THE NEW RETAIL REALITY FOR DESIGNER-MAKERS - THE FUTURE OF RETAIL
Retail is changing. We all notice it and the news are talking about it all the time. It is changing for shopping centres, high street shops, local shops, shows, markets and even for informal sellers; only digital retail is growing, but not for everyone. In the actual circumstances nobody is safe. All the growth plans created at the end of 2019 went down the drain and 2020 confronted us with a difficult new retail reality.
THE SHOPS (HIGH STREET)
Face to Face retail is shrinking for every single brand, big and small, and all of them are cutting costs by closing the non-profitable outlets that were supported by the profitable ones, reducing their operational hours and thinning the amount of employees to the bare minimum. Redundancies are becoming very common everywhere in order to cut costs and keep the plummeting profit as high as possible.
Big conglomerates are closing their shops and are, desperately, trying to move into the digital world, investing millions of pounds in the process. Empty streets devoid of locals and tourists are hitting hard in the main city centres. Shops are getting emptied and there are not many companies with the financial stability to rent them out just because the risk is very high. Prices for the empty shops are not going down and nobody with the right mind frame will invest in opening new facilities without the security of getting the investment back through the sales floor.
Big digital retailers are growing like never before and small digital retailers are growing in numbers but not in sales. The digital world is an uncharted territory for the vast majority of companies.
Having a website now is like having a shop. They are common and there are many companies offering the tools to create new ones, which makes the task way easier than it was 10 years ago. Selling through them, however, is a different story.
Most companies don't have the pocket to invest in online advertising and many others simply don't know how to do it. Maintaining an online shop requires a minimum amount of knowledge in applied software and lots and lots of creativity to be different from the vast majority. Skills like photography are extremely important as well as being able to write the right content. On top of that is required a minimum knowledge in SEO and being able to understand the advert positioning algorithms.
Most people don’t realise that in order to grow a website in sales, what is needed is time and dedication. The majority of small companies do not have the resources to hire a team of experts to help them develop their websites so they end up depending on the little amount of free time they have to do the all the marketing themselves. These efforts almost always go down the drain just because the little they do is never enough. Social media disappears any amount of money you put in adverts if you don’t know how to do it.
Website hosts require you to pay a yearly fee to keep your own webpage running and if you add the e-commerce capabilities the price increases significantly, and this is without making any sales.
WHAT TO DO IF YOU ARE A DESIGNER MAKER
So if the future is confusing what is the best to do? What do you recommend to our vendors?
Those are the main question some of my friends, colleagues and employees ask me and the answer is never easy but if you want to have more chance of succeeding in the digital world through improving your sales I think that you must be in all the existing marketplaces (malls).
It is like having many stockists at the same time, most of them with their own teams of marketing experts working for your products. Go to the marketplaces and use them all. From Amazon to the newest you can find. Some are cheaper and some are more expensive but they have to deal with all the digital advertisement process that you don’t understand so you don’t have to spend in advertising yourself (that is very expensive).
The rent you pay is nothing compared with what you will pay for a brick and mortar shop and you only have to focus in checking how your products behave to understand what the customers like. You will have the time to focus in what you like: to develop new products.
You will have to focus in producing amazing pictures and to describe your products in the best possible way and those marketplaces will be in charge of bringing the customers to you.
Some of them charge you a monthly fee that is very low in comparison with any other outlet you can find, (between $5 and £20 a month is a bargain to have a spot in a place that is visited by thousands every month!). In most cases they charge a commission for the sales: from 5% to 25% but if you don’t sell you don’t have to pay so your risk is non-existent. Some say that 25% is too much and I disagree, let me explain why:
- If you wholesale to a shop you will have to give them between 50% and 60% discount of your recommended retail price if you want them to buy from you.
- If you wholesale to a shop you will have to give them the products in sale or return condition. Before you could find a shop that will pay for your product upfront or with a 30 days delay but in the actual circumstances that will be very difficult. Most shops are closed or near closing because of lack of sales, and those that are not closing are asking for conditions that are very difficult to manage by the designer-makers.
- If you sell in a retail show the numbers are even more challenging. A show, if it is a good one, will charge something close of £1000 per show (3 to 5 days) depending upon your size and exposure. Apart from that you will have to pay for the time to be there, transport, food etc. If in the show your takings are £5000 (which is not bad at this time) your costs are going to be well over 30% (without including the cost of the product).
- If you are in a craft market where you pay £60 per day rent and you pay for your time, food and transport, taking less than £500 in a day will give away over 30% of your takings, so paying 25% in a marketplace doesn’t look that bad at all and you have your day free to keep improving your products and contacts.
In reality, it is not that difficult to see the advantage of the digital marketplaces. Just do your best to get the perfect pictures, the perfect attractive content and the right price so they can do their work in bringing your sales in.
May 2021 be a more benevolent year for us all.