
A new class of experiential retailers is rising - okket
https://www.businessoffashion.com/articles/opinion/why-mass-merchants-are-toxic-and-a-new-era-of-retail-is-coming
======
doitLP
Diferentiating your company with an "exclusive brand experience" has led to
another kind of race to the bottom. More and more brands are trying to be the
most "iconic", "relevant", "fresh", "sexy". The commoditization of these
concepts is everywhere. They get so diluted and commericalized in the barely
veiled desperation for relevancy that now I avoid such "experiences" whenever
I realize I'm being "engaged with". I might buy your overpriced tshirt on its
own merits, just don't try to tell me I'm changing the world by wearing it.
Such a concept has a very precise, limited application that gets unsustainably
depleted when used by a bunch of clothing companies. It's the marketing
version of strip mining.

~~~
HappyKasper
In my experience selling a consumer product, barely a month goes by without a
new PR/marketing agency telling me we should “go for the green angle”. Few
people seem to understand that, like you said, these common differentiators,
in my case “green/natural”, have become extremely commoditized.

~~~
soared
But on the flip side, they're commoditized because they are very effective. I
believe few consumers share your point of view.

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harrumph
There is, despite what's been written here, no "breakdown" of the wholesale-
retail model for revenue, except in the minds of lazy editors such as whoever
edited this piece.

Brick and mortar sales exceed online sales by nine to one. Obviously the trend
line is moving away from brick and mortar, and equally as obvious, at least in
the commercial real estate industry, the US is way, way overbuilt with retail.

So closures will continue, and articles featuring the "apocalypse" premise
will continue, and at the end of ten years, brick and mortar...will exceed
online by maybe 8 to 1.

That said, the article central premise is sound. Designed experiences in
surviving retail space are going to get deeper and more numerous.

~~~
jessriedel
Your points seem mostly logically separate from those in the article. (You may
have extrapolated too much from the title.) The author is arguing that Nike
and other high-profile brands will move to direct-to-consumer sales rather
than using intermediate wholesalers. But he explicitly includes Nike-branded
brick-and-mortar shops as an example of this shift. He's not arguing on brick-
and-mortar vs. online.

~~~
hosh
More then that, there is an inversion: The experiential retailers are actually
media channels and gets compensated with promoting the brand. That is, Nike
shifts from being a vendor of the retailer to a client of the experiential
retailer.

That neatly addresses the growing practice where a brand consumer goes into a
physical location and then purchases from online.

In other words, the inversion makes the brick and mortar vs retailer dichotomy
meaningless in terms of sales.

It's kinda like what Tesla has already been doing.

What is not said in the article: the role of Amazon in squeezing traditional
retailers from the othet side; the continued erosion of broadcast advertising.

------
flyinglizard
This is just an intermediate step in the inevitable shift to direct to
consumer sales. Between Walmart, Amazon, dying retail and malls and
globalization which killed control of product distribution worldwide, this is
the only conclusion.

Brands will want to engage with customers directly and cut Bezos and co. out.

~~~
tomjen3
Honestly as a consumer "Engaging with brands" is somewhere just below getting
a root-canal on my list of non-favourite things. Really I don't want to
"engage" with anything I just want to give you some money in exchange for your
stuff - why don't they get this?

~~~
drewbuschhorn
At the risk of stereotyping, I don't think you or I are the target consumer.

The last high end fashion item I bought was a suit 3 years ago. Meanwhile my
wife buys from the same higher end fashion retailers over and over.

~~~
tomjen3
That is probably true, although I do buy good suits - but even so has your
wife ever "engaged with a brand" or does she think of it as "purchased a
gorgeous looking $CLOTHING_ITEM"?

~~~
drewbuschhorn
Seems to me like it's the brand, because she'll find something similar on
Amazon then talk herself into going to the brand's store for various reasons
instead of buying the basically identical knock off.

My favorite reason is "I think the brand name holds up better," ... for the 5
times you'll wear it? But it makes her feel like we're doing well in the rat
race, so works for me.

~~~
lucio
LOL. Just make sure she doesn't read your HN comments. I guess you're a smart
man with a happy marriage. Kudos.

~~~
drewbuschhorn
Oh we've had the conversation and she agrees with me, but then goes and buys
it anyway and I don't judge her for it.

