Memo: Four Trends For Fashion’s Future

When you think of Vuori, Psycho Bunny, Faherty, Johnnie-O, and Bombas, you think of their rare growth trajectories. None of the brands were first-movers; they each had stiff competition form incumbent retail brands and better-positioned DTCs. But something set them apart from the rest. Here’s an example of how many of these brands work against the typical best practices associated with the segment:

Tucked away in suburban Ohio, a small boutique features a number of brands, none of which are native to the midwest. One trip around the Trevor Furbay boutique in Dublin and you’ll find Faherty, Johnnie-O, and Vuori among others. For smaller formatted stores like this one, it’s rarer to find modern brands of the caliber of those mentioned. For the brands, this type of distribution is a lot of work for relatively little revenue. To a brand of Vuori’s size, this could seem like a waste of time and energy. But for brands like these, who’ve excelled in the art of finding customers where they are, there is no such thing as an account too big or one too small.

These brands are not just popular; they are reshaping what high-performance retail looks like. With their own unique stories and approaches to business, they are rewriting the rules of success for retailers across the globe. Let’s delve deeper. In a recent deep dive by Women’s Wear Daily, the report explained the characteristics that other DTC brands can replicate for their own success. WWD explains the difficulty in achieving what these brand have:

But there are brands that have managed to break that cycle and build highly profitable businesses. In menswear, some of the most impressive include Vuori, Psycho Bunny, Faherty, Johnnie-O and Bombas. Although they service different parts of the market — everything from socks and activewear to polos and beachy button-downs — they have managed to navigate through the potential pitfalls to build multimillion-dollar businesses.

Their stories emphasize the importance of authenticity, quality, social responsibility, and community engagement – trends that are shaping the future of the retail industry.

In an increasingly competitive market, staying true to a brand’s ethos while adapting to market shifts is as difficult as it is crucial. As these brands demonstrate, remaining customer-focused and delivering high-quality products can drive significant growth. Upcoming retailers and DTC brands looking to replicate this success should focus on these aspects: offering unique, quality products, demonstrating social responsibility, fostering a strong brand community, and perfecting channel mix.

This could not come at a better time as fashion retail is poised for a leap in volume of sales for 2023. It’s never been more important to be build close relationships with consumers as competition grows between competitive brands.

Seeing those brands prioritize a small but potentially influential local retailer got me thinking about how each of these companies did so well to build brands with loyal followings, appropriate amounts of inventory, reach, and profitable growth. Here are the top four characteristics shared by each of these retailers.

Trend: Prioritize Product Quality and Innovation

Product reigns supreme in these companies. If you’ve shopped any of them, this is evident. They understand the three Ps of business: Product, Product, and Product. Bombas, a sock company that also deals in other basics, has taken the ‘product-first’ strategy to heart. They prioritize the quality and the utility of their products and you can tell when you wear them. Faherty, an East Coast-based family business, also follows this principle. They deliver products with an East Coast beach flavor made from sustainably sourced materials. The key to their success has been their dedication to creating exceptional products that are both durable enough, appealing, and readily available to consumers.

Vuori was a fitness brand born out of necessity, and another exemplar of this strategy. In “Size Charts, Returns, and EBITDA,” I explained:

Over the course of the pandemic, Vuori became one of the fastest-growing modern brands in the fashion retail space. When the retailer landed its $400 million Softbank investment (at a $4 billion valuation) in 2021, I admittedly didn’t understand the buzz. Then I bought my first pair of joggers from them around a year later. REI, one of Vuori’s top wholesale partners, made it easy. A section of the store is devoted to the brand and an REI associate is frequently stationed within the shop to answer any questions. I was an immediate fan.

Vuori offered an innovative solution to a lack of appealing athletic wear, leading to its exponential growth.

Trend: Craft a Distinct Brand Story and Culture

These standout brands don’t just deliver great products; they also built compelling stories and cultures around their brands. As CEO Dave Gatto of Johnnie-O said, “a brand is a living organism, more than just a logo or a name.” A successful company must create a culture that reflects its brand ethos.

