Retail Consolidation The Continuing Saga!
<ul><li>Cause / Effect </li></ul><ul><ul><ul><li>- What’s driving retail consolidation? </li></ul></ul></ul><ul><li>The Re...
<ul><li>The Taste Level Of America -   “Forever Changed” </li></ul><ul><ul><ul><ul><li>-  Thank You…Mickey Drexler and the...
<ul><li>Apparel is declining in importance to the consumer </li></ul><ul><li>Lifestyle is driving apparel decisions </li><...
<ul><li>“Live Young, Work Young, Look Old </li></ul><ul><ul><li>- The Aging Boomer will not go quietly…Dressing Younger is...
<ul><li>Effect of “Younger vs. Older” </li></ul><ul><ul><li>- Clash of lifestyle apparel choices </li></ul></ul><ul><li>“ ...
<ul><li>Technology </li></ul><ul><ul><ul><li>- “Warp Speed” visibility to brand awareness -  Good & Bad </li></ul></ul></u...
<ul><li>The Dept. Store Format Stabilizes And Prospers </li></ul><ul><ul><ul><ul><li>-  Federated / Macy’s streamlines and...
<ul><li>“ Uncool” Stores Cease To Exist </li></ul><ul><ul><li>Mass / Midtier Customer Once Identifiable > Becomes Invisibl...
Cool Stores <ul><li>Costco </li></ul><ul><li>Home Depot </li></ul><ul><li>Victoria’s Secret </li></ul><ul><li>Target </li>...
<ul><li>Federated / Macy’s :  Big Upside </li></ul><ul><ul><ul><li>- Macy’s West: Prototype Future Better Department Store...
<ul><li>“ Versions”:  according to Webster </li></ul><ul><ul><li>A name given to a product or service </li></ul></ul><ul><...
My Version <ul><li>Labels Have Recognition •  Brands Have Loyalty </li></ul><ul><li>Labels Get Your Attention  •  Brands G...
<ul><li>3 Types of “Labels” </li></ul><ul><ul><li>Direct Retail Private Label </li></ul></ul><ul><ul><li>Generic Vendor La...
<ul><li>“ Generic Vendor” Label </li></ul><ul><ul><li>“ Vulnerable To Extinction” </li></ul></ul><ul><ul><li>Price Driven ...
<ul><li>3 Types Of Brands </li></ul><ul><ul><ul><ul><li>Vertical Retailer </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Tra...
<ul><li>Traditional Manufacturer </li></ul><ul><ul><ul><ul><li>Reliance on retail distribution </li></ul></ul></ul></ul><u...
<ul><li>7 Stages Of Development   </li></ul><ul><ul><ul><li>“Emerging” </li></ul></ul></ul><ul><ul><ul><li>“ Cool ” </li><...
<ul><li>Adults “Dress Younger” - “Less Serious” </li></ul><ul><ul><ul><li>- Subtract 10 years of age from your dated consu...
<ul><li>“The Modern History Of Apparel” </li></ul><ul><ul><li>3 Parts: </li></ul></ul><ul><ul><ul><li>Luxury / Premium </l...
<ul><li>The Term “Moderate Department Store Is An Oxymoron </li></ul><ul><ul><li>Squeezed From Both Ends (Luxury / Premium...
<ul><li>“ State Of The Union” </li></ul><ul><ul><li>Highly Competitive, Price Driven, Lack  Of Predictable Future / Long T...
<ul><li>Qualifications </li></ul><ul><ul><ul><li>Strategic Plan </li></ul></ul></ul><ul><ul><ul><li>Specific goals / objec...
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Retailconsolidation

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Retailconsolidation

  1. 1. Retail Consolidation The Continuing Saga!
