online eCommerce platform. This is a welcome move in the current scenario.

Lin Qingxuan (a Chinese cosmetics retailer) was forced to close 40% of its stores during the crisis, including all its locations in Wuhan.

Yet, the company redeployed its 100+ beauty advisors from those stores to become online influencers who leveraged digital tools, such as WeChat, to engage customers virtually and drive online sales.

As a result, its sales in Wuhan achieved a 200% growth compared to the prior year’s sales.

The majority of Perfume & cosmetics manufacturers in the Middle East region pivoted their product range by immediately responding to the rising demand for hygiene products like Sanitizers and tissues and masks.

corona virus

New rules of Quarantined Economics – Focus on reskilling or upskilling.

The majority of retailers will push for e-learning modules for training their employees and sales personnel as this downturn time can be utilized for imparting training online.

Online learning platforms like Udemy, unacademy, etc will see an upsurge in their enrollments.

Learn how Tjmaxx is fighting retail apocalypse, click here.

New rules of Quarantined Economics – How Brands can maintain engagement with customers

Content is king: Create interesting, shareable content that will appeal to customers and build brand recall. Check out the example of Nissan in the Middle East region asking people to stay indoors and safe.

 

YouTube video

 

Be active on social media. Engage with consumers directly.

 

Case study: Burberry AI-enabled experiential app.

Burberry has launched a new Augmented Reality (AR) shopping tool through Google Search technology.

The AR tool allows consumers to experience Burberry products embedded in the environment around them, enhancing their research and shopping experience online.

Watch the video here

 

YouTube video

 

I hope my readers would learn to see the opportunities even in the downturns. In case any of my retail fraternity members need my or help, feel free to reach out to me on riteshmohan@yahoo.com

About the author:

Ritesh Mohan is a passionate retail professional with over 22 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management and Franchising & Business Management. He believes in empowering business owners with his wisdom & experience of around two decades in the industry.

category management for dummies

A Beginner’s guide to Category management- Why is it so crucial?

2

A Beginner’s guide to Category management.

 

Category management, the term arises from hypermarket or modern trade retail management practices.

It signifies the importance assigned to a particular category from the Profit & loss point of view. It brings the feeling of collaboration amongst the buyers and vendors.

Collaboration with vendors in terms of exchange of information, sharing of data and joint business building.

The focus of all supplier negotiations is the effect on the turnover of the category as a whole, not just the sales of individual products.

Suppliers are expected, indeed in many cases mandated, to only suggest new product introductions, a new planogram or promotional activity if it is expected to have a beneficial effect on the turnover or profit of the total category and be beneficial to the shoppers of that category.

Category management is a retail management tool in developing a category as a profit center.

What is the category?

benefits of category management

Firstly let’s understand what is a category, a category is essentially any group of similar items that the company wishes to buy under a single deal. The management part is about applying procurement methodologies to ensure the firm maximizes savings.

The central driver behind category management is to simplify demand and take a bigger contract to the market. The greater the scale, the lower the unit price.

Let me explain using an easy category management example:

If you are a store chain having 10 stores and each store buys sanitizers (nowadays hot selling item), from different vendors; Imagine the time spent by individual stores in negotiating, etc. There is a higher probability of non-uniformity in the purchase prices as well.

To streamline the procurement process, the companies approach the vendor with their centralized purchase order to ensure purchase prices are locked at the beginning of the year for that category or items at a group level which results in uniformity in purchase prices.

The savings for the above example of sanitizers are clear. If we extrapolate this case to more important business activities, such as industrial products or technology, the savings available to organizations are huge.

This is category management.

The process of clustering and centralizing similar goods into bigger contracts which are easier to administer and lowers prices.

Learn how covid-19 is impacting the retail sector, read here.

What is Category Management?

what is category management

 

As explained in the previous examples, companies especially, large hypermarkets, chain stores, ensure that they are procuring goods in their categories at the lowest cost and hence they can provide a Value proposition to their customers, who buy from these hypermarkets on their price deals promise.

 

How does one implement the Category management process in their organizations?

By following these steps, one can implement category management in procurement.

  • Identify category items or opportunity drivers:

Identify items that you would like to control based on historical sales and its impact on your bottom-line i.e. % contribution of that category on your net sales.

  • Formalizing Category strategy

Consolidating internal needs and external capability, buyers must determine which sourcing methods will best position the company in the market.

  • Develop RFQs (request for quotations) forms and screen out the suppliers.
  • Work out evaluation parameters or vendor checklist
  • Invite online RFQs or bidding from the suppliers.
  • Negotiate and firm up your contract

Once bids have been received, the company has an opportunity to further shape the offering to add more value. This is a key step where a category manager can contribute to the process, through mobilizing knowledge of the business and identifying.

  • Vendor onboarding process management.

Once the vendor is selected and contract signed it is the category manager’s responsibility to conduct vendor onboarding so that the supply chain processes are adhered to by the vendor including QC (quality checks and audits).

 

What are the Benefits of Category Management?

  1. Centralizing Spend Data (helps in managing OTB)
  2. Opportunities for Cost Savings
  3. Better Vendor Risk Management
  4. Better cash flow planning and credit limits.

Any business benefits a lot from adopting category management as one of its best practices in procurement.

An organization can tap into opportunities to manage demand, have better cash flow management, and enforce greater compliance of standards from suppliers.

Category management can break or make a retail chain store.

Customer or a shopper has to be the central component of category management strategy.

Put yourself into the customer’s shoes and ask the following questions before formalizing your strategy.

  • How does the shopper shop?
  • When do they make their purchase decisions?
  • Why do they make their purchase decisions?
  • What factors influence or motivate their decision?
  • Who decides to purchase?
  • When & Where is the purchase decision made?
  • How much is bought / would they buy more if incentivized?
  • What else did / would they buy? (your opportunity for cross-selling or bundling)
  • How did they feel about the purchase experience?

Learn the art of bundling, read here.

How to do category planning by breaking it into components of category management?

The most practical way is to divide your store into zoning

Zoning i.e. which section gets more traffic ( I am taking an example of beauty & cosmetics store) and how they need to categorize their zoning & develop growth strategies.