That's compromise that is.

------
nimos
"New competitive pressure force established brands to come up with new ways to
trick people into paying 200 dollars for things that cost 10 dollars to make."

~~~
soared
Because the material cost to produce 1 shirt is the only variable to determine
its price. Nike doesn't need to pay for anything else.

~~~
lucio
HN readers are not the typical consumer. I guess the majority here will buy
after making a comparative table and a Phyton/Go/node script to scrap prices
from the web. :)

OTOH the typical consumer wants to "feel good" and part of a "special club"
when buying, they want "an experience". That's what Nike sells along with the
shoe, and that amounts to 80% of the price. /half-joking

~~~
Noos
HN users are just as vulnerable to branding as anything else; it's just
different values. Linux in particular is a massive triumph of branding; it's
success is based much more on the intangible benefits of open source and that
particular "lifestyle" than utility compared to its competitors. Not a few
products position to this crowd, namely the various phones for privacy geeks
as one example.

------
GuiA
Lots of marketing speak in there so my TLDR (with apologies to ‘sitelus): when
people want to buy Nikes, they go to Nike.com, not drive to the nearest mall
(except for grandpa buying nike’s for his grandson’s birthday, but there are
fewer and fewer of them, and even then they might not have the model that
grandpa wants, resulting in a potentially lost purchase).

Running a successful company is about managing focus and effort. In the light
of the above, Nike has decided that dealing with mass retail is just not worth
the effort+time investment anymore.

You still want to have a physical presence in the real world, but you want it
to be iconical - people making a point to going to the Nike Store, etc (did
Apple pioneer the modern version of that concept? I can’t think of product
companies who did something like it before). So that’s what Nike is betting
on.

~~~
libertine
It depends on where you stand geographically - in some places, there are
retailers who are simply the go-to solution.

Now, anyone who knows some history of marketing, or who have been working on
this for some time, knows that the sales channel helps with brand positioning
- this is basic marketing.

If you have a luxury brand (yes, Apple is a luxury brand) you stand where
luxury brands are - you even use media that luxury brands use for advertising.

Nike was about empowering people who liked sports - they were a mass market
brand. That's where mass retail comes to play because they have distribution
on the scale to the masses - the problem is that they squeeze margins. Mass
retail REMOVES effort + time from the equation precisely.

Maybe Nike just wants to thicken their margins, since they are watching what's
happening with SUPREME - a fashion brand where people make lines to buy
t-shirts... if SUPREME cult can do it, with ridiculous margins... why can't
they?

Nike has the brand cult, they have the product, now they just bump the prices
and create the idea of exclusivity with a small supply - the illusion of
scarcity.

I mean, they have a good example with basketball shoes in the USA.

Secondary market will love this.

Btw, Apple didn't pioneer the concept of the modern brand stores - they copied
boutiques from luxury jewelry and watches brands.

~~~
tgb
Nike has been doing the "costumers standing in lines to buy their product"
thing for longer than Supreme has existed. Their basketball shoe line has been
massively cultish since at least Michael Jordan.

~~~
libertine
It's a distant reality from my culture, didn't knew that was already a thing
at product release!

------
kevin_thibedeau
I gave up on Nike because the quality of their shoes have plummeted with
cheaper materials and inflated prices.

~~~
alehul
I was actually just looking into some Nike running shoes.

Any alternative you'd recommend for running shoes?

