2018 Could Be a Rocky Road for Retail
Marshal Cohen, Chief Industry Advisor ;
Everyone wrote retail off during Holiday 2017, but the consumer was resilient and the economy keeps chugging along. Looking ahead to 2018, it will be a similar ebb and flow, high and low, rocky road. The challenge for retail will be to have a smooth flow of success along the relatively uncharted territory we have entered. From online and stores challenging one another, to the reality of wrestling with weather challenges of varying degrees, retail has its hands full. We need to be realistic and learn from the many lessons that developed in 2017, both positive and negative – no one can get lax and expect to succeed. Bottom line, as long as product is new and exciting, giving consumers a reason to buy, then they will buy.
Not Your Grandmother’s Private Label
One way we’ll see new product will be through private label – it will take a giant leap forward again in 2018. Many retailers have been doing a good job with new private label offerings. These aren’t your grandmother’s private label products – they’re not generic and they’re unique. Private label is now creating an important point of differentiation at retail. In some cases, private label will replace the traditional brand, particularly where brands aren’t performing or delivering margin for the retailer. Beyond the importance of delivering a unique product, in order to ensure private label brand success retailers need to pay attention to price, replenishment, level of quality, and branding that can be shared. Private label brands need to be treated like a real brand.
The Great Retail Divide
While retailers are creating brands, brands need to become retailers. Private label brand development is creating tension on brands being displaced, and in some cases replaced, at retail. In 2017, we saw some brands respond to this tension by taking on new retail partnerships that would have previously been unheard of. As retail continues to be challenged, and the number of doors declines, brands need to energize their emphasis on direct-to-consumer selling. By doing so, manufacturers can also control their messaging and truly showcase the brand. Brands will need to open stores, pop-up shops, and develop enhanced websites to effectively reach consumers directly.
2018 is kicking off with all of the makings of a successful year, but it won’t be easy. Bringing all of the pieces together to pave a path to success that is somewhat smooth will require work and creativity on the part of both retailers and brands. Retailing and branding are different, so we must think differently.