By Robin Lewis
Old world brands, as well as their marketing models, big and small alike, across all consumer-facing businesses, are entering an era in which many of them are in danger of becoming extinct. At best, they are slowly sinking in an ocean crowded with tiny speedboats, a new world metaphor of the infinite number of long tail niche brands stealing chunks of share from the giant old-world brands. Think of it as the assault of the runabouts against the aircraft carriers. In the last century (the old world), it took decades and billions of marketing and distribution dollars to establish such iconic brands as Budweiser, Campbell’s Soup, Levi’s Jeans, Ralph Lauren, Sears, Macy’s, JC Penney, Estée Lauder and even Ford. And there are thousands more examples.
Technology and new world consumers are flipping everything old-world on its head, including the old-world brands and the processes that drove their growth to scale. First, most of the brands their parents and grandparents loved and trusted do not get a free pass to this generation: “They are so not cool and they’re old.” Second, these young consumers, don’t like or trust anything big. Third, the icons don’t make them feel special. They don’t (and most cannot) engage the nextgen intimately or personally. Fourth, most of the oldies put profits and growth first, and community and sustainability second (if at all).
And a fifth and out-of-control reason for the slow sinking of many of these Titanic brands is that technology, combined with a world awash in capital (resulting in very low barriers to entry), makes it possible for thousands of young entrepreneurs to set up shop and create products or services overnight. With lower marketing and distribution costs combined with the sweeping and speedy networking access to millions of consumers in a nanosecond, these branded tiny speedboats, in the aggregate, are like a thousand cuts into last century’s mass brands. And many of these upstarts are created in your own backyard or local bar/restaurant. Jack’s craft beer in a small Midwest town; Aunt Millie’s homemade organic soup started in a local restaurant, then scaled to every soup shelf of a national grocery chain within a month. Stitch Fix, Birchbox and many other subscription brands became overnight unicorns. In 1980, there were six major blue jean brands. Today there are over 800 and counting. And on and on and on.
So, there are two options for the Titanics: acquire the speedboats as Walmart, Nordstrom, Campbell Soup and many others are doing. Or, create your own private niche brands. Both of these strategies will accelerate as these giants realize that repositioning their old-world brand to appeal to this new-world consumer culture will be next to impossible.
In advance of their March event, the Shoptalk team is providing valuable background information about every speaker and why he or she was selected to speak on the topic. This will help attendees make informed decisions about what educational sessions they plan to attend to learn from peers on how to succeed in retail. Here’s a snapshot preview of sessions that look how brands are evolving.
By Zia Daniell Wigder
As Robin noted, at Shoptalk this coming