  2. 2. <ul><li>Cause / Effect </li></ul><ul><ul><ul><li>- What’s driving retail consolidation? </li></ul></ul></ul><ul><li>The Retail Landscape ( Next 5 Yrs.) </li></ul><ul><ul><ul><ul><li>- Survival Of The Coolest? </li></ul></ul></ul></ul><ul><li>Life Expectancy Of Labels Vs. Brands </li></ul><ul><ul><ul><li>- Will the consumer figure this out? </li></ul></ul></ul><ul><li>Small / Mid Sized Apparel Manufacturers </li></ul><ul><ul><ul><ul><li>- Where do they fit? </li></ul></ul></ul></ul><ul><li>“ The Vanishing Middle” </li></ul><ul><ul><ul><ul><li>- Goodbye Generic! </li></ul></ul></ul></ul><ul><li>“ Generational Evolution of Apparel” </li></ul><ul><ul><ul><ul><li>- Youth Meets Boomer! </li></ul></ul></ul></ul>Retail Consolidation
  3. 3. <ul><li>The Taste Level Of America - “Forever Changed” </li></ul><ul><ul><ul><ul><li>- Thank You…Mickey Drexler and the Gap </li></ul></ul></ul></ul><ul><li>Once Upon A Time… </li></ul><ul><ul><ul><ul><li>Higher price points equated to better product </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Lower price points meant poor quality / “no taste” </li></ul></ul></ul></ul><ul><li>Now Its: “Good, Better, Best” Vs. “Cheap or Expensive” </li></ul><ul><ul><ul><ul><li>The Consumer doesn’t want cheap </li></ul></ul></ul></ul><ul><ul><ul><ul><li>They want “Good, Better, Best” at a discount </li></ul></ul></ul></ul><ul><li>Added Value Isn’t A Bonus… </li></ul><ul><ul><ul><ul><li>- It is a requirement! </li></ul></ul></ul></ul>Cause / Effect - What’s driving retail consolidation?
  4. 4. <ul><li>Apparel is declining in importance to the consumer </li></ul><ul><li>Lifestyle is driving apparel decisions </li></ul><ul><li>Apparel must adapt and provide relevance </li></ul><ul><li>Provide what they want…Not what they need </li></ul><ul><li>“ Good taste is expected” …”Good deal is desired” </li></ul>What’s Different?
  5. 5. <ul><li>“Live Young, Work Young, Look Old </li></ul><ul><ul><li>- The Aging Boomer will not go quietly…Dressing Younger is Cool </li></ul></ul><ul><li>The 40 yr old of 1981 </li></ul><ul><ul><li>vs. </li></ul></ul><ul><ul><li>The 40 yr old of 2006 </li></ul></ul><ul><ul><li>Single Biggest change… </li></ul></ul><ul><ul><li>Father / Son and Mother / Daughter all dress alike </li></ul></ul><ul><li>Price is the ultimate vehicle of change </li></ul><ul><ul><li>Price / Value equation much more important vs. past </li></ul></ul><ul><li>The “25-35 Year Old” Consumer Has A Different Perspective </li></ul><ul><ul><li>Based on exposure to all outside influences of Media </li></ul></ul><ul><ul><li>Grew up with different “Tools” (Instant Access) </li></ul></ul>The Changing Consumer
  6. 6. <ul><li>Effect of “Younger vs. Older” </li></ul><ul><ul><li>- Clash of lifestyle apparel choices </li></ul></ul><ul><li>“ Everyone looks good in a “Suit and Tie” </li></ul><ul><ul><li>- Casualization of America = Men with no clue </li></ul></ul><ul><li>“ No one buys an outfit to go out on Saturday Night” </li></ul><ul><ul><li>- Your Lifestyle dictates what you wear </li></ul></ul><ul><li>“ Households with children under 18 dramatically alter </li></ul><ul><ul><li>what parents wear” </li></ul></ul><ul><ul><li>Inherent awareness of what’s cool / what’s not </li></ul></ul>The “Generational” Shift of Apparel For Consumers
