H&M in Bangladesh

Addressing how they are supporting Bangladesh development, H&M produced a fairly well-rounded video. With all of the coverage on the much needed improvements to working conditions, the economic and developmental impact is often left untouched. It is this development and international investment in the country which is why organizations should continue to push for improvement in the lives of their workers. 

It is a one-sided perspective, but it includes a variety of initiatives: 

  • Wage growth
  • Skills training and upgrades
  • Improved employee - management relations

 

What is missing, but perhaps not within the context of this video, is the environmental working conditions - exposure to toxic materials, chronic pain and ergonomic initiatives, etc. But overall, it was nice to see an organization addressing specific measures in a fuller way - not simply speaking about the cheque they cut in light of the tragedies. 

A designer - retailer partnership is the key to success

A week ago we had the pleasure of attending an event hosted by the Art of Fashion and Fresh Collective – aptly titled “The Retailer’s Point of View”. Laura Bernhardson, CEO and founder of Fresh Collective gave an inspiring and passion-packed presentation that armed designers with great information about the business of retail, and the importance of building strong relationships.


Fresh Collective has an interesting model that has been fine-tuned over the years. Truly built in the spirit of growth and collaboration, the retailer has expanded to multiple locations, and all with a consignment model. Typically ‘consignment’ does not elicit a positive reaction from either retailers or suppliers, but Fresh Collection makes it work.



WHY CONSIGNMENT WORKS FOR THE RETAILER

 

“The bottom line is it allows us to work with emerging designers.”

-Laura Bernhardson



Fresh Collective has a customer who appreciates and wants to support unique, local artists and designers. But any retailer (and designer) will tell you that an emerging designer business is never easy. Despite high-levels of design training, it can take years for a designer to perfect the fit, fabric selection, assortments, marketing, and even sourcing. Most retailers will wait until a brand is more established before jumping into business together – for all of the reasons above and more.


Through a consignment partnership, Fresh Collective is able to protect its profit, and provide their customers with the new, saleable, local designs they desire. The designers walk away with customer and retailer feedback and guidance, continuous cash flow, and the opportunity to develop their business.



CUSTOMER APPROPRIATE PRODUCT

Maintaining assortment integrity and merchandising can be difficult for a retailer with a consignment supplier. Often the supplier considers the space in-store to be ‘rented’ instead of part of the retailer’s own. Many large retailers, like Hudson’s Bay prefer this type of agreement. However, in a smaller store, the retailer will still want to maintain control over their environment and product selection.

 

Ms Bernhardson does this extremely well – not a single product reaches the hanger or shelves in-store without first being chosen. Fresh Collective’s mission really guides each product choice, “to inspire joyful living and self-expression, one relationship at a time”. Colour and print with the practical aspects required (the customer must be able to ride her bike in each day piece, and it must cover her bra straps) are all evident on the sales floor.

 

Working closely with designers by providing feedback on the design, and clearly articulating what her customer is looking for ensures success for both Ms Bernhardson and the designer.

 

 

PARTNERSHIP IS A LEARNING TOOL

Consignment has the effect of putting a higher level of ownership back on the designer to ensure sales plan are met. After all, they will only be paid for what they sell. The feedback from the buying team early on in the development process is the first way in which the retailer is able to ensure a high quality product which meets the customers’ wants.

 

Even more important is the direct interaction with the customer Fresh Collective affords its designers. Events, and even in-store communication is invaluable and often something designers receive primarily post-season, after the next collection is already designed and produced.

 

Smaller runs and in-season repeats are a lean and effective way to learn what resonates with customers – without huge financial mistakes in inventory buying. And the direct sales feedback means the designer can make quick changes, swapping out merchandise that isn’t selling and correcting any mistakes. This fast action keeps the retailer’s sales floor fresh, and gives the opportunity for the designer to increase his/her sales.

 

 

POWER OF AN EARLY OPPORTUNITY

Whereas a retailer like Holt Renfrew will require a cohesive, high quality line with perfected fit and capacity to create monthly collections, an emerging designer with Fresh Collective has a bit of time to work with the retailer to perfect all aspects of their brand. Because their customer is looking for novel ideas, the designer can test and try new things.