  • Fragrances
  • Skincare
  • Cosmetic
  • Gifting section
  • Make me look gorgeous ( experiential zone)
  • Buy me NOW (promo section)
Category Strategic impact on store P&L Group category
Fragrances traffic building Destination
destination image building
creating excitement
Transactional building.
Skincare traffic building Routine / convenience
destination image building
Promoting wellness skincare regime
Transactional building.
Cosmetics traffic building through unique brands Destination/ convenience
destination image building
Promoting fashionable and vanity quotient
Transactional building.
Giftings builds image Seasonal
transactional building
Experiential zone Brand turf protecting Destination & convenience
drives traffic
drives customer engagement
develops and builds customers loyalty
drives social media user-generated content.
Promo section Traffic builder Routine
transactional building tool
(always some deals to grab – Tjmaxx uses this concept)

 

Learn how TJ Max is defying all recessionary pressures, click here.

I hope my article on category management and its importance will help Brand managers and key account managers to develop their categories more profitable. I shall write more about category management for the benefit of my readers who are handling supermarkets and modern trade.

If any of my readers want to reach out to me then please feel free to write to me on riteshmohan@yahoo.com

 

References: grocer.com.uk, whatis.com, Retail management by Prof Piyush Sinha, shelfstock.ie

 

About the Author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. Ritesh has been instrumental in the growth of some of the regional brands as well in the Middle East region. He specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

coronavirus impact on economies

What does Covid-19 means for Retail? Ways to fight it.

9

Learn how to manage the impact of Covid-19 or coronavirus on your retail business.

 

COVID-19, the coronavirus has affected more than 80,000 people, spreads across the world in a very short span of time.

Wherever you go or travel, only one topic that people are discussing is covid-19 or coronavirus.

The first impact of coronavirus or Covid-19 will be on consumer-facing companies.

Retail & hospitality are some of those sectors.

It includes everyone from retailers to restaurant operators, luxury-goods companies and cinema chains.

How does it impact the retail sector and other economies?

Today we all know that China is the world’s manufacturing hub; China produces and the world consumes.

One such sector is Clothing or cloth manufacturing.

As per the World Trade Statistical Review, in 2018 – China exported $118.5 billion (£91.1 billion) of textiles and $157.8 billion (£121.5 billion) of clothing, making it the world’s biggest exporter of these categories.

China is a major producer of cotton, fabrics, and silk, and its factories churn out everything from coats to swimsuits for fashion brands, from H&M and Next to higher-end designers such as Tory Burch.

Covid-19 will hit various sectors:

  • Supply Chain crisis across sectors who are dependent on China as a major source of raw material or finished goods supplies.
  • Delayed replenishment of running or moving merchandise due to out of stock situations– Most of the companies operate on 2-3 months buffer stocks and once their buffer stocks are over then replenishment would be a challenge.
  • The automobile sector as most parts is being produced in China.
  • Tourism and Aviation sector – as countries impose travel bans and restrictions, this sector will see the most challenging times.
  • Fashion Retail – Challenging times lie with Autumn-winter collections as most of the spring-summer collections would be en-route already.

With continued uncertainty around the Coronavirus and no signs of its spread slowing down, it seems highly likely that Chinese factories will remain closed & this will impact stock availability throughout the world.

 

Luxury goods sales to see a decline 

Chinese are the number one buyers of luxury fashion goods and are also amongst the largest travelers (nationality wise) in the world.

The outbreak has posed a major problem for brands like Burberry and other luxury fashion brands.

Learn how luxury brands are disrupting accounting practices, click here.

Ways to manage Covid-19 and learn from it?

Spread your risk: Find and develop other manufacturing hubs other than China. Brands Like H&M and Zara are less immune to coronavirus since they have a diverse supply base in North Africa and Turkey.

Explore new markets and Online sales: Retailers should give a push to their online sales efforts in order to cope up their declining sales due to this epidemic

Growth in online sales, especially in food delivery apps, predicted.

The rise in Media consumption: Brands advertising their services through mass advertising, online advertising will see a good response as the viewership increase is predicted as more people are confined indoors.

So it is a good time to advertise in the media.

Retailers and brands have a significant opportunity to offer gamification of retailing on mobile and drive traffic and sales.

Case study: Lush cosmetics.

Cosmetics chain Lush is opening its doors for passersby to walk in and wash their hands for free as government advice flags better basic hygiene as a way to help halt the spread of coronavirus.

They are encouraging customers to use their soaps in stores or in the malls to wash their hands. Those taking advantage of its sinks will be given soap to use and are under no obligation to buy anything.

Conclusion:

We all can fight with coronavirus or covid-19 only with POSITIVITY.

Observe personal hygiene.

Watch how China is sanitizing their cities:

 

YouTube video

 

References: Business Insider, Guardian, Forbes, CNN, Business of Fashion, WHO, world economic forum.

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management and Franchising & Business Management. He believes in empowering business owners with his wisdom & experience of around two decades in the industry.

what is recommerce

Excess Inventory Problems? The answer is Recommerce

4

Inventory Issues- Recommerce is the way forward.

 

Recommerce — “resale commerce” — is the process of selling used products or excess inventory to companies or consumers.

A couple of weeks back, I was not aware of this term nor its business model until one of my LinkedIn connection Patricia vekich Waldron wrote a post on Recommerce that caught my attention and made me curious to learn more about the concept and understand how brands are utilizing this model of Recommerce to their advantages.

I strongly believe in acquiring new knowledge, learning and sharing with my friends through my blog articles. So this article would help retailpreneurs with the new business model.

 

What is Recommerce?

As per Wikipedia,  Recommerce or reverse commerce, refers to the process of selling previously owned, new or used products, mainly electronic devices or media such as books, through physical or online distribution channels to companies or consumers willing to repair, if necessary, and reuse, recycle or resell them afterward.

Important statistics

Resale or Recommerce is already worth $24B and it’s expected to grow to $51B in just five years.

33% of Millennials and Gen Z expect to shop resale in 2019—and that figure is increasing 40% year over year.

 

Recommerce model – Not new for Indian Kitchens or culinary practices.

Recommerce model is being practiced for centuries in Indian kitchens… How?

Do you recall your mom or wife using leftover curries or vegetable dishes from previous night dinner and turning them into delicious parathas, new mixed vegetable stuffed idlis or even dosa’s stuffing.