  7. 7. <ul><li>Technology </li></ul><ul><ul><ul><li>- “Warp Speed” visibility to brand awareness - Good & Bad </li></ul></ul></ul><ul><li>Old Adage: Better Product = Better Taste Level = Better Distribution </li></ul><ul><ul><ul><li>- Throw it out the window </li></ul></ul></ul><ul><ul><ul><li>- New School: Cool product at lower price points in broader distributional channels </li></ul></ul></ul><ul><li>Apparel Spending Grew In 2005 (+4% [2005] NPD) </li></ul><ul><ul><ul><ul><li>Mens Stronger Than Womens </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Lifestyle Segment Driven </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Price Factor: Important more than ever </li></ul></ul></ul></ul><ul><li>New Consumer Profile Emerging </li></ul><ul><ul><ul><ul><li>Non “Brand / Channel” specific </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Buy what they want / where they want </li></ul></ul></ul></ul>Changes In The Game Today
  8. 8. <ul><li>The Dept. Store Format Stabilizes And Prospers </li></ul><ul><ul><ul><ul><li>- Federated / Macy’s streamlines and further separates from mid/tier and discount to create “Reason To Exist” </li></ul></ul></ul></ul><ul><li>Brand Direct Retail Over-Expansion </li></ul><ul><li>“ Rush To Direct Retail” </li></ul><ul><ul><ul><ul><li>Survival Of The Fittest = Weeding Out </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“One Dimensional Brand Retail” Platform Fails </li></ul></ul></ul></ul><ul><li>Outlet Store Malls Re-Focus </li></ul><ul><ul><ul><ul><li>Good, Better, Best Brands = Better Product Offering </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Less “Outlet Private Label” </li></ul></ul></ul></ul><ul><li>“ Neighborhood” Niche Specialty Stores Emerge </li></ul><ul><ul><ul><ul><li>Non Mall Based “Cool” Stores: “Lifestyle Center” </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Destination Locations - I.E. Abbot Kinney </li></ul></ul></ul></ul>The Retail Landscape - Next Five Years
  9. 9. <ul><li>“ Uncool” Stores Cease To Exist </li></ul><ul><ul><li>Mass / Midtier Customer Once Identifiable > Becomes Invisible </li></ul></ul><ul><ul><li>Everyone Wears Cool Product </li></ul></ul><ul><li>Big Box Players “Modernize” Assortments </li></ul><ul><ul><li>Generic Product = Gone </li></ul></ul><ul><ul><li>Lifestyle Focus </li></ul></ul><ul><ul><li>Picture Multiple “Target” Formats </li></ul></ul><ul><li>“ Transformational” Brands Impact Retail Formats </li></ul><ul><ul><li>Think J.C. Penney / Sephora </li></ul></ul><ul><li>The Mall Reinvents Itself </li></ul><ul><ul><li>“ Plastic,” “Food Court,” “Non-Traffic Driven” Retail Space </li></ul></ul><ul><ul><li>Picture “Farmers Market Of Apparel” (Mixed Category / Real Life Experience ) </li></ul></ul>
  10. 10. Cool Stores <ul><li>Costco </li></ul><ul><li>Home Depot </li></ul><ul><li>Victoria’s Secret </li></ul><ul><li>Target </li></ul><ul><li>Whole Foods </li></ul><ul><li>American Eagle </li></ul><ul><li>Best Buy </li></ul><ul><li>Pac Sun </li></ul><ul><li>Abercrombie & Fitch </li></ul><ul><li>Lifestyle Focused </li></ul><ul><li>Clear Point Of View </li></ul><ul><li>Category Dominant </li></ul><ul><li>Modern / Relevant Business Model </li></ul><ul><li>“ Speed To Market” </li></ul>“ Common Thread”
  11. 11. <ul><li>Federated / Macy’s : Big Upside </li></ul><ul><ul><ul><li>- Macy’s West: Prototype Future Better Department Store </li></ul></ul></ul><ul><li>J.C. Penney: Big Opportunity </li></ul><ul><ul><ul><ul><li>- “Transformational Brands” (Sephora) Drive The Business </li></ul></ul></ul></ul><ul><li>K-Mart: Big Question </li></ul><ul><ul><ul><li>- Create Reason To Exist </li></ul></ul></ul><ul><li>Walmart: Big Challenge </li></ul><ul><ul><ul><ul><li>- Modernize Apparel Assortment And Add Brands </li></ul></ul></ul></ul>“ Retailers In Transition”
  12. 12. <ul><li>“ Versions”: according to Webster </li></ul><ul><ul><li>A name given to a product or service </li></ul></ul><ul><ul><li>A type of product manufactured by a company under a particular name </li></ul></ul><ul><ul><li>The name or trademark of a fashion company </li></ul></ul>Definition Of Brand vs. Label