 

The experience, with a growing customer and sales base is ideal for a new designer. And a stable yet unique brand matrix is perfect for Fresh Collective. It’s a model that works for the retailer, their collection, and supplier base – an ideal retailing scenario. 


iStock_000004668290_Small.jpg

This event with Fresh Collective was the official launch of the Art of Fashion's Ultimate Holiday Dress competition - applications closing August 1. 

Breaking down Target's Canadian launch

Target’s expansion into Canada in 2013 was met with high expectations, and a level of excitement, all of which was decidedly missing when Walmart made a similar move in 1994 with the purchase of 122 Woolco stores.

The fiscal year generated $1.3 billion for Target, and the team operated with a gross margin rate of 14.9 percent. Although this was below the company’s expectations, considering the volume of openings – 124 in less than a year, these results would be considered a win by many retailers (although operating losses for the next two years are a tough metric to swallow). 

TARGET 2013 sales vs store count results - RETAIL ASSEMBLY news.jpg

The quarter-by-quarter sales are increasing at a faster rate than the number of stores. However, the concern is the low margin rates in the second half of the year as the retailer began to clear excess inventory. 

 

TARGET 2013 gross margin results - RETAIL ASSEMBLY news.jpg

Strangely though, this isn’t what the customer is seeing. Empty shelves have been the widely reported inventory story in the country’s media. At a dinner party this past weekend in rural Ontario, the consensus around the table was that the company was “selling out” of merchandise too quickly because the company wasn’t buying enough. 

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    Image by Doug Stevens via  The Wall Street Journal Blog

Image by Doug Stevens via The Wall Street Journal Blog

Much of the retailer’s launch shows consumer perception at odds with what the business is telling the merchant and buying team. Initially, Target had indicated that the higher-than-expected demand attributed to the lack of inventory. However, almost a year into business it indicates a larger distribution and allocation issue with the retailer.


Is it possible that Target’s sales plans would never have allowed the buyers to fill store shelves? Typically if a retailer is missing its sales plans, as Target is consistent in suggesting, it results in the opposite issue of too much inventory in-store.


Pricing perception is another issue that both the media and consumers have embraced. Higher pricing is something Canadians are particularly sensitive to as higher duties and shipping costs often put goods just south of the border 10 to 15 percent less expensive on average. Target has always understood this, and despite multiple pricing surveys indicating Target is on-par with their Canadian competition, consumers believe they are being over-charged for goods compared with US Target stores.


A feature unique to Canada’s retail landscape is the brand and product exclusivity the country’s major players have secured. Unlike most countries, Canada has only one or two national players in each market category. This lockout may have prevented Target from forming key relationships with suppliers immediately in the country.


The retailer managed to secure some excellent working relationships regardless, a grocery partner was announced almost immediately and the Starbuck’s partnership soon followed. Many apparel designer collaborations, which Target has become known for, were rolled out in Canada including Peter Pilotto and 3.1 Phillip Lim. 

Announcements with Root’s Beaver Canoe brand were a bit later, the exclusive home collection not to launch until September 2013, and Aliment du Quebec in the same period.

 

Despite Target’s initial challenges with inventory and distribution, some product assortment hurdles, and diminishing pricing concerns, it’s surprising the Canadian consumer hasn’t embraced the many social efforts of the company.

Image via https://www.facebook.com/TargetCanada

Image via https://www.facebook.com/TargetCanada

Their marketing is downright clever and suited perfectly to the market. It combines national pride, humo(u)r and friendliness which appeals to the broader population. In addition, Target has a full collection of stores which are all LEED certified – a remarkable feat considering they purchased their locations from HBC.

 

Target also distributes 5 percent of its profit through local community and social programs. School nutrition programs, Lac-Megantic Relief efforts, and Alberta flood relief have all benefited last year.

 

This reinforces the truly national focus the retailer has taken, embracing both major cities and small-town Canada. Their launch events featured storytellers in Halifax, the three tenors in Toronto, free Christmas tree farms in Sudbury, a hockey tournament in West Ferris, an art installation in Edmonton, and Carly Rae Jepsen in Mission BC.

 

Although Target has secured only 0.2 percent of Canada’s coveted grocery market to-date, we expect they will come out on top.  

 

RETAIL ASSEMBLY is a mission-driven organization, upgrading skills and enhancing great businesses. Our top offering to this day is The Retail Buying Course, with case studies, great foundations and business insight. And if you wanted a deep dive into inventory management and demand-planning, our Bundle is coveted across the industry.