Or even using them in a dish called Khichdi (vegetables mixed with lentils and rice).

Recommerce or recycling model has been used for centuries and it’s now it has been taken to the next level by digital & tech-savvy companies. We have been buying refurbished cars, mobiles, laptops TVs, etc for years now.

The same model is now taken to the apparel industry wherein sustainability is a big issue.

 

Learn more about sustainability in fashion, click here.

 

Basic steps for Recommerce model:

The process includes–

  • Collect the obsolete and undesired products from the users and companies, and returned goods from e-commerce portals.  (Products may or may not contain any defects)
  • Sort them
  • Repair them
  • Repack them
  • Make sure that these products work properly
  • Sell them on Reverse Marketplaces or to the companies directly.

 

Driving consumption through re-use

For instance, instead of buying a new mobile every few years and just tossing the old one in a drawer, people are increasingly buying and selling these second-hand phones.

Counterpoint Research reports,  “the global market for refurbished smartphones grew 13% y/y in 2017, reaching close to 140 million units. This was in contrast with the global new smartphone market that grew a scant 3% last year…

Apple has also started selling its refurbished used cellphones at lower prices to expand its user base in developing or underdeveloped economies.

Watch the video here

YouTube video

 

Recommerce in Fashion- Giving luxury products a new lease of life

Returning unwanted items and receiving points or discount vouchers for your next purchase is nothing new.

H&M has already organized such an initiative with its Garment Collection Program. After the success of the campaign in 2013, the brand introduced the possibility of returning clothes permanently. In return, H&M offered a discount card for 15% off the next in-store purchase.

Farfetch created a platform that allows you to donate old designer bags. In exchange, the company offers credit to fund the next purchase on their website.

 

Nordstrom has announced its latest creative projects initiative, See You Tomorrow, a new recommerce experience launched on January 31, 2020.

Powered by technology and logistics startup company Yerdle, “See You Tomorrow” offers customers both an online resale site and an in-store shopping experience in the New York flagship store.

The resale shop will feature a thoughtfully edited, authenticated assortment of pre-loved apparel and accessories from highly coveted brands.

Watch video here

YouTube video

 

Merchandise will include women’s apparel, women’s shoes, handbags, men’s apparel, accessories, shoes, children’s clothing and a limited selection of jewelry and watches.

 

Learn about Rent a Runway business model, click here.

 

Shopping second-hand is certainly not a new concept.

Consumers are also increasingly keen to reduce their own consumption and to help combat the negative impact on the environment.

This has led many retailers to enter the ‘Recommerce’ market (sometimes referred to as ‘resale’ or ‘reverse commerce’), which refers to the buying and selling of pre-owned goods.

There have been examples from the Middle Eastern retailer who are emphasizing sustainability in their campaigns and new collections hence Recommerce is here to stay for long.

Watch the video here

YouTube video

 

Case study: Yerdle

Yerdle, founded in 2012, is a white-label business that operates resale for brands.

It handles the logistics, including pricing, for resale platforms that live on brands’ e-commerce sites. (Someone shopping for a secondhand sweater from her favorite brand will have the experience of buying directly from that brand, rather than Yerdle.)

Yerdle business model is based on philosophy,

 “Brands adds more authenticity to resale and are trusted by consumers [while resale] gives the luxury brands another revenue stream.”

Experts in reverse logistics.

Inventory management can pose particular problems since brands often aren’t redirecting new pieces from warehouses.

Yerdle operates on a revenue-share model with rates dependent on how much of the backend process it handles.

The data advantage

Unlike many online consignors, Yerdle isn’t a retailer.

This works to its advantage when securing partnerships as brands don’t have to worry that cooperating with or encouraging resellers can cut into their sales.

Data and consumer’s details remain with the brands, so Yerdle is only facilitating and helping brands to get rid of your excess or returned inventories to new price-conscious customers.

 

In case, if any of the middle eastern retailers want to learn more about Recommerce, then you can reach out to me on riteshmohan@yahoo.com

 

 

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management and Franchising Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry. Hence he is going impart his knowledge in the form of a book. His book is currently underprint.

duty free shops

Cracking the travel retail code- The success story

3

Travel Retail- A Game changer for retailers.

Today brands and retailers are using travel retail for building their brands by targeting a much-focused audience.

Travel retail or duty-free retailing or airport retail are the terminologies used by modern retailers for this emerging business channel.

My article narrates some of my experiences acquired by spearheading travel retail operations and sharing some trends which I foresee emerging in 2020.

Travel retail will become the way customers shop in the future. One of the reasons is that it’s tax-free.

A number of airport retailers are increasingly looking into customer experience surveys to get a better understanding of travelers’ spending habits.

Travel retail – A modern face of retail – My perspectives.

the travel retail business

 

I got exposed to travel retail in 2017 when I was assigned the responsibility for initiating and launching a new business channel for brands handled by me as a retail practitioner.

As I got involved in business expansion pitching to various duty frees category managers and leasing spaces at prominent airports, I found that this business has the potential to overshadow the existing malls or traditional retail.

 

What is fueling growth to travel retail business?

During my recent holidays in India, I was amazed to see the booming travel retail operations not only in metro airports (New Delhi or Mumbai) but also in tier 2 cities airports (Bhopal, Goa, Dehradun, Surat)

  • The quality of airport infrastructure has drastically improved.
  • The quality of retail offerings and brands, cafes, lounge facilities, brands (fashion and accessories), book stores (WHSmith is the category leader in this segment) or even travel accessories shops have improved and they offer high-quality products.
  • Airports offer a great variety of food options (food lounges, food halls, etc).
  • Millennials today prefer to learn from travel experiences, gathering memories is more important than saving money. They believe in the quote “Travel is the great teacher”.
  • Change in traveler’s behavior, today they see traveling as a leisure activity and prefer to spend more time at the airports which offer great experiential retail.

It makes more sense to check-in early at the airports and experiences its retail galore.

Today, airports (I can say from Indian & the Middle Eastern aviation scenario) are busier than most of the prominent malls in the country.

travel retail trends

 

The picture shows an activation by MyFM in Ahmedabad thanking their listeners for making the FM station number one. The passengers received a hamper gift pack for them at the Ahmedabad airport’s arrival terminal.

 

Emerging Trend is toward luxury items in travel retail.

