Sunday, March 7, 2010

The key to profitable, premium apparel, retailing

The key to apparel retail profitability, even for premium brands, are stores* like these.
200 square feet, 200 shirts on display.

In my view, the fallacies in premium apparel retailing are:
  • the customer needs to see a display of 2,000 to select 2.
  • if the merchandise is premium, the store needs to be large.
  • premium merchandise needs premium interiors. Is the retailer seeking to influence the customer with the product offering or the store interiors?
  • that stores needs to be located in premium retails areas where the store rent could be upto upto 25% of sales
  • a small army of people is required to pander to the customers whims.
200 square feet stores, located in all key neighborhoods are the key. If a brand can retail from 200 square feet from an airport location, it can do the same from other locations too. Carefully selected merchandise, in 5 well selected  stores in the city, of 200 - 300 square feet each, will fetch more than one 2,000 square feet store. Hand-held barcode scanning and invoice printing devices can even dispense with the need for a cash wrap. For the consumer, it is easy access to the brand. For the brand, it getting closer to the customer without mounting a white elephant.

A combination of a large number of  very small stores and a small number of  very large stores, combined with the power of the internet, is the key to  profitable apparel retailing.