It is interesting to see how discussions regarding retail and marketing have developed in recent years. The reason is more due to changes in customer buying habits and tastes than anything else.
Today at all levels - whether it is entry level, fast or bridge fashion, or premium and luxury brands - the universe, to put it mildly, is in a state of flux. Fashion stores and boutiques are continuing to hold course, as the place where you can experience products in its real brand ethos and where the latest products are first introduced.
At the same time, customers are finding alternate ways to get what they want, maybe online, at outlet stores or elsewhere. At the upper end, luxury brands are trying to ensure that they aim their products’ marketing and communication to a tighter and tighter circle of high-end customers whom they want to really look after, pamper and build closer relationships with.
While this is going on, the concept of flipping or reselling high-end products is a phenomenon that is becoming structured across categories. In our own region, a large online reseller dealing in pre-owned handbags, shoes, jewellery and accessories, raised $11 million in a recent funding round.
The indication is that buyers want the same brands and products, but at lower prices – irrespective of whether they are new or pre-owned. This business is growing.
Powers of dissuasion
Some brands are actively dissuading these flippers, making it difficult for them to get new products. While this may sound like a simple idea, it does raise a few questions:
* Would it reduce the overall demand for the products they actually wish to protect?
* Would this reduce the appeal of the brand as a repository of value that can be encashed whenever needed? Many of the people offloading products could need the cash.
* Would it preclude a new category of customers wanting to enter the brand universe, but at a lower cost? Could these new entrants be enticed in the future to trade up within the brand at a higher value?
* Or is this an indication of the new price perception of the brand at which customers would be willing to trade? If so, this could suggest the need to address the product portfolio itself.
I am sure there are many astute minds contemplating these questions as they assess the future of their brands. This really needs to be done for the long term - say over 10 to 20 years - and taking into account the impact of generational shifts on the brand and its future positioning.
Boomers who are today’s buyers would have grown up looking through the windows of boutiques aspiring for these hallowed names, but may not have entered the stores for years until they developed the confidence or money power to do so. They have an elevated image of the brands in their minds.
The new generation which has the spending power now - and will have even more of it going ahead - is much more self-assured and has a different view, and looking for more than just image.
What does it do for me? How does it enhance my lifestyle? How is it better for the planet? Is it authentic? Is it inclusive? How does it affect my daily life?
And unlike earlier, they are able to get all the information they want about brands sitting at home. The democratization of information has changed the mystery, and the dynamics of brands completely.
Business of staying relevant
For example, Apple and Samsung are arguably among the biggest brands today. Probably more powerful, than all the other fashion and non-fashion brands put together, they produce new products every few months that are lapped up by their followers. Why?
Because they bring one big element to their brand – relevance.
The products are designed to meet peoples’ lifestyles, their consumption patterns and feelings of self-esteem. They often create new types of consumption and usage behaviours, which resonate with people and have the spending power to actually change people’s desires. When this happens, the weightage of price in the marketing mix becomes much less.
People are willing to spend differently.
In the case of fashion, beauty products, accessories or shoes, this becomes much more difficult to recreate. Where it has happened, products fly off the shelves. For instance, shoes – the latest Nike and Adidas bestsellers - or Fenty with its inclusive makeup. And even Tesla Cars.
For others, the old adage of the stock market seems to hold – buy gold for the price of silver. So what does this say for brands?
Relevance is the key.