The reason is that passenger buying behavior has changed dramatically. Passengers research, check availability and compare prices online – and then purchase the products at the airport.

There is the emergence of electronic shops at airports selling the latest i-phones, Macbooks, Samsung notes, etc which were not common in the past.

The big game-changer has been the surge of mainland Chinese travelers.

Their appetite to learn about and visit the world and their willingness to shop when they travel have provided the industry with a fantastic opportunity.

travel retail

Interesting Statistics- Travel Retail

  • Travel Retail channels now encompass Airports, Airlines, Cruise Lines, Ferries, Border Stores, and Diplomatic stores
  • Airports have heavily increased their retail spaces and turned into shopping malls with multi-brand stores and stand-alone boutiques.
  • Travel Retail offers a shop window and communication platform with the highest frequency of customers in your matching target group.
  • A huge increase in potential customers due to consistent growth rates of international travelers. More than 1 Billion tourists crossing international borders globally.
  • More than 100 Million Chinese outbound travelers.

 

Source: https://www.moodiedavittreport.com/

 

Category domination: (global travel retail sales in 2018)

  • US$ 5.7 billion Watches, Jewellery, and Fine Writing
  •  Fashion & Accessories contributed US$ 9.6 billion
  • US$ 25.6 billion Fragrances & Cosmetics
  •  Confectionery & Fine Food pitched in with US$ 5.0 billion
  • US$ 11.4 billion Wine & Spirits

The winner is Fragrances & cosmetics category globally followed by wine & spirits.

 

Learn as to why entrepreneurs need to say NO to stay focussed, read here.

Building the Travel retail ecosystem – the role played by data analytics.

Airports provide the physical space and infrastructure; brands and retailers the retail environment and airlines provide the necessary customer data to communicate with and sell to passengers in a targeted manner.

For example- when you shop at any retail outlet at the airports, they scan your passport, hence your details other than your name, etc gets captured. Details like frequency of travel, destinations mostly traveled your shopping behavior, frequency of purchase, etc.

This data is shared amongst airlines, airport operators, travel retail operators and retail operators so that they can create experiential retail experiences in their concepts and services.

Challenges for 2020

  • High operating costs, emerging from built & run model or public-private equity models or even high bidding model.
  • Travel retail is a highly complex and concentrated business. TOP 10 Operators are generating 40% of global Travel Retail sales and keeping most airport concessions throughout the world
  • Brands are pushed to pay higher margins, resulting in low net operating margins.
  • Consumer’s perception that Duty-Free price advantage is less attractive.
  • External factors like travel caution advisories in cases of geopolitical issues, impact the entire travel retail sector.

Learn how to franchise your business, read here.

Case study: How WHSmith pivoted its business model to the travel retail or duty-free retail model?

 

travel retail channel

WHSmith, one of the oldest retail chains in the world.

You cannot miss WHSmith shop in case you are a frequent traveler as they are present at almost all the prominent airports, seaports in the world.

607 high street stores, as well as 149 airport units, 127 rail/metro units, 131 hospital units, and 286 travel units outside the UK. They employ over 13000 employees.

Amidst retail apocalypse, wherein most of the traditional retailers are going out of business, WHSmith is delivering consistent growth.

(Estimated growth for 2019 is around 11%).

The Key for WHSmith growth lies in understanding the travel sector and understanding consumer’s behavior.

WHSmith has mastered the art of studying its customer’s behavior.

At the airport, we are all a captive, trapped audience.

In such situations, people are driven by impulse purchases and immediate needs and are less price-sensitive and more focused on convenience.

WHSmith’s range of items – books, stationery, magazines, newspapers, entertainment products, and confectionery – cater perfectly to these kinds of impulse buys.

For example, imagine that You are at the airport waiting to board the aircraft. You decide you need something to keep you occupied for the journey.

You pop into WHSmith’s to buy the latest copy of your favorite business magazine and while you’re there you buy something to chew or some chocolates. Then you discover you’ve forgotten your charger.

Consolidating all the items, you have a decent amount of purchase in your invoice. And since you are in excitement for travel (either business or leisure) you don’t mind paying a little higher price for your purchases.

It is the emotion i.e. NEEDs overtaking the WANTs.

It happens with me quite often that I end up shopping for some small gifts or toys for my son or even chocolates while taking a return flight from my business travel.

Overcome online competition by completely ignoring it.

WHSmith, instead of competing with the likes of eBay’s or Amazon’s of the world, took a different approach.

They focused on securing more locations at airports, railway stations at every prominent travel hub.

Because, the answer to this strategic move is that in high street locations you would get lots of customers who would come and browse, but then they don’t buy, because, at that moment, they’re really just doing comparison shopping. But that doesn’t happen so much in a travel location.

The same rationale applies to moviegoers purchasing popcorn and a coke at inflated prices which are sometimes higher than the movie ticket prices.

In my next article, I shall share case studies from successful brand activations in travel retail.

 

Become a blackbelt in retail & Grow your retail career

If you want to excel in your profession and have big dreams then please read below.

retail expert

Enhance your retail knowledge and skills by enrolling for blackbelt in the retail program and learn the game of retailing at your ease. You can get amazing discounts in 2020 as well by clicking here. This is my affiliate link which you all could use to learn retail and progress in your careers. I strongly believe in learning, practicing and sharing. Let’s all grow together in 2020.

Use Promo code: BLACKBELT.

 

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Retail Operations, Sales Management and Franchising. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

Why TJ Maxx is successful?

Either you are a winner or a loser; Learn tricks of the retail game from TJ Maxx.

4

Either you’re a winner or a loser- there is no middle ground in retail. Learn tricks from TJ Maxx.

 

Read this article if You want to learn the retail tricks from TJ Maxx.

It is a bold statement that I am making and most of you would have heard a famous quote from stars war series by a guru protégé “Yoda”.

 

  “Do or do not. There is no try.”

 

This quote is a simple lesson in commitment and the power in giving something our all — not just giving it a try.

Most of our Middle Eastern value apparel retailers need to follow this mantra in case they need to succeed in 2020.

 

Being in fashion retail for a long time and being a curious student of retail, I see most of the fashion clothes retailers are out of ideas in order to market their merchandise.