Psycho Bunny turned the challenges it faced in its early years into an inspiring success story. This excerpt begins the narrative that laid the groundwork for the company’s present day stature:

But around 2013, things began to unravel and Psycho Bunny experienced operational issues and internal struggles. Enter Alen Brandman to the rescue.

In 2021, Brandman became the brand’s majority owner. Similarly, Bombas’ advertising campaign Compassion = Change was a powerful expression of its brand story. This campaign was instrumental in spreading awareness about homelessness and promoting a more compassionate approach towards this issue. And, Faherty had a strong human capital ethos that shaped its culture and had consistently been a part of its brand story over the past decade.

Trend: Understand Your Customer and Their Needs

These successful DTC retailers understood their customers and their needs better than anyone else. Johnnie-O’s focus on ‘West Coast prep’ resonated with its target market. Bombas’ approach to addressing the issue of homelessness through its business model appealed to its consumers’ sense of social responsibility. Vuori and Faherty too, with their unique, high-quality wears, understood and catered to the needs of their respective target markets. This quote by Brandman was pretty solid:

Men especially are strange creatures. Some men have the same type of underwear for 12 years. Some men have the same T-shirt for 10 years, so you need to make sure those core fundamentals are treated with great respect to ensure people are going to come back. And we’re not going to do anything to breach that trust.

These brands are not just selling products; they are partnering with their consumers, selling a lifestyle and fostering loyalty to an identity that their customers could connect with.

Trend: Leverage Multiple Channels for Distribution and Growth

This is the key trend, in my opinion. And it goes back to the second paragraph: several of these brands saw value in working with a small store that would barely move the needle from a sales volume standpoint. Each of these brands recognized the importance of multiple distribution channels to their growth. While direct-to-consumer retail was a crucial part of their success, they also understood the value of physical retail spaces and wholesale partnerships.

Faherty, for example, has a significant brick-and-mortar presence and operates 52 stores around the US. Psycho Bunny, despite facing internal struggles and operational issues in the past, managed to bounce back and is currently present in over 70 retail locations across North America. Vuori has followed a similar path, starting out as a direct-to-consumer brand, and then branching out into wholesale. Their strategy shows how a multi-channel approach can help a brand expand its reach and tap into different customer segments.

The success stories of these high-performing DTC brands offer a road map for other retailers. By focusing on product quality, crafting a compelling brand story, understanding the customer, and leveraging multiple channels for distribution, a retailer can replicate their success. But in the end, the internet remains the center of the wheel for these retailers. Vuori founder Joe Kudla:

There’s so much to learn about navigating different cultures and consumer preferences, but that’s the stuff I view as fun. The real challenges were raising money and getting our product marketing and fit correct. Two years in, I thought we were going to run out of money so I thank my lucky stars for the internet and being able to sell online.

These brands have shown that it’s possible to carve out a niche in the market by taking lessons from DTC’s past and challenging the status quo. As the retail landscape continues to evolve, the lessons from these trailblazing brands will remain relevant, guiding the way for future DTC success stories.

Emulating these brands doesn’t require massive investment or out-of-the-box thinking, but instead a dedication to quality, community, and authenticity. It’s a testament to the potential of retail done right, proof that in an industry often seen as challenging and unpredictable, success is achievable when businesses stay true to their values and put the customer first.

Por Web Smith | Editado por Hilary Milnes con arte de Alex Remy y Christina Williams 

Memo: The Returns Coup

The eCommerce industry is a dance between partners, economic conditions, and balance sheets. Affirm, Shopify, Deliverr, Flexport, Returnly, and Loop have all had their moments on the dance floor this year – each striving to perfect their routine while keeping pace with the rhythm of market dynamics, consumer behavior, and technological progress. But of them all, Shopify is the key benefactor; Loop is the latest beneficiary. Effectively acquiring the chief competitor while bolstering its relationships with two of the most important software platforms in all of commerce.

It’s all one big give and take. Shopify’s divestment of its Deliverr investment may see Flexport benefit over the longterm. Shopify and Flexport deepened their alliance as a result.

