Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.
Sunday, March 22, 2009
Streetwear pt 2 : Limited door effect.
We spoke a lot of how the differing distribution channels of a fashion brand play into its Retail Value Proposition, and I feel the streetwear industry takes full advantage of using its distribution channels to its benefit.
As I noted in my last posting, streetwear is well known for being hard to find, only selling in hand picked shops, high prices, and limited stock. Limiting the amount of doors they sell in really plays into the image they try to create with the brand, which is exclusivity. That being said, it does not mean they are entirely limiting they amount of sales or growth that a large brand would like to achieve.
Because the target market for streetwear brands are avid blog readers, social network users, and internet shoppers, streetwear brands capitalize on the opportunity to capture large margins by selling online, and extending their reach internationally.
Pushing sales online, allows the brands to limit the amount of product they need to sell through traditional brick and mortar retailing, while selling as much as possible without looking like they are flooding the market. These brands are able to still sell lots of clothes, at high prices, while maintaining that factor of exclusivity - because it is coming from their online shop, rather than retail stores. For example, one of the most popular brands in the industry right now is The Hundreds. They are internationally known, worn by celebrities, and loved by millions. Yet in Ontario, they are only being sold in about 5-6 shops - one of those being here in London, ON (Echelon).
Not only are they reinforcing their RVP by their strategic choices of distribution channels, the online channel allows them to receive the extra 50% margins that retailers would normally receive. You can easily see how profitable a business this can be when you put together the fact that the tee's they produce probably cost about $2 a piece, and they are selling a large amount of them directly for upwards of $40-$50 = BIG MARGINS.
Once a brand has grown to a certain point, the next step in its growth is usually a stand-alone brick and mortar shop that sells only their product. Because a streetwear brand will open very few shops, they are always in very populous cities that are known as shopping destinations. i.e. Fairfax, California, New York City, Vancouver, B.C., etc. Just like case of online shops, these stores allow the brand to capture very high margins. However, they also serve as a destination spot for even more 'limited release' products that often create lineups of hundreds of people deep, further reinforcing the exclusivity of their products. As big of a brand The Hundreds is, they just only opened their second store in the U.S.
Streetwear brands are using strategic distribution channels to reinforce their RVP, and at the same time are able to reap much larger margins by selling directly. They know their customers well because most owners themselves are consumers of the products.
In my eyes, within the streetwear industry, the distribution of the products are as important a part of the business as the product they sell - and sometimes even more important.