Blog postsAugust 16, 2019
FLEXE Hub: Does sustainability sell?
A roundup of the latest news on logistics, retail, and industry trends
Keeping up with the latest store closures, emerging tech, and what Amazon is doing could easily be a full-time job. Luckily for you, it’s ours.
We’re looking at the biggest retail and logistics headlines from the past few weeks, including:
- Tariff delays
- Sustainability as a selling point
- Barneys bankruptcy
- How tariffs will affect Amazon
Let’s talk logistics
Hooray for delays!
In one of the few instances when something being delayed is actually a good thing, the United States Trade Representative announced Tuesday that it will delay a good portion of the tariffs on Chinese goods. Instead of going into effect on September 1st as originally planned, $156 billion worth of electronics, apparel, and footwear will get a reprieve until December 15th.
Delaying tariffs until December will give retailers more of a chance to stock up ahead of their biggest time of the year, without the extra costs. And even more importantly, it will soften the blow to consumers during the holiday season.
The not so good:
$111 billion worth of goods will still be hit with 10% tariffs starting September 1st. As Chris Krueger, managing director of the Cowen Washington Research Group, points out, “It is not entirely accurate to label this a de-escalation,” it's like telling someone “I was going to break both of your arms on Sept. 1—now I am only going to break your elbow.” Ouch.
Does sustainability sell?
Veja is a sustainable shoe brand that downplays their sustainability. Why? Because it doesn’t sell shoes. While deeply important to the brand, Veja has found that their customers often don’t know or don’t care about that aspect of their product. They believe that because the word “sustainability” is so broad and so overused, it’s become, essentially, meaningless. Instead, Veja emphasizes the specifics of their product, “raw, organic and recycled materials, transparency and fair trade” as well as the design. By getting specific about the actual ways your product is sustainable, you avoid veering into “greenwashing” territory and give your customers concrete ways they can feel good about your brand.
What happened to Barneys?
Facing potential liquidation, Retail Dive explored the history of Barneys, and the pitfalls that led to their current situation. Here are the takeaways:
1. Too cool for its own good: Barneys was always known as a high-end, high-fashion, luxury brand, and they’ve stayed true to that. Unfortunately, the already niche luxury market has shrunk even more in recent years.
Thomai Serdari, a professor of luxury marketing and branding at NYU, points out that "it's very avant-garde, and that sort of avant-garde fashion needs a different type of consumer, which there aren't that many of anymore."
By not adapting with their customers, Barneys isolated itself and made an already difficult retail situation that much more difficult.
2. In all the wrong places: In addition to isolating itself via its branding, it also isolated itself via its physical locales. Barneys continued to keep its retail stores in very expensive, but less cool areas that younger customers don’t frequent.
Barneys also failed to update its marketing tactics—opting to continue with traditional methods rather than embracing new channels, like social media and influencers, that resonate more with younger audiences.
3. It couldn’t keep up with the competition: Dealing with better-equipped competitors on both sides, Barneys can’t win on either the fashion front or the luxury front.
Luxury retailers like Neiman Marcus and Saks are better able to compete due to their larger scale. As David Silverman, Fitch senior director, points out, “scale allows these competitors to invest significantly in long term growth initiatives around customer-facing elements like websites and store remodels, and infrastructure like robust supply chains.”
Meanwhile, fast-fashion retailers like Zara and H&M have been able to capture the fashion-forward audience more effectively, offering them newer fashions at a lower price point.
Via Retail Dive
What’s Amazon up to?
Coming out on top
While most retailers are worrying about profit margins and price increases with the upcoming tariffs, Barron’s reports that retail’s biggest players will actually benefit from them. They found that while “the SPDR S&P Retail ETF is down nearly 4% in 2019,” Amazon, Target, and Walmart have all earned “ double-digit gains year to date, as investors applaud their business improvements, overall resilience, and general dominance in the sector.”
Telsey Advisory Group’s, Joseph Feldman, believes that the big will continue to get bigger and that “given their wider product base and global sourcing capabilities” they’ll have an easier time managing tariffs than other smaller retailers and brands. Businesses that don’t have access to those kinds of resources will have to find other ways to manage them like forward buying, prioritizing best-selling inventory, or increase product pricing.
FLEXE news & events
Gartner Supply Chain Brief
What is the world’s leading analyst saying about on-demand warehousing and fulfillment? Find out in the free Gartner report.
The 2019 State of On-Demand Warehousing
Our latest whitepaper covers everything you need to know about on-demand warehousing, including key industry trends and how your business can benefit. Download it here.
FLEXE will be making our way through the supply chain event circuit over the next few months. Here’s what’s coming up: