If you are like most premium and mid-market brands, partner retail is not an own distribution channel, but a strategic stepchild. If you want to determine where you are on partner retail, allow me these 3 health questions:
“2025 retail rents will be like 2020 flight routes: back to the 1980s.” “The future is social commerce, digital market places are an interim hype, for brand industry’s e-com latecomers.” “In five years, an office workspace and business travel will be recruiting incentives.” “Grandpa tells me, his company used to pay him for sourcing travel to adventurous rural locations.”
There are many reasons why it makes sense to conquer a market through reliable retail partners. Besides the shared risk, lower investment and faster growth, you may want to benefit from your partner retailer’s deeper understanding of the market – the local players, dynamics (e.g. real estate and channel development) and consumer behaviours – before opening your own retail stores. (more…)
Three years after H&M gave up on like for like reporting, they stopped publishing monthly sales figures altogether. H&M follows the path of other well-known retailers that no longer publicly report monthly details of their like for like retail performance. (more…)
There is plenty of information available about characteristics of the different distribution channels. Therefore, in this post I would like to focus on how to select the best distribution model for your brand. A distribution model that allows you to expand into the targeted channels in a specific country in your market segment!
The media is flooded with stories of new future stores and advanced consumer technologies. All brand investment strategies point towards direct-to-consumer, while digital wholesale transition is far from flavour of the month. Despite this, Tommy Hilfiger launched a new digital showroom in 2015 that has been piloted and is now being rolled out across the globe has all the ingredients for best practice wholesale buying processes. (more…)
Reading about brand distribution in India lately, has meant encountering an endless stream of comments filled with superlatives. For example:
Jan 2014, Berlin: Three years earlier, a French outerwear brand* signed an exclusive partner store distribution agreement for southern Germany. Visiting the newest German store, the French CSO realises locations continue to be rather ‘cheap’ and off the High Street. The distributor argues that the brand doesn’t pay High Street rents.
May 2014, Dubai: The CEO of a Swedish womenswear brand* is on vacation in Dubai and realises his long-time Middle East distributor is also managing 10 other brands. The brand’s previously exclusive position is diluting as the distributor’s new favourite brands get the better locations in the new malls opening up. (more…)
Italy – birthplace of coffee culture and until now a ‘Starbucks-free nation’ – will host the first coffee shop of the Seattle coffee chain, right in downtown Milan! Swiss giant Nestlé first entered Italy in 1999 and opened a Nespresso flagship store (out of 6 worldwide) in Milan last year, now another big player is daring to do the impossible – the equivalent of selling ice to the Eskimos.
The opening of Primark’s first store recently was another big bang for the Italian retail market. The famous Irish fashion giant has chosen the brand new shopping centre ‘Il Centro’, in Arese near Milan, to host its first foray into the Italian market. This is the biggest of Italy’s regional malls, located on the former Alfa Romeo site and hosts more than 200 stores; among them several other prominent debutants to the Italian market such as LEGO and Under Armour.
So why is Italy so attractive these days for international powerhouses wanting to establish themselves in new markets? The most important reason is the improved availability of quality retail space – in the past, finding appropriate, large sized retail space in prime locations was quite challenging to near impossible.
Shopping centre-wise, Italy is still a so-called ‘opportunity market’, with a large population but a shopping centre density (GLA/1.000 population) below the Western European average. In 2015 it was around 229 sq.m compared to the number 1 shopping centre market – Norway – with 926 sq.m. However, Italy has caught up over the last 10 years – by nearly doubling its shopping centre space to approximately 13.8 million sq.m nationally. There is also more than 700.000 sq.m of new space expected in 2016/17.
Italy’s shopping centre market is marked by the arrival of large schemes and significant projects that create more supply for international players such as: Westfield Milan; Merlata Mall, Milan; Roncadelle, Brescia; and GrandApulia, Foggia. Also real estate company Cushman & Wakefield follows the Italian trend to be prepared by having bought Cogest Retail – an Italian retail asset services and leasing firm with a portfolio of 51 shopping malls and retail parks across Italy under management. The consolidated company will double the size of C&W’s current business and manage circa 3.5 million sq. m of floor space in Italy.
So which international players are already succesfully active in the homeland of some of the world’s most famous fashion brands? There are well established global brands with a broad and long-term presence such as Timberland (∼160 stores), Nike (∼ 50 stores), Tommy Hilfiger (∼30 stores) or Ralph Lauren (∼8 stores). But also ‘new Italians’ such as Michael Kors (2008), Superdry (2010), Desigual (2011) and Victoria’s Secret (2012) have arrived in the last couple of years. Besides running stand alone stores, these international brands are also well distributed in department stores such as Coin and La Rinascente.
To decide the best entry mode, companies need to consider also Italy’s very local specialities and challenges. Italy as a network driven country has its own rules. Relationships are crucial factors – between brands and retail partners as well as between local stakeholders. Bureaucracy, corruption, high levels of taxation, long payment terms and political and legal reforms have been applied, but a real breakthrough is yet to have taken place.
Weighing these circumstances plus considering the expertise of strong local and well established partners such as Percassi or Libenzi, many global players (Zara, Victoria’s Secret, Timberland, Lego and more) choose cooperations. Activewear company Under Armour just announced its plans to open 20 stores over the next 7 years with the Italian Oberalp group. Also Starbucks has picked Percassi as a partner for opening the Italian market – Percassi will own and operate the stores as the primary licensee.
Mango on the other hand entered Italy in 2001 without local alliance. The company decided to have a few of their own flagship stores in the top retail locations, while the rest are franchise stores. Furthermore, they currently run around 40 corners in Coin department stores.
If the question is to partner or not to partner, there is no ideal solution to suit all companies. The choice is dependant on various parameters that raise questions such as:
Whether you plan to launch a brand in Italy or you are already there, the time is perfect to grow your brand into a meaningful business in Italy. As the saying goes, ‘all roads lead to Rome’ so what might be the right one for you?
About the Author:
Isabell Guidastri has worked most of her professional life with brands on their local & global brand distribution strategies, including with many well-known global powerhouses in branding & retail. Retail in Brazil, franchise in Turkey or traditional wholesale in Germany were just some of her virtual project travels in the last 24 months. But above all, the challenges of Italy are her great love, since marrying an Italian and now commuting between Germany and Modena, Italy – home of fast cars and slow food. Contact her by email for more information and further discussion on your favourite country and distribution strategy. Or see more from her here.
You think the biggest risk in partner distribution is to lose a partner and all local sales? Puma’s CEO Jochen Zeitz thought so too, until Puma’s Greek distributor filed for bankruptcy in 2012. Puma paid a high price when it had to inform the stock market that it might lose €115m; quite a figure, considering the entire Greek sporting goods market is less than €500m in annual sales. (more…)
