PRO’S & CON’S OF RETAIL
In today’s fashion market, online direct to consumer is an obvious essential for operating a clothing brand, while retail has become an afterthought.
Below, we will go over a few of the pro’s & con’s to weigh before deciding if implementing a retail strategy in combination with online DTC is a good option for your brand.
First, what is retail?
Retail means to sell your product through third party sellers, whether that be physical brick & mortar locations, or online retailers.
PRO’S OF RETAIL :
ESTABLISHED CUSTOMER BASE : Enhanced brand exposure, providing immediate access to a large audience without significant marketing efforts of your brand.
REDUCED LOGISTICAL BURDEN : Retailers handle storage, distribution & sale transactions, allowing you to focus more time on design & production.
SCALABILITY : Retailers allow for faster brand scaling by leveraging the retailers extensive distribution network & established audience.
INCOME STABILITY : Guaranteed bulk payment upfront before sales are made, more stability in cash flow.
CON’S OF RETAIL :
REDUCED PROFIT MARGIN : Retailers typically want at least 50% markup for each sale, which significantly cuts into your profit margins on each item sold.
LIMITED CONTROL : Limited control over product placement, you will have less control over how your products are displayed and marketed.
For example if the retailer puts your product on sale frequently, it can diminish brand image.
LARGE SCALE PRODUCTION : Since profit margin will be lower, this often means larger scale orders are needed to meet profit targets, this can cost significant upfront investment.
DEPENDANCE : Dependance on retail partners, your sales and brand presence may rely too heavily on the retailers performance and business decisions.
CONCLUSION
Deciding if retail is a good option depends on several individual factors that only you can answer for your brand.
With that being said, we recommend to focus solely on DTC as a startup brand, at least until you have built your own community & customer base.
Disclaimer : this is not business advice, only reiteration of our research & experience working with brands. Use information at your own discretion.