  13. 13. My Version <ul><li>Labels Have Recognition • Brands Have Loyalty </li></ul><ul><li>Labels Get Your Attention • Brands Get Your Heart </li></ul><ul><li>Labels Serve A Purpose • Brands Serve A Consumer </li></ul><ul><li>Labels Offer Value • Brands Offer Value - Added </li></ul><ul><li>Labels Trust Consumers • Brands Consumers Trust </li></ul><ul><li>Labels Are For Now • Brands Are Forever </li></ul>
  14. 14. <ul><li>3 Types of “Labels” </li></ul><ul><ul><li>Direct Retail Private Label </li></ul></ul><ul><ul><li>Generic Vendor Label </li></ul></ul><ul><ul><li>Niche Specific / Category Expert Label </li></ul></ul><ul><li>Direct Retail Private Label </li></ul><ul><ul><li>Continued Evolution Of Superior Price Value Equation </li></ul></ul><ul><ul><li>Future Upside in Better Design And Quality Execution / Investment </li></ul></ul><ul><ul><li>Specialty Retail Dominates Execution Vs. Department. Store / Midtier </li></ul></ul>Life Expectancy Of Labels Vs. Brands
  15. 15. <ul><li>“ Generic Vendor” Label </li></ul><ul><ul><li>“ Vulnerable To Extinction” </li></ul></ul><ul><ul><li>Price Driven </li></ul></ul><ul><ul><li>“ No Reason To Exist” </li></ul></ul><ul><li>“ Niche Specific / Category Expert” Label </li></ul><ul><ul><li>Future Is Bright </li></ul></ul><ul><ul><li>Creating Expertise In Category </li></ul></ul><ul><ul><li>Flexible Sourcing / Design Capabilities </li></ul></ul>
  16. 16. <ul><li>3 Types Of Brands </li></ul><ul><ul><ul><ul><li>Vertical Retailer </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Traditional Manufacturer </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Licensing </li></ul></ul></ul></ul><ul><li>Vertical Retailer </li></ul><ul><ul><ul><ul><li>100% in Control </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Direct Access to consumer </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Best price / value equation </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Fastest “Trend to Market Provider” </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Sales Comps: “True Barometer of Success” </li></ul></ul></ul></ul>
  17. 17. <ul><li>Traditional Manufacturer </li></ul><ul><ul><ul><ul><li>Reliance on retail distribution </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“Middleman to Consumer </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“Limited” control </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>- Pricing, Point of Sale, Positioning </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>“Wholesale Sales” growth </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>(vs. Retail Sales Success ) </li></ul></ul></ul></ul></ul><ul><li>Licensing </li></ul><ul><ul><ul><ul><li>“3rd Party” Control </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>- Licensor to licensee to retailer </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Management of diverse licensee cultures: “One Voice” </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“Direct correlation of success </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>- Degree of brand promise kept </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>“ Brand Extension” - revenue growth </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“ Difficult” control </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>- Wide variations: “Best to None” </li></ul></ul></ul></ul></ul>
