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You Better Be Direct With Me
Liza Amlani --  Retail Strategy Expert Liza Amlani -- Retail Strategy Expert
For Immediate Release:
Dateline: Toronto, Ontario
Sunday, May 5, 2024


I appreciate when people are direct with with me. Just come right out and say what’s on your mind, I won’t be offended.

When brands want to be direct with me, I might question the decision. I’m looking at you Levi’s, Canada Goose and Sketchers and others mentioned in the Wall Street Journal last week.

These are brands that want to ramp up their direct to consumer business. Although, they need to do the requisite supply chain gymnastics to make it work. The decision is about margins and profitability. Strategies like this, to double-down on direct, are not made in isolation and are part of broader change in the organization. It’s not a coincidence that Levi’s and Canada Goose have recently trimmed their workforce.

However, the benefits of increased revenue and margin might be overstated. Our colleagues at BMO (notably, Simeon Siegel) have studied this carefully. In a report entitled “DTC’s Not All It’s Cracked Up to Be” the margin/revenue lift isn’t the goldmine you would expect. Rather, the benefit of having more control over the brand, 1st party data and pricing is the real win.

Brands also say that wholesale sales are declining. But, I would have to ask about their wholesale strategy and execution. Wholesale partnerships do work and they have evolved over time. A critical piece here is to ensure that data is being shared between the two parties. Also, how are brands curating the wholesale product mix, if they curate at all?

So be it that brands want to go direct and have more control. But, with more control comes more responsibility. It’s far too easy to blame poor performance in a wholesale arrangement on a lack of footfall at Macy’s, for example. It’s another thing when your own stores have poor foot traffic. It’s up to brands to tighten up their merchandising strategy/execution, inventory management and logistics.

(Levi’s, to their credit, seems to get it. Their CFO has remarked that they are getting better at cutting the duds from the product assortment and accelerating speed to market.)

But consider this. Does “Direct to Consumer” equate to being “Close to Consumer?”

Allbirds is an example of a “direct” brand that lost its way and veered away from its customer. Now, it’s laboring to find it’s way back.

What brands need to embrace is a close-to-consumer approach. This is not about making bets on a particular channel. Because consumers don’t see channel, they see brand. Instead, this is about understanding the dynamic nature of the customer and staying in step with them.

That doesn’t mean you should try getting close to me, I like my personal space.

Stick with being direct.

Retail Strategy Group works with market-leading brands to help them improve profitability and increase organizational effectiveness. For more information, visit www.retailstrategygroup.com.

News Media Interview Contact
Name: Raj Dhiman
Title: Chief Rainmaker
Group: Retail Strategy Group
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