Shopify and Flexport are deepening their alliance as Shopify seeks to compete with e-commerce rivals such as Amazon and Walmart. The companies announced a partnership in February that gives Shopify merchants access to Flexport’s freight services, including booking international shipments from suppliers to their warehouses. Flexport also counts Shopify as an investor.

Then, last week, it was publicly announced that Loop did a deal of a lifetime. In what was essentially an acquisition of Returnly, CEO Jon Poma structured a deal that may send a large number of Returnly’s clients from Affirm to Loop in exchange for Loop stock to Affirm (though this agreement is a partnership and not a bonafide acquisition). In line with what was explained above, Affirm counts Shopify as an investor. Loop also counts Shopify as an investor.

Amidst this symphony, the returns segment of the industry has often been offbeat, posing significant challenges to both consumers and retailers. The ‘return to sender’ card was held by as much as 16.5% of overall sales in the past year, tallying up to an imposing $800 billion-plus in return value according to Wayne Pommen, Affirm’s Chief Financial Officer. But as any seasoned dancer would know, to evolve, sometimes, you need to learn new steps. Reflecting this ethos, Affirm and Loop Returns have choreographed a strategic partnership that will nearly double Loop’s business and remove a competitor, all while improving Shopify’s position in a two-fold manner.

Returnly’s clients partnering with the long-time Shopify loyal, Loop Returns, means more ecosystem lock-in and a surer bet from its equity position from its 2021 investment into Loop.

While Shopify was investing in Loop’s Series B, Affirm and Returnly partnered for a tango of their own. Acquiring Returnly was Affirm’s response to the incessant growth of returns and an attempt to streamline the industry. The data reflected in this essay’s title card can begin to explain why Affirm was motivated to enter the returns business. Returns revenues boomed in 2021.

Returnly, with its self-service online returns experience, catered to more than 8 million shoppers, swaying to the beat of returns and exchanges. Yet, two years later, influenced by the increasing importance of core profitability, Affirm decided to change both its dance and its partner. Divesting Returnly, Affirm moved in tune with Shopify’s previous divestment from its logistics business, underlining a trend of letting specialized partners lead in non-core operations.

Ironically, Loop Returns, a company now nurtured with investments from both Affirm and Shopify, emerged as the beneficiary of these strategic divestments. Loop, with its commitment to making returns a more harmonious dance for businesses and customers, struck the right chord. It provided the perfect rhythm for more than 2,200 merchants, enabling them to reduce refunds and retain more revenue according to Pommen (not to be confused with Poma). Affirm’s new dance partner will prove to be a harmonious fit. The timing of the transition couldn’t have been better.

Loop’s CEO, Jonathan Poma, described the partnership as a grand assembly of industry leaders, sharing the common goal of orchestrating better returns for businesses and customers. Poma said merchants moving from Returnly to Loop “will be joining brands such as Princess Polly, Allbirds and Tecovas who continue to trust Loop to manage their returns. Joining Loop’s platform will positively impact your business by delivering meaningful cost savings — from reducing refunds to optimizing your reverse logistics processes.”

With Affirm passing the baton of Returnly to Loop, it enables the latter to optimize the returns experience for an additional 1,500-plus merchants. For these merchants, joining Loop’s platform holds the promise of transforming their returns process from a frenzied jig into a well-orchestrated waltz, with cost savings, enhanced operational efficiency, and a seamless customer experience.

As PYMNTS recently reported, Affirm’s acquisition of Returnly for $300 million in cash and equity occurred at a time when the eCommerce dance floor was more crowded than ever; the pandemic, hungry investors, and a quickening pace of adoption all influenced the all-cash deal and 10x return to Returnly’s venture capitalists. But as the music (ahem, economy) slowed, Affirm decided to refocus on its core operations, a move that echoes the strategic decisions of other key players in the eCommerce sector. Affirm’s CFO said it best:

This partnership with Loop and the divestiture of the Returnly business will allow Affirm to take an even deeper focus on driving strong growth and profitability in our core business, serving our merchant and platform partners with world-class payments and technology solutions, accelerating our direct-to-consumer offerings, and building on our deep capabilities in underwriting and decisioning.

