Wholesale-to-Retail Heading Hyper-local

In a recent blog article for the Licensing Industry Merchandisers' Association (LIMA), I introduced the concept of “proto-ships” – stores, such as Duane Reade’s recently-opened mega-store in Manhattan, that are one part prototype and one part flagship. I predicted that more retailers would begin to leverage retail locations as live labs, as well as increase the number of experiments that are being conducted in each location at any given time.

Own-It-All Retail

For a growing number of wholesalers, owned retail has become the ultimate learning lab, a chance to wrest control of distribution and display destinies away from retailers and gain insight that can be fed back into both the retail and wholesale side of the business. In a recent example, HMX Group, a New York-based apparel manufacturer led by lifestyle designer Joseph Abboud, has announced that it will debut a new retail concept, Streets, which will showcase all of its men’s brands in one location. HMX’s growing portfolio of brands includes Hickey Freeman, Hart Schaffner Marx, Coppley, and others, many of which will be included in Streets’ assortments. According to Abboud, ninety percent of each store’s merchandise will come from HMX’s brands, allowing the company to leverage its own factories and achieve 30-day turnarounds on key trends – a rate that puts them right up there with vertical fast fashion retailers like Zara and H&M, but with higher-quality, branded goods. The relatively staid menswear market hasn't traditionally relied on pulling trend triggers; Streets has the potential to speed up the long, slow cycle of male style and introduce a new generation of male shoppers to trend-right merchandise.

According to Women’s Wear Daily, HMX CEO Doug Williams has described the concept as “a retail laboratory that will allow us to bring everything under one roof…It will help us figure out what works and what doesn’t.” He gave a nod to HMX’s retail partners, stating that they do an amazing job of selecting among the brand group’s offerings, but noted that the company’s traditional wholesale model doesn’t give it the opportunity to “exploit some of the things we really believe in.”

Street Cred

The Streets model is exciting on a number of levels, as it foreshadows the evolution of the wholesale-to-retail model and represents the next turn of the screw in hyper-localization. Each of Streets’ locations carries its own place-branded moniker and the first two, Streets of Georgetown and Streets of Beverly Hills, are slated to open in September (the company is currently scouting sites in other urban U.S. markets, including New York, Boston, and Chicago). Williams said that the inspiration for Streets sprang from a desire to have stores that create “intimate relationships with the communities in which they reside.” By attaching its brand to well-known streets and neighborhoods, Streets is also leveraging a form of co-branding that doesn't involve royalties or permissions.

Starbucks’ attempt at neighborhood-branded retail quietly came to a close when it shuttered its 15th Avenue Coffee & Tea location in Seattle early this year, stating that no additional “learning environment” cafes have been planned. I was closely watching the concept since it seemed to promise many of the breakthroughs that Streets will now likely bring to fruition. Unlike HMX, Starbucks’ core model is retail. However, like HMX, Starbucks crossed over into complementary models (wholesale and licensing), making its products available in wide retail distribution. Had Starbucks stayed with the idea, it would have been able to leverage the resulting hyper-localized insights, not only in its own stores, but also with retail partners.

Will other wholesalers follow in HMX’s uber-local, owned retail footsteps and if so, will they share what they learn with their retail partners?

Want to explore how to leverage these and other retail dynamics in your direct-to-retail positioning? Contact me directly at carol@newmarketbuilders.com