Welcome to the great reset. 2020 saw a whole lot of retailers closing stores, adjusting the capital expenditure and slicing at operational expenses.
One of the biggest challenges with traditional retail was simply their retail locations. Locked into multi-year leases and having invested a lot of sunk capital into their locations, they didn't have the flexibility to pivot and move like some smaller businesses. Add on top of that the need for a national strategy where in-person events and restrictions varied by state and it was likely a strategic nightmare.
Locations closed. Inventory was dumped. A lot of retailers went conservative with their future buys based on the uncertainty. Some accelerated their digital and e-comm plans in order to survive. The uncertainty compounded the difficulty of decision making. And people had to innovate to survive.
But now we're (almost) out of it. And we're looking at the great reset. The difference between this recession and the ones that the economy has faced before is that there's a root cause. And an end date.
Per a 2010 article in Harvard Business Review, the winners from past recessions don't just follow one strategy. They don't just cut costs. They don't just scour for efficiency. They don't just invest in innovation. They don't just expand their markets. They don’t just cut. They don’t just invest. They do both. They leverage the moment to become more operationally efficient. And they reinvest that money in their people and innovation to come out fo the recession stronger.
One of the things that I've been thinking about was uncertainty. Uncertainty exists because we don't have reliable data. And one of the best things to do when you're faced without reliable data is to go get some.
And that's where experiments come in. Don't know what's going to happen? Run an experiment. Either it works or it doesn't, but at the end you have data.
So here are three tests that I would run if I was Forever21 or any other retailer locked in to large physical locations.
1/// HYPE LOCAL CAPSULE COLLECTIONS
The Asset: Production means and quick turnaround times. Quick turn fashion has that production cycle on lock. They can turn stuff from idea to reality in record time and they're masters at it. And they're probably sitting on a lot of blanks if you want to keep it simple.
The Experiment: Collaborate with local artists, designers and storytellers to drop a monthly collection. Keep numbers small and curate it as a regular drop. Create a system that it's plug and play and easy to drop into local markets.
The Logistics: Boilerplate legal agreement that allows benefits the artist. Make them a fan, not an asshole. Write it in easy to understand language so that they don't need to pull in a lawyer and you're not trying to fuck them over. For the experiment, have the cost/payment to the artist be the same for everyone. Have transparency around that.
2/// INVEST IN EMPOYEES AS CREATORS
The Asset: Your employees. We've all seen the awesome stuff that great employees do when they're excited about your brand. Don't pull a Sherwin-Williams. Enable that behavior! Invest to make it easy for your employees to create and share.
The Experiment: Put a photo studio in the store. Seriously. Different props, backdrops and more. Gen Z is a generation of creators. It's the generation of influencers and side hustles. Make it easy for them to create. Encourage their creation and reap the rewards.
The Logistics: Eat up retail real estate you say? Why would I do that? Because it's an investment. Switch out one of the change rooms to be a mini-photo studio with great lighting. And then pay your sales associates for 30 min each day to put in time to create create create.
3/// BRING IN THE DTC HEAT
The Asset: Physical retail space. Seriously. In today's DTC world a lot of brands can go direct to consumer online. A couple of them can build out their own stores (shoutout Warby Parker). But what about the middle? Those brands that have a lot of heat, but people still want to access them in person?
The Experiment: Allocate a couple of retail displays as showcases for DTC brands with heat. I remember when Travis Scott was touring in 2019 that the Kylie Jenner Lip Kits were flying off the shelves as part of the concert merch. Why? People could buy them online?!! Because people still want to physically shop. If you can be the bridge to an audience for a brand like ColourPop (shoutout to the Canadian/UK spelling), than there's potential to benefit both brands. Think of it like Casper pillows being on shelf at Target.
The Logistics: Is it as profitable for you and for them? Fuck no. But take the time to run the math and provide flexibility with the terms for both parties. Standardize those terms to be able to scale and invest in those relationships. It's a big opportunity for distribution. I would start the experiment by focusing with brands that benefit from an enhanced physical interaction (like makeup or scents). My hot take is that a million of these brands launched during the pandemic. Cherry pick the best ones that are ready to take that next step!
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Some of these might work. Some of these might be boneheaded. But the point of experiments is to find out the truth. What works? What doesn't? I'm a big fan of hot takes, but let's be real - opinions are nice, but data is better.
- Christian