Translation: Affirm needs to capture as much of this growth as possible to remain a viable BNPL business:

As this grand dance progresses, the trend is evident. eCommerce industrialists are recognizing the value of forming equity-based, strategic partnerships to address non-core operations, allowing them to concentrate on perfecting their signature moves. The strategic decisions of Affirm and Shopify to divest from non-core operations and engage Loop Returns in managing the returns process mark a significant shift in the eCommerce industry. In many ways, Loop executed the perfect coup.

By setting new trends and orchestrating new, long-term partnerships, these companies are poised to redefine the eCommerce landscape and its financing mechanisms. As Shopify, Affirm, and Loop continues to improvise and innovate, the dance of eCommerce is set to reflect improved efficiency, enhanced customer satisfaction, and increased profitability. It’s a dance where everyone is learning, adapting, and, above all, evolving.

Por Web Smith | Editado por Hilary Milnes con arte de Alex Remy y Christina Williams

Memo: Hacia dónde van los comestibles (2053)

El futuro del sector de la alimentación se encuentra en una encrucijada. El conservadurismo fiscal, los avances tecnológicos, la escasez de mano de obra y los cambios en las preferencias de los consumidores configurarán drásticamente el panorama de la alimentación en los próximos 30 años. Este ensayo examina estas influencias y propone una hoja de ruta estratégica para el sector. Según datos recientes de la empresa mundial de ciencia de datos Dunnhumby, se ha producido un cambio notable que influirá en el resto de este informe. Durante la última década, la rapidez de entrega y la comodidad general fueron el centro de muchas decisiones de compra. Hoy, los precios y las promociones pueden estar eclipsando las ventajas de la era del comercio electrónico. Del extenso informe de Dunnhumby:

2022 se centraba en encontrar los productos adecuados a los precios adecuados y no tanto en ahorrar tiempo. "Precio, promociones y recompensas" ha sido siempre la necesidad más importante en nuestro modelo, y probablemente ha sido la necesidad más importante del cliente durante gran parte de los últimos más de 100 años. La historia de quién ha ganado y quién ha perdido es también la historia del insaciable apetito del consumidor por una oferta mejor.

El sector de la alimentación, como cualquier otro, no es inmune a los cambios. De hecho, creo que es un indicador adelantado de lo que pueden encontrar otras industrias. Desde las preocupaciones económicas y el impacto de los comportamientos generacionales hasta los avances tecnológicos, el sector se enfrenta a una polifacética ola de transformación. La reciente publicación por parte de Retail Dive del informe de Dunnhumby, "Grocery 2053: A Data-Driven Gaze into The Future", proporciona datos reveladores, desentrañando las complejas capas que influirán en el consumo de comestibles durante las próximas tres décadas. Analizando estas influencias, podemos prever la forma que adoptará el sector de la alimentación en los próximos 30 años. El resumen de Retail Dive aporta datos tan interesantes como estos:

Harris Teeter, Wegmans, Publix y Sprouts Farmers Market se encuentran entre los minoristas cuya cuota de mercado es más vulnerable al conservadurismo fiscal en los próximos 30 años, según Dunnhumby. En general, Amazon, H-E-B, Costco, Sam's Club y Walmart son los mejor posicionados para aprovechar la tendencia de aquí a 2053, cuando Dunnhumby prevé que el sector minorista de alimentación estadounidense alcance los 1,9 billones de dólares en ventas, más del doble de su tamaño actual.

En el centro de la evolución del sector se encuentra el pulso del conservadurismo fiscal, cuyo resurgimiento está impulsado por la preocupación de los consumidores por su futuro económico. La amplia encuesta de Dunnhumby, con más de 70.000 respuestas, muestra que el precio sigue siendo un factor decisivo en la compra de comestibles, independientemente de los ingresos. Las generaciones Y y Z, más profundamente afectadas por la Gran Recesión y la pandemia del Covid-19, expresan una mayor preocupación por las cuestiones financieras. Mientras que la salud y la sostenibilidad compiten con el coste como principales factores de estrés para los compradores con mayores ingresos, el coste es el principal obstáculo para el 60% de los consumidores que buscan opciones alimentarias más saludables.