They are still using old school marketing thoughts in order to sustain their businesses like celebrity endorsements, discounting, and sales, price markdowns, etc.

Always remember, “What brought you here, won’t take you to the next level”

 

Your brand needs to stand for something, if you are a value fashion retailer then you need to redefine value and stand for it.  If you are a sustainable brand then stand for it like a luxury sustainable brand Eileen Fisher.

By trying too many things in bits and pieces will not lead you to your destination but would only prolong your brand’s declining status.

Let me here give a case study of TJ Maxx to explain my points.

 

Why TJ Maxx is successful?

Look at the statistics below for TJX, ( we know about TJX, the parent company of TJ Maxx):

  • TJX’s sales have risen for 22 straight years.
  • Their market stock has increased by more than 24% over the past year.
  • TJX same-store sales rose 6% in the fourth quarter of 2019.
  • Opened its 4,000th store in 2017 but has plans to hit 6,100.

Can your fashion retail brand boast of such credentials?

 

TJX understands how to attract consumers to their brick-and-mortar locations. While all TJX stores are successful, TJ Maxx is the driving force behind the company’s positive results.

Let me highlight here factors that I feel have contributed to their success.

  1. The Treasure Hunt.

Management prides itself on having unusual and great value merchandise in all stores – often well-known brand labels – that creates a surprise for customers and extra sales for the store.

Why TJ Maxx is so successful

TJ Maxx stores give these people exactly what they want, the opportunity to find a brand-name designer product at a bargain price, just like a treasure hunt.

The Neuroscience behind this phenomenon is called FOMO (Fear Of Missing Out).

2) TJ Maxx’s strengths lie in their buying and store staff.

Most of the Middle eastern retail companies are being run and operated by CFOs who have no practical experience on the shop floor. They only know to read Balance sheets without having an outlook for making the business turn-around.

So if, given a scenario of like for like sales of a store that is declining continuously, the obvious decision of a CFO would be either to close down the store or cut down on headcounts in order to cut costs.

This is according to me a loser’s mindset.

The winner mindset is depicted by TJ Maxx i.e. The company has upped its merchandising staff by 10%. Adding extra people to scour exceptional values.

Management stresses strong vendor relationships that these merchants nurture, and that often leads to unusual buys for their stores.

These buyers understand what their local customers want and are constantly buying inventory rather than only a few times a year.

This allows TJ Maxx to deliver better deals and be more responsive to trends.

Learn why Primark is saying no to E-commerce, read here.

3) Capturing Market Share- The Main aim of TJ Maxx.

Management stresses that it must generate great traffic in its stores.

By offering great values on great brands all the time, they have been successful in achieving this objective.

The company has indicated that customer traffic was up in all divisions.

For the full fiscal year 2019, comparable store increases were up +7% for Marmaxx (U.S.), +4% for HomeGoods (U.S.), +4% for TJX Canada and +3% for T.J.X International (Europe and Australia).

 

4) Fresh Merchandise hitting the floor is the key:

TJ Maxx has a motto “door to the floor in 24.” Their goal is to get the product out on the floor within 24 hours of being delivered to the store.

Their products actually get sold faster – an average of 25 days vs. more traditional stores like Macy’s which average 100 days per inventory turn.

5) Stores are built on Low CAPEX.

This is according to me one of the main reasons for the TJ Maxx store’s success, low cost to built up means faster break-even of each store.

Treasure Hunt by TJ Maxx

 

TJ Maxx locations average 30,000 square feet and typically don’t have any walls. This allows the stores to quickly rearrange the layout as needed.

 

 

How many Middle Eastern fashion retailers would qualify for this criteria?

My answer would be none.

 

6) Stand for something – TJ Maxx stands for amazing bargains

By understanding their customers and delivering what the customer needs at that moment, TJ Maxx gains trust from their customers. Customers trust they will find a bargain when they walk into a TJ Maxx.

According to Brand Keys’ 2019 CLEI survey, TJ Maxx is 1 of the 6 most trusted brands.

Watch out the video on TJ Maxx success:

YouTube video

 

 

I would like to sum up my article, as I feel I have expressed key strategic insights for my middle eastern fashion retailers in my article and in case, if any of my readers, would want to learn more about redefining their retail business, then feel free to write to me on riteshmohan@yahoo.com.

You can now subscribe to my blog for free by simply entering your email address.

Every week, key retail insights would be sent to you as soon as the new article is published.

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. Ritesh has been instrumental in the growth of some of the regional brands as well in the Middle East region. He specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

how retailers compete with amazon,

How to compete with amazon? Check out brands who are doing it.

1

“How to compete with Amazon?”.

How do we sustain our topline sales amidst onslaught from online retailers?

These were the few questions that kept buzzing in the recently concluded Retail Congress in Dubai.

Post attending some of the keynote sessions during the retail congress, I am penning down my thoughts, providing tips and insights to the Middle Eastern retailers.

 

It is the Retail Renaissance time.

Given the current economic slowdown, wherein the customers have become “discount seekers”, bottom margins are depleting due to excessive promotions, selling the merchandise on full margins is a distant dream for many merchandise planners.

So how do you compete with Amazon and other online retailers which are thriving on their discounting model and excessive funding from venture capitalists?

The answer lies in the Basics of retailing…

Basics of Retailing

You make something happen in physical stores that can’t happen online.

If you think about the history of the department stores in the west, they were the circus when the circus wasn’t in town.

There was always something going on, with free candy flosses, art & crafts and performers and a pleasant place to gather & leisure activities and time out with the family.

The advantage with brick-and-mortar retailers is that they have amazing assets (stores), but they need to think about what’s unique about having a physical space and how the physical stores can be leveraged to do something that can’t happen in the digital world.

Experiential retail offers solutions.

Re-invent or Perish

The main challenge for the retail industry is to divert online traffic to physical shops.

Brands who are agile, adaptive to changes will prosper in the coming times.

Monitor market gaps and how you can fill those with your offerings or services.

Kohl’s uses strategic alliances to compete with online retailers of the likes of Amazon and eBay.

Case study: Kohl’s accepting Amazon.com returns.

Kohl’s has launched an interesting initiative to process Amazon returns, for example. It’s difficult for Amazon to process all those returns, and Kohl’s saw the fact that this would bring a lot of traffic to their stores as a positive effect, particularly younger people who would not otherwise go into the store.