~~~
acheron
Brooks, Asics, Saucony for running shoes.

~~~
module0000
+1 for Asics - the foot fitness guru in basic training fitted me for them 20
years ago, and I've been happy with them ever since.

------
mitchtbaum
m-commerce virtual shelving[0] allows mid-level e-commerce ventures to

(1) setup branded in-store experiences / show rooms

(2) align logistics supply lines (manufacturing, importing, warehousing,
distribution suppliers) to move supplies closer to "pickup points"

(3) connect local partner "distribution points" and "pickup points" to also
act as 1-hour delivery using Uber, PostMates, etc

Online retailers need to connect their own existing shopping experience with
local shops using virtual shelves, think backlit movie posters outside a movie
theater. This can come in the form of dedicated walls, laminated print book, a
simple picture frame, etc in a friendly location and an option to either ship
or local pickup. As long as the local shop is tied into their partners' back
offices and they believe in the brand, they can represent it well and act well
on their own behalf by splitting the sales generated at minimal cost of mostly
a little unused closet space. This lessens the need for mega shops like Amazon
and eBay, as well as for mega logistics providers like UPS and FedEx because
there are many warehousing and cargo van subcontractors available.

For an example, I've seen yoga studios with small, unmanned in-store corner
shops and similar in martial arts studios and small gyms. They might have a
small group of hand-picked supplies, whereas, in this model, a new company
that for example has a brand new safety gear might search them out and see
their gym members as a good target. Then by setting up what we might call a
consignment deal today, they can have a delivery of supplies on the next run
from their partner warehouse and the new rep can start printing out and
framing their displays for immediate roll out.

This would have unlimited potential for those who want to setup the deals that
connect e-commerce and retailers as well. That is also a branded experience,
and wheels need greasing.

0:
[https://www.youtube.com/watch?v=3lTdE2pfiX8](https://www.youtube.com/watch?v=3lTdE2pfiX8)

------
navbaker
>For consumers, to whom shopping experiences matter as much, or more, than
products, mass merchants are bringing nothing to the table.

I’m not sure if it’s just me not being a hyper brand-conscious teenager
anymore or if I’m just out of touch, but out of this whole nauseating article,
this statement was (to me) the most ridiculous. When I need or want a product,
I don’t give two shits about the shopping experience other than did I find the
product in a convenient manner and was it priced low enough for me to afford
it.

I’m ignorant of the economics at work here. Is there really money to be gained
by abandoning a strategy of lower prices but wide availability for one of more
expensive and harder to access?

~~~
lucio
Yes. A lot of money, but its really hard to get there. Think of brands like
Luis-Vuitton, Bentley, Burj-Al-Arab. [https://conversionxl.com/blog/product-
pricing-strategies-and...](https://conversionxl.com/blog/product-pricing-
strategies-and-techniques/)

~~~
Noos
Those brands never had wide availability to start with, and are straddling the
line between commodity and bespoke goods. Nike really is a mass maker of
commodity shoes; they have a slightly better brand cachet, but the audience
for sneakers is a lot more mainstream and wouldn't support that kind of
positioning.

A similar example would be in MP3 players. Remember Neil Young's Pono?

[https://en.wikipedia.org/wiki/Pono_(digital_music_service)](https://en.wikipedia.org/wiki/Pono_\(digital_music_service\))

That's trying a higher scale of positioning, but failed.

~~~
navbaker
I guess that’s what I was trying to get at. I understand how brands like Gucci
get away with ludicrous pricing and positioning themselves as exclusive, but I
have a harder time understanding why this is a good strategy for a company
like Nike.

------
purplezooey
In many places we need to demolish retail and build housing. In CA there are
perverse incentives (prop 13) that continue to drive retail construction over
housing. Thanks Howard Jarvis.

~~~
prostoalex
How does prop 13 encourage more retail construction?

~~~
purplezooey
Municipalities make a lot more in taxes on a lot if it's retail vs. housing so
are more incented to approve...

~~~
prostoalex
Commercial property in California for whatever reason is also covered by Prop
13, so the property tax increases are limited. A large retailer of Costco or
Walmart variety is able to move the needle as far as the underlying property
valuation, which is why they typically assure a tax break before they even
consider development. If the commercial property is owned by a REIT, and the
retailer carries a long-term lease, the REIT as the landlord is covered by
Prop 13 as far as potential valuation volatility goes.

There's a cut of the sales tax revenue that municipality gets, but commercial
projects like shopping plazas also require significant municipal spending as
far as the roads, street lights, infrastructure hookups, etc.

I live in Southern California which has a sprinkle of small towns packed into
a limited space, with a new town forming through annexation every few years or
so. Some towns are very commerce-friendly, some are very unfriendly. You'd
assume that towns with a large retail presence are swimming in cash, while
those that are mainly residential have a Prop 13-caused budget crisis any time
they need to replace a light bulb in a street light, but it's not the case.

There are some very rich (as far as cash flow statements and balance sheets)
towns that are purely residential and there are very poor towns with
significant shopping and industrial presence, as well as the opposites of
those two.

------
baxtr
In Europe there is suitsupply. They have a very different approach to in store
experience even though they started as online only store. They greet you with
their first name, ask some personal questions (not creepy though), and try to
find out what you really need. I always feel quite welcomed there.

~~~
richardknop
I don't know whether I am in a majority or a minority. But I hate it when I go
to a shop, am walking around and just browsing, and random store employees
come to me for a chat, ask me questions etc.

I don't want to be approached and forced to have a conversation until I decide
I want to proceed and buy something or try something on. Just let me browse
without bugging me. I am more likely to find something I like and give you
money that way.

~~~
baxtr
I can totally understand that, I often feel the same way. I think it makes a
huge difference how and when you are approached. That’s when a real good
salesperson will show their skill.

------
matt_morgan
There's something missing in this, I think, which is exactly what about the
experience makes in-person retail work. Compare buying a book at a bookstore
to buying it on Amazon or bn.com. Still, 20 years later, it's only good online
if you know more or less what you want. Yes, you can buy a bestseller, yes,
you can look at recommendations. But you can't walk into amazon.com and find
something you didn't even know you wanted like you can in a local bookshop, a
branch library, or a giant B&N. There is still a lot of room for growth and
building a nike-branded area inside some big retailer is not the half of it.

------
Noos
This isn't a new era of retail. The article mentions that instead of
widespread availability, retailers will sell direct to customer and only in a
few stores. However, we have had this already with multiple brands; Bose is
probably the primary example of this trend. And Bose is successfully
challenged by Beats, who does normal retailing with many retailers.

Nike can try doing this, but they might find they've ceded a lot of ground to
a rival brand who is willing to be visible and widespread.

~~~
dkuebric
Beats proves the article's point: they're part of the Apple retail and direct
to consumer experience.

------
dzink
They simply want to boost conversion of their product, which likely sells less
as a shelf item with hefty stocking fees for a commodity experience. For
wealthier shoppers (the target market of these brands) shopping is
entertainment - something you do when bored. If the product can’t
differentiate itself on a shelf, doing the brand maneuver justifies the high
prices a lot better.

------
watertom
Wouldn't just limiting the selling price, like what Apple does prevent this
race to the bottom?

Nike would still be free to pursue in store unique "Nike experience" selling
pods with those 40 or so retailers.

------
godzillabrennus
Wow. Reading this, having spent some years doing retail tech, I feel that
Nike’s shift in strategy is as game changing for retail as $10K bitcoins will
be seen for the finance world.

This is seismic change in strategy.

~~~
miketery
Can you please expand how it's a seismic change? Also Bitcoin is a bad
comparison as we havent seen that through to its conclusion. If you wanted to
say something was seismic, iPhone would be a better comparison as there is
clear indicators of how it changed the landscape.

------
sytelus
TLDR; Brands like Nike don't want to partner with 1000s of outlets that they
typically did. Instead they will only work with 10s of partners who are
willing to invest in creating brand specific unique experiences.

I am not sure if this is right approach. I think the whole era of "brand
ambassador", "store experience" etc has ended. Previously brands carried
promise of quality and uniqueness however these days this promise has been
transferred to store itself that distributes those brands. Now these
distributors are able to get similar quality from relatively unknown brands
and sell at higher margin. This likely because most brands have centralized
their manufacturing to places like China and there is usually same
manufacturer there which produces same goods, one with brand label and other
without. So as brands have outsourced their manufacturing, they have also
outsourced their expertise.

~~~
walterbell
Is there a github/wikidata list of global manufacturers and the branded goods
made by each factory? In theory, that would enable supply chain transparency,
e.g. Amazon plugin for online shopping or mobile app for offline shopping.
Note that the same factory can make goods to different quality specifications,
depending on brand requirements.

~~~
dates
datamyne, importgenius, panjive, 52wmb are all services that collect shipping
manifest information and make it searchable

~~~
walterbell
Thanks for the pointer, which lead to [https://www.quora.com/Panjiva-vs-piers-
vs-zepol-vs-import-ge...](https://www.quora.com/Panjiva-vs-piers-vs-zepol-vs-
import-genius)

------
chriscappuccio
since the quality of nike's products is often much lower these days, fuck,
WHY?