Este conservadurismo fiscal, que se espera que continúe hasta 2053, señala un giro del mercado hacia los minoristas orientados al valor. Del resumen ejecutivo de Dunnhumby:

De aquí a 2053, vemos a los minoristas haciendo mucho más: ofreciendo una inteligencia artificial que les ayude a hacer presupuestos, convirtiéndose en el socio financiero de confianza de sus clientes y lanzando su propio formato del futuro para ahorrar dinero.

Amazon, H-E-B, Costco, Sam's Club y Walmart están preparados para beneficiarse de esta tendencia, mientras que la cuota de mercado de Harris Teeter, Wegmans, Trader Joe's, Publix, Sprouts Farmers Market y otras tiendas más premium podría enfrentarse a desafíos. Esto no significa la ruina para los supermercados premium y especializados, pero sí requiere ubicaciones estratégicas de las tiendas, diferenciación de productos y mejora de la experiencia del cliente para prosperar.

Las transformaciones tecnológicas repercutirán significativamente en nuestra forma de fabricar y suministrar productos. Creo que a veces es descabellado, pero no por ello deja de ser importante reconocerlo. La estrategia Go-To-Consumer de Dunnhumby sugiere una revolución potencial provocada por la impresión 3D de alimentos, la biología sintética, la edición de genes y la bioingeniería. Estas tecnologías prometen cadenas de valor más sostenibles y eficientes, valoradas en 72.000 millones de dólares. Las entregas con drones, respaldadas por un mercado tecnológico de movilidad valorado en 236.000 millones de dólares, podrían convertirse en la norma, eliminando el riesgo de perturbaciones como el atasco de mercancías en los puertos.

El informe también citaba la promesa de la conectividad avanzada, la computación cuántica, la IA, el aprendizaje automático y el desarrollo de software de nueva generación sin código -valorados colectivamente en 336.000 millones de dólares-, que impulsarán la próxima fase de información al consumidor. Los minoristas que prevean integrar estas tecnologías en sus cadenas verticales y estrategias de experiencia del cliente podrán aprovechar conocimientos profundos y emerger en la cima.

La revolución digital, impulsada por la creciente importancia de la privacidad de los datos y la reducción del despilfarro logístico, supone una nueva frontera para la captación de clientes. Se espera que las empresas establezcan su presencia en la Web3, un espacio valorado en 110.000 millones de dólares, lo que refleja el cambio hacia un mundo digital más descentralizado y con más poder para el usuario. Y la IA generativa, que cubrimos ampliamente aquí, abre oportunidades para que los minoristas de comestibles participen activamente en el desarrollo, la investigación y la regulación de la IA para los comestibles y el comercio asistidos por la IA.

La realidad virtual y la llegada del metaverso redefinirán el compromiso de los consumidores. Con empresas como Apple apostando por auriculares de realidad mixta, es prudente que las tiendas de comestibles se mantengan al día de estas innovaciones tecnológicas, aunque estén en sus primeras fases. insight was pretty valuable:

Although the metaverse has diminished in importance in the new-tech hype cycle, its steady evolution over the last two decades suggests that it may reappear in a future horizon. The question is, just how soon will we get to that future? Apple’s recent announcement of a state-of-the-art mixed-reality headset is a strong indication that the technology world is still betting on the metaverse. Our position is that the metaverse is here, but still in the very early stages of adoption. It would be wise for grocers to keep track of all the innovation.

But back to physical reality. Labor shortages, another consequence of the pandemic, are a persisting challenge. Solutions lie in continued investments in AI and automation for unfilled jobs and in initiatives like the Kroger tuition program, Giant Food stores scholarships, Publix tuition reimbursement, and Walmart’s $5 billion upskilling initiative, which exemplify investments in education, skills training, credentialing, and employment frameworks. Amazon has its own upskilling program – 10 to be exact.