For Kohl’s, this is a way of remaining relevant & filling the market gaps.

Learn more on Experiential retail, click here.

More Case studies on how retailers compete with Amazon.

Case study 1: Warby Parker

online eyewear brand

Founded in 2010, online eyewear retailer today has over 64 physical stores.

The internet-first company helped spearhead the trend of “online moving offline.”

The smart retailer uses physical stores to get new customers and insights into shopping behavior & then augment it with powerful digital advertising to boost brand visibility and social engagements with their customers.

They have also tested pop-up shops, stores on wheels (in decked-out school buses).

Warby Parker with their stores has created an experiential theatrical engagement by using photo booths in some of their stores, where you can try on the glasses and take pictures of yourself.

how retailer warby Parker compete with amazon,      photo booths showing how retailers compete with amazon.com

Benefits:

If you want to receive the picture, you have to give them your email address. And when you are browsing frames, they offer to send you a link with the frames you have seen.

They present this as a service but it’s also very valuable data, because they can link offline and online, and they know that you were in the store on a particular day and what frames you saw, and they can follow up with an email saying, “Do you want to buy this now?”

themes created at warby parker

Check out the experiential green screen theme created in one of their stores. Exotic locations and lifestyle combined with stylish eyewear.

The use of augmented reality is also being tested by an Indian eyewear online retailer called Lenskart.com.

Modeled around the similar Warby parker business model, the chain also boosts of over 50 retail showrooms in India.

Check out their web content here (featuring beautiful Bollywood actress Katrina kaif).

YouTube video

 

Pushing the sales through CSR initiative:

Warby Parker’s initiative “Buy a pair and give a pair” has given the brand the social meaning. They have helped people in over 50 countries by providing eye care and lenses so that they could live meaningfully.

 

Case study 2: Charlotte Tilbury’s Magic Mirrors

At Charlotte Tilbury’s flagship store in London, customers have access to two touchscreen Magic Mirrors.

Charlotte Tilbury Westfield London Magic Mirror

These fairytale-style screens allow you to ‘try on’ each one of Tilbury’s 10 signature looks – in as little as 40 seconds!

No more messing around with tester pots and samples. Now you can layer on the look digitally and get a feel for what suits.

There’s even the chance to change your look from ‘desk to disco’ and to email yourself a picture when you’re done, share the picture with your friends and get likes and votes on the preferred looks.

Learnings:

Customer experience is the new customer service.

Brands need to adapt to social selling and not just transactional sales.

I would continue my series on Experiential retail in my on-going blog series, my next one would be a case study on a leading retailer in United states and how Middle eastern retailers like Max fashions, R&B, Redtag could learn the rules of the game from it.

In case if any of my readers or retail fraternity member would like to learn more about my vision of retail 2025 and how they could transform and elevate their business model; feel free to reach out to me through my blog contact form or write to me on riteshmohan@yahoo.com

I would be more than glad to assist and help my retail fraternity.

 

About the author

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of over two decades in the industry.

Musuem of Ice cream

What is Experiential Retail? 2 case studies to energize retail.

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What is Experiential Retail?

Experiential retail is a type of retail marketing whereby customers coming into a physical retail space are being offered experiences beyond the traditional ones.

The physical store becomes the center of customer’s engagement, the brands are not selling here but are becoming advocators & taking a consultative approach towards creating a memorable experience that results in building trust for the customers.

In the recently concluded, the Middle East Retail forum, experiential retail was the trending topic.

experiential retail examples

The retail stalwarts came together for 2 days and brainstormed on the topics which are shaping our current retail concepts.

I have taken two brands i.e. Museum of Ice cream from New York and homegrown Project Chaiwala from the UAE.

Both these concepts embody the experiential retail in their brand’s salience.

 

What is the experiential retail engagement?

Experiential retail is a trend that is being practiced by the brands to create experiences over possessions, stories to tell over the product specs, create memories instead of selling products or services.

It is the new kind of retail marketing wherein building trust and engagement with the new customers’ i.e. Millennials are the priorities.

Case study 1: Museum of Icecream

The Museum of Ice Cream (MOIC), was co-founded in the summer of 2016 by Maryellis Bunn.

MOIC is an acronym for the “movement of imagination and creativity,” not the Museum of Ice Cream.

Since its start, the MOIC has approximately 394,000 followers on Instagram.

“Food is a language which we all understand,” says Bunn.

“When you have something as simple as ice cream, it’s something that’s spread happiness and brings people together in a way that’s unexpected.”

Store concept:

The concept of store color is Pink.

experiential retail 

“For women…pink leads to happiness and good thoughts,” Bunn said, speaking about the soft millennial pink, the color that covers many walls of The Pint Shop.

It is a place wherein the women could come and connect with fellow friend and engage in sweet treats (ice creams) and create a memorable experience which is later shared on Instagram.

The brand encourages its customers to engage with the interiors of the store and share their experiences, it is a kind of pop-up retail revolution.

Start with your own pain point

When Bunn moved from calif to New York, she found that even in a city with more than eight million people, she felt lonely.

Insights:

“People are desperate for connection”.

“Everybody’s on their phones. Where do we have to go to connect?”

Bunn couldn’t find one, so she decided to create one with the Museum of Ice Cream. The pop-up, which Bunn referred to as a “passion project.”

But, the response was so overwhelming that the temporary museum moved to Los Angeles and Miami, and it’s currently in San Francisco.

Key Lessons from MOIC:

Experimental, physical, and sensory experiences that are seamlessly integrated with Instagrammable, social media-friendly moments are reinvigorating and redefining retail.

In other words, brick and mortar businesses are here to stay and are giving way to new, connective experiences.

Case Study 2: Project Chaiwala

During the Middle East retail forum, I met with Mr. Ahmed Kazim, co-founder of Project Chaiwala.

Ahmed along with his co-founder Justin Joseph saw a gap in the market especially for their love of traditional tea or chai (as it is famous in Southeast Asian countries).

experiential retail

The gap in the market:

To create an ambiance to showcase creativity in the tea business, in terms of brew, selection of finest leaves from foothills of Darjeeling, Assam.

Both wanted to create a concept that could bring creative, intellectual, artistic people together to enjoy a cup of finest chai in a traditional and more authentic way.