  18. 18. <ul><li>7 Stages Of Development </li></ul><ul><ul><ul><li>“Emerging” </li></ul></ul></ul><ul><ul><ul><li>“ Cool ” </li></ul></ul></ul><ul><ul><ul><li>“Aspirational” </li></ul></ul></ul><ul><ul><ul><li>“Accessible” </li></ul></ul></ul><ul><ul><ul><li>“Mainstream” </li></ul></ul></ul><ul><ul><ul><li>“ Declining ” </li></ul></ul></ul><ul><ul><ul><li>“ Gone ” </li></ul></ul></ul><ul><li>Direct correlation to sales volume & stage of development </li></ul><ul><li>The hotter the brand gets - The younger the consumer that embraces it. </li></ul><ul><li>Define brand strategy before stage 4 ( “Accessible” ) </li></ul>Life Of A Brand
  19. 19. <ul><li>Adults “Dress Younger” - “Less Serious” </li></ul><ul><ul><ul><li>- Subtract 10 years of age from your dated consumer profile </li></ul></ul></ul><ul><li>“Being Cool” vs. “Dressing Cool” 2 Different Things </li></ul><ul><ul><ul><li>- Cool Products exist at all distribution points vs. 5 years ago </li></ul></ul></ul><ul><li>Remaining “Separation Factor” of cool: “ Brands ” </li></ul><ul><ul><ul><ul><li>“Tribe Differentiator” </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“Lifestyle Statement” </li></ul></ul></ul></ul><ul><li>Price / Value Equation: New Dynamic </li></ul><ul><ul><ul><ul><li>More choices to spend money on </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Apparel facing new competition </li></ul></ul></ul></ul>Brands Today
  20. 20. <ul><li>“The Modern History Of Apparel” </li></ul><ul><ul><li>3 Parts: </li></ul></ul><ul><ul><ul><li>Luxury / Premium </li></ul></ul></ul><ul><ul><ul><li>Generic / Mainstream </li></ul></ul></ul><ul><ul><ul><li>Mass / Commodity </li></ul></ul></ul><ul><li>“Educated Consumers Changing The Game” </li></ul><ul><ul><li>Better Fashion, Better Quality, Cheaper Price </li></ul></ul><ul><ul><li>“ Polarization” Of Retail Landscape </li></ul></ul><ul><ul><li>Direct Brand Retail Replacing The Middle </li></ul></ul><ul><ul><li>Generic Product Rapidly Vacating Middle Tier </li></ul></ul><ul><ul><li>Mass Getting “More Sophisticated” On A Daily Basis </li></ul></ul>The Vanishing Middle
  21. 21. <ul><li>The Term “Moderate Department Store Is An Oxymoron </li></ul><ul><ul><li>Squeezed From Both Ends (Luxury / Premium and Big Box / Mass) </li></ul></ul><ul><li>Growing Trend : </li></ul><ul><ul><li>Luxury / Premium Fashion Mass / Commodity Prices </li></ul></ul><ul><li>Generic Product : </li></ul><ul><ul><li>Forces Consumer to search for lowest common denominator price point </li></ul></ul>
  22. 22. <ul><li>“ State Of The Union” </li></ul><ul><ul><li>Highly Competitive, Price Driven, Lack Of Predictable Future / Long Term Status </li></ul></ul><ul><ul><li>Forced To Compete With Large Public Apparel Firms ( Chargebacks, Allowances, Discounts ) </li></ul></ul><ul><ul><li>Increasing Margin Pressure </li></ul></ul><ul><ul><li>100% Of Existence Held In the “Hands Of Retail Distribution Or Wholesale Brand” </li></ul></ul>The Lifecycle Of The Small / Midsize Apparel Company
  23. 23. <ul><li>Qualifications </li></ul><ul><ul><ul><li>Strategic Plan </li></ul></ul></ul><ul><ul><ul><li>Specific goals / objectives </li></ul></ul></ul><ul><ul><ul><li>Proper due diligence </li></ul></ul></ul><ul><ul><ul><li>“ Realistic diagnosis of the patient” </li></ul></ul></ul><ul><ul><ul><li>Time frame - you can live with </li></ul></ul></ul><ul><ul><ul><li>Financial support to execute </li></ul></ul></ul><ul><li>Tools </li></ul><ul><ul><ul><li>Sub-Branding </li></ul></ul></ul><ul><ul><ul><li>New product launches </li></ul></ul></ul><ul><ul><ul><li>Multi-channel distribution strategy </li></ul></ul></ul><ul><ul><ul><li>Category extensions </li></ul></ul></ul><ul><ul><ul><li>Trade Advertising </li></ul></ul></ul><ul><ul><ul><li>“ Exclusive” brand extensions </li></ul></ul></ul>“ Requirement For Survival ”
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