Career Choice—one of Amazon’s 10 programas de mejora de las cualificaciones-pagaoportunidades educativas, que van desde clases de inglés como segunda lengua hasta títulos universitarios de cuatro años para 750.000 trabajadores de primera línea que reúnan los requisitos. No hay cláusula de reembolso si dejan la empresa. Con 400 opciones de cursos, 300 universidades y un total de 130.000 participantes hasta la fecha, Career Choice es el programa de formación más amplio de Amazon. En septiembre de 2021, el gigante minorista se comprometió a invertir 1.200 millones de dólares hasta 2025 en Career Choice y otras iniciativas de mejora de las cualificaciones.

Los programas de Amazon ven el éxito ilustrado a través de dos medidas: la finalización del curso y las tasas de colocación laboral tras la graduación. El objetivo: retención y reinversión. En todos los casos, estas estrategias de mejora de las cualificaciones reflejan la conciencia de que el sector está cambiando rápidamente, oleada tras oleada. Por lo tanto, el sector de la alimentación necesita una estrategia global para sortear estas olas. A corto plazo, los minoristas pueden seguir ayudando a los clientes a ahorrar dinero donde más importa, desarrollar protocolos con los proveedores o aceptar subidas de precios, y tranquilizar a los clientes mediante una comunicación clara sobre los efectos atenuantes, como la inflación.

A largo plazo, es necesario un enfoque más visionario. Los minoristas podrían plantearse desarrollar herramientas de presupuestación de comestibles basadas en inteligencia artificial, convertirse en socios financieros de confianza de sus clientes e incluso lanzar formatos de marca privada del futuro. Estas estrategias permitirían a las empresas de alimentación satisfacer mejor las necesidades de los clientes y aprovechar las fuerzas que están dando forma al sector.

El papel de la tecnología en esta transformación es ineludible. La inteligencia artificial y el desarrollo de software de última generación pueden revolucionar la forma en que el sector de la alimentación opera e interactúa con sus clientes. La utilización de estas tecnologías, junto con un enfoque dedicado a la información basada en datos, permitirá a los minoristas ofrecer experiencias de cliente totalmente integradas y mantenerse a la cabeza en un mercado ferozmente competitivo. Es imperativo que los minoristas de comestibles participen activamente en el desarrollo y la regulación del comercio de comestibles asistido por IA.

A medida que el sector de la alimentación se adentre en el metaverso, su forma de relacionarse con los clientes evolucionará radicalmente. La compra tradicional en tiendas físicas podría verse complementada, o en algunos casos sustituida, por experiencias virtuales inmersivas. El éxito de la navegación y adopción de estas plataformas podría determinar el éxito futuro de los minoristas de alimentación.

Resumen

Creo que lo primero son las personas. Las inversiones en educación, formación y desarrollo de los empleados no sólo ayudarán a los minoristas a abordar este problema, sino que también servirán como poderosas estrategias de marketing. Al presentarse como empleadores concienciados y comprometidos con el bienestar y el desarrollo de su personal, los minoristas pueden distinguirse en un mercado saturado.

El sector de la alimentación va a experimentar una profunda transformación en las próximas décadas. En medio de las preocupaciones económicas y los avances tecnológicos, la industria debe adaptarse para servir mejor a sus clientes. El conservadurismo fiscal, los avances tecnológicos, la escasez de mano de obra y la revolución digital son ingredientes de la receta para el futuro del sector de la alimentación. Los minoristas que puedan combinar eficazmente estos componentes e innovar continuamente para satisfacer las necesidades de los clientes son los que prosperarán hasta 2053 y más allá. La evolución del sector de la alimentación, por tanto, depende de su capacidad para transformar los retos en oportunidades, garantizando que siga siendo una parte fundamental de nuestras vidas en las generaciones venideras.

El objetivo de los minoristas de alimentación será combinar la facilidad de compra con la conciencia de las presiones sobre los precios que definirán los próximos 30 años. Los recursos humanos, la ciencia de los datos y el empleo de las tecnologías disponibles determinarán qué minoristas logran definirlo.

Por Web Smith | Editado por Hilary Milnes con arte de Alex Remy y Christina Williams