Hence Project Chaiwala was born.

They have created a simplistic and artistic ambiance in their store in al Serkal Avenue, al quoz, Dubai which is experiential.

Brand promise

Putting a smile on their customer’s face while providing them an ambiance which fulfills their creative urge while sipping the finest teas from the Indian sub-continent and providing them the experience which they relish back home i.e. authentic way of having tea.

YouTube video

Social responsibility:

Though the brand is new with 3 stores currently but the founders are following their corporate social responsibility from day one.

They source artisan’s matkas or popularly called Khullars (a type of cup made up of mud) from the rural villages in Tamil Nadu, India.

experiential commerce

Thus ensuring they help protect the environment from plastic cups and in return, help uplift the rural artisans.

Result:

Today the brand caters to youth, especially females cutting across the geographies while enjoying a traditional cup of Karak chai. The brand serves various varieties of teas, herbal, Chinese, Japanese green teas and of course their famous signature chai shot.

 

What’s common between MOIC and Project Chaiwala?

Besides both being experiential retail concepts, there is a lesson to learn i.e. both the concepts are born from the pain-points experienced by their founders.

Hence I always say to my readers “Start a business and not a startup”.

Read my article on 4 tips to startup owners, click here.

To sum up my article, Mr. Ahmed Kazim, advises upcoming entrepreneurs, “Life is full of challenges and that’s the beauty of it, Keep hustling”.

This is a great statement that every entrepreneur should follow.

Read my article on Believe in yourself, click here.

 

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

forever 21 bankruptcy report

Forever 21, America’s hottest fashion brand- Losing its Hotness.

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Forever 21 once carried a tag of America’s hottest fashion brand. Off lately, we heard in the news that the chain has filed for bankruptcy in the United States of America.

Having worked with this brand and knowing it inside out & being an ardent fan of this brand, I even had the pleasure of interacting with the founders and senior leadership of the Forever 21 brand.

Let me confess that knowing the brand’s DNA, it is based on strong fundamentals, its beliefs, its purpose is all in the right place.

Forever 21 USPs (unique selling propositions) is based on 4 core pillars

  • Large collections of fashion styles
  • Limited quantities per style
  • Tomorrow’s fashion trend, today.
  • Fashion for which you don’t have to break your bank.

This concept gave birth to a term we call as “Fast Fashion”.

What is the Fast Fashion concept?

Fast fashion can be defined as cheap, trendy clothing that samples ideas from the catwalk or celebrity culture and turns them into garments in high street stores at breakneck speed.

It is a case model for the super-efficient supply chain, in turning trendy fabric into the most sought after designs and producing it in minimum lead times and shipping it on to the shelves as fast as possible with minimum lead times.

So what went wrong with Forever 21?

Fashion retailer Forever 21 has filed for Chapter 11 bankruptcy protection in the US. The company said it plans to “exit most international locations in Asia and Europe” but would continue to operate in Mexico and Latin America.

It expects to close up to 350 stores worldwide, a spokesperson said, including as many as 178 US stores.

Let me clarify here that filing for bankruptcy protection is not the same as going bust, it is a provision provided by law to corporates to relook and restructure their debts. It is like going on a strict- diet to become leaner & healthier.

Rapid expansion i.e. opening new stores in new territories led to capital erosion, a slump in sales, and competition from eCommerce and a rise in demand for cheap fashion all led to the downfall of Forever 21.

 

Forever 21 core promises

Forever 21, provided every teenage girl a chance to look like a fashionista without creating a hole in their pockets. Yellow-colored Forever 21 bag was the most visible shopping bag in the malls across regions.

Mind you there was no Instagram or influencers when forever21 started out.

It wasn’t a unique idea — teenage girls have always wanted to dress like their idols. But the dizzying speed at which Forever 21 could make those trends available and affordable, however, was.

The company’s specialty became known as fast fashion, and the chain grew aggressively to become a staple in American shopping malls, opening hundreds of stores and redefining what it meant to be a traditional mall anchor.

 

Scalability comes with problems

As they say, when you scale your business, you have to face different problems.  Problems like quality issues, keeping up with the trends, and a price promise is a herculean task to balance.

Forever 21 had roughly 450 locations by 2009, and its “cheap chic” assortment was especially popular in the aftermath of the severe recession in 2008-09. Hundreds of shoppers would line up for the grand openings of its new stores.

Check out the video wherein I had launched its first store in New Delhi, India. ( In the last frame you might get to see a glimpse of me…)

YouTube video

 

They kept opening more outlets, and by 2015, the Changs (founders) had a combined net worth of $5.9 billion — but that fortune has since shrunk to $1.6 billion because of Forever 21’s problems and declining valuations among similar retailer (source Forbes )

As it grew, Forever 21 expanded into menswear, children’s clothing, maternity, and plus-size apparel and cosmetics, among other items. But that made the chain looked too much like the conventional department stores.

This is where things started dwindling down for the brand.

They lost the focus and forgot the core philosophy from where they started. You cannot induce fast fashion across categories like kids, plus sizes, athleisure wear, etc. Forever 21 stretched themselves across categories.

Learning –

Focus is the most essential aspect an entrepreneur has to practice always.

 

Learn as to how Instagram is disrupting fast fashion, read here.

 

Failed to Adapt to changing consumers demand

A brand popular with millennials may not be popular with Gen Z, and it should evolve to stay ahead of the trends.

Generation Z’s apparently is looking elsewhere for clothing inspiration.

You cannot be everything to everyone, you just need to focus on targeting with a particular niche segment of consumers, who believes in your product and would ensure that you stay afloat in turbulent times.

Forever 21 core customer base was teenage girls, once they grew older, they started craving for Quality over Quantity. They would not mind paying a little extra to seek a good quality garment.

Forever 21 failed to keep up or raising its quality standards instead chose to remain a fast-fashion retailer offering cheap fashion.

Competition too tough to crack

Competition from online fashion brands like fashion nova, nasty gals gave forever 21 tough competition and is one of the main reasons for the brand’s failure. Fashion Nova, a Los Angeles-based, online-only fast-fashion retailer known for its body-hugging silhouettes, “is the new Forever 21.”

Fashion Nova relies heavily on influencer marketing — teaming up with celebrities, bloggers and others who have large online followings. It knows its shoppers: young women who want to emulate the aesthetic of the likes of the Kardashian family.

As fast fashion starts to get even cheaper with the arrival of the wildly cheap Primark in the US, other consumers are veering away from shopping cheaply, and, rather, toward shopping smartly.

Learn more about fashion forecasting, click here.

Poor Online Offering 

The design felt out of place when compared to competitors like H&M and Zara—something that modern-day consumers are no longer willing to countenance.

Family dominance

Forever 21, always remained and operated as a close family business. They had not opened up their corporate governance by exploring different options for financial inclusions into the business.

The Way forward for Forever 21

Downtimes provide the best time for self-reflection, understanding what went wrong and then coming back re-energized with full power.

“In order to take a big leap, one must take 10 steps backward”.

Knowing the founders of Forever 21 and their entrepreneurial spirits,  the brand would soon emerge in its new avatar and will once again dominate the fashion scene.

 

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. Ritesh has been instrumental in the growth of some of the regional brands as well in the Middle East region. He specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

luxury brand

How to build a Luxury brand with “no advertising”? Uncover the secrets for scaling a brand.

4

“Can you build a luxury brand without advertising?”

“Interesting Question”… I replied to one of my connections who had raised this question to me in one of the networking forums.

“To understand the very nature of luxury goods and behavioral study of luxury goods buyers, you need to understand the pillars of a Luxury brand”, I replied.

learn about 4 must do’s for luxury, click here.

What is common between these brands Maserati, Hermes, and Rolex?

  • Maserati: Is 105 years old, Established – December 1, 1914.
  • Hermes: The 175-Year Old French Fashion Empire
  • Rolex founded in 1905, 114 years old

Longevity is the common factor amongst all these 3 brands, Longevity comes from their Heritage of these business houses, their core values which is passed on from generations together.

Longevity provides trust and confidence to buyers.

If you wear a Rolex, chances are that your succeeding generations will also want to wear Rolex because they have confidence and trust in your choice of brands.

These brands are considered as Investments.

Hermes have bags that increase in value over the years. Limited Rolex editions are priceless in the eyes of their consumers.

Hence the main pillars of luxury brands are Longevity, Trust, Luxury, and Promise.

I shall now list out the ways as to how you can build your retail brand without advertising support.

Create a luxury brand Experience and Deliver Quality.

Recently, I went to a restaurant with a couple of friends. This restaurant had beautiful interiors, music, and dim lighting, the arrangement of furniture and ambiance was giving a feel of luxury dining. The staff was polite, professional and friendly.

We ordered food, the food was not just good, it was awesome!

I expected to receive an extravagant bill, but to my surprise, the bill was hardly close to what I expected, there were no overpriced dishes. Before even seeing the price I was sold to pay more for their offering. That restaurant had persuaded me with their tasty food and surprised me (in a good way) with their economical pricing.

I associated dim light, soft music, polite people, wood finish to an expensive place.

PR builds trust and creates relationships.

Less successful companies think they need advertising to get customers, but the best brands use their products, reputations, and stories to attract customers and that is the main premise of PR.

ROI on TV advertising makes it unviable.

People who can afford luxury goods are not spending their time watching TV nor logging onto the digital channels to see who is advertising. They are engrossed working towards enhancing their wealth, their business by constantly monitoring business & market journals and making their investment plans.

Ads are not social.

There is a limitation for a commercial or advertisement to go viral on social media hence brands are coming out with their branded content which is engaging, relevant to their audience and have the tendency to go viral.

More and more brands today are encouraging their customers to post their own generated content featuring brands, their rationale for brand selections and interesting stories of their experiences with the brand.

Recently Mercedes in India had generated a TV series with Car’s India, wherein the host drove to interior parts of the country highlighting different cultures, places to visit coupled with the adventures of a road trip.

YouTube video

 

Studies show that people are far more likely to believe a news story than an advertisement.

 

Luxury Brands that don’t believe in advertising – Case studies

Kiehl’s

kiehls luxury brand of skincare

Kiehl’s created an unforgettable customer experience by offering extensive samples to customers, which gives way to lower-pressure sales. The skin- and hair-care company built a luxury brand name for itself by offering a 100% money-back guarantee, staffing more than twice the industry average, and offering free consultations.

This 150 years old successful brand to date maintains its “no-advertising” style even after it was acquired by L’Oreal. A move that garnered them more — you guessed it — free advertising.

Spanx

sara blakely's luxury brand

Like most of the business owners who often find themselves with no budgets for advertising or marketing. Sara Blakely, founder of Spanx also found herself in a similar situation when she started out. She didn’t run marketing spots because she couldn’t afford to. She also grew her billion-dollar brand without any help from outside investments or debt.

In one of her interviews, Sara Blakely told Forbes, “The power of women discovering the brand from other women was actually a better strategy. The aunt telling her niece; one woman to a college friend. There’s something about saying, ‘look, feel my back, no lines,’ that’s powerful.”

Learnings:

Look out for opportunities in all the problems, Word of Mouth strategy created Spanx has multi-million dollar business.

Zara

zara fashions

Zara’s first retail fashion store opened in 1975 and, today they are over 10,000 stores.

The brand works on the principle of Exclusivity, Urgency, and scarcity

They produce limited quantities per style hence it creates urgency and scarcity which pushes the consumers to purchase.

Users generated content in addition to influencers

Zara also uses social influencers as well as encourages millennials to tryout their outfits and post on their social media pages using hashtags and tagging the brand’s social pages.

They spend their cash in getting premium, high traffic locations close to luxury fashion brand stores which drives visibility and uplifts the brand image as aspirational.

They’ve built an empire based on their reputation as a company whose technology and automation allows them to analyze trends and consumer feedback to get fashion from the runway to the racks in a matter of days.

Learn how Zara is embracing digitalization, click here.

Conclusion:

These brands have shown that you don’t need ad budgets to build massive brands. However, your product and brand promise should be very strong and compelling.

Learn how e-commerce is boosting Men’s grooming products, click here.

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in the Middle East region. Ritesh specializes in Retail management, Product development, and Brand Management, Retail Operations, Sales Management, and Franchising & Business Management. He strongly believes in empowering business owners with his wisdom & experience of around two decades in the industry.

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