This is a post about the future in wholesale distribution, a perfect storm, 1.000 lighthouses, the loss of puppy protection, and why wholesale is far more alive than most thought.
Our 1000 Minds dialogues on the future of brand distribution brought many insightful perspectives on how brand distribution will evolve. Perhaps most diverse and interesting were conversations around wholesale brand distribution. From the many valuable insights, allow me to share 7 key trends on the future in wholesale distribution:
1. Loss of Puppy Protection Ahead
With governments reinstating insolvency laws and landlords asking for full rent, the retail market come out of its period of ‘puppy protection’. But consumers, especially tourists, are not back at pre-Covid levels, and retailers’ capital reserves continue to shrink. Supply chain issues aside, high streets in Europe and the US are faced with a bumpy retail journey ahead. Current wisdom states that it may take another 2-3 years with more exits and takeovers before things go back to some form of normal.
2. Real Estate Revitalises Retail
With Zoom replacing business travels and the country-side home office being more attractive than commuting, city-centre hotels and offices experience low occupancies. A crisis is investors’ time for action, therefore many landlords are considering the repurposing of properties for a new lease of life. Add to this high street insolvencies and city councils pushing towards CO2-free shopping, and future city centres may see a biggest overhaul with many new opportunities for brand wholesale distribution.
3. New Brick-ital Natives
If there was one surprise during pandemic, it was how many small stores managed to go digital when it was essential to do so. More flexible than big box retail or chains, small boutiques applied call & collect, retail by appointment, or selling via social media: brick-ital in less than a year. Amateurish perhaps, but authentic and therefore popular. Not surprisingly, many of the brick-ital natives report their best sales ever for 2020.
4. Multichannel Merchant Masters
Multibrand retailers infected with a ‘digital allergy’ went bankrupt, while those with strong online channels thrived on their flexibility to move retail-dedicated stock into their e-shops. The crisis demonstrated that most of them are still trusted merchants in wholesale distribution. Where online pure players utilised the crisis to push market share, multichannel retailers mastered maintaining price levels and growth margin. Combine this strength with being local approachable, and it gets easy to understand why online pure players continue to test own retail formats.
5. Online Pure Players adopt Department Store Strategies
Online multibrand players move towards marketplaces and move away from an own trading priority. The driving force behind the strategy: Marketplaces bring new growth momentum and higher profitability than own trade. It would be a little bullish to proclaim this trend will end where it ended for department stores when they began to boost shop-in-shop and concessions. Nevertheless, it will have a major impact on future wholesale distribution.
6. Online Pure Players Consolidate
Online had its perfect storm in 2020 when many brick and mortar competitors had to close for months. But with everyone turning into e-com marketplace individual online growth is no longer skyrocketing in 2021. Recent stock market warnings indicate that we are looking at a cool down phase. As many of these platforms have neither reached systemic relevance nor profitability, consolidation is to be expected. Again, are we seeing similarities to the department store market?
7. Seasonal Calendars: Reaching a 1000 Lighthouses
In the decade of direct-to-consumer investments and see-now-buy-now collections one may wonder whether the previous (lighthouse) trade shows will return and continue to drive seasonal calendars? Lucky those that are independent, have digital showroom and reach buyers’ laptop in the home office anytime. Brand wholesale distribution is changing and so is the future in selling: Creating inspiring digital collection delivered at 1000 home offices, anywhere, anytime.
Brand Wholesale Distribution 2025: Invest in Direct to Wholesale
Contrary to many forecasts, wholesale distribution is very much alive and kicking despite most investment going into direct-to-consumer strategies.
Those who have been following us for a while will know that we have a passion for good e-com, brand retail and many other distribution channels. But above all we believe in wholesale for its strategic and financial value. Wholesale is like that good old diesel engine – not particularly trendy, but still the most efficient way of growing a brand, enabling profits, and ensuring financial health.
For next year’s wholesale planning, are you still improving your diesel engine or preparing a next generation e-engine? If you haven’t invested in wholesale over the last years, it’s a good time to do so now. Because, even the most advanced D2C mid-market and premium brands expect to make more than 50% of their sales in wholesale by 2025.
About the Author:
Guido is a brand & retail manager with 25+ years of experience. He has assisted entrepreneurs and managers across Europe, Asia and the Middle East in successfully growing their brand distribution. Read more of Guido’s work here, or connect with him on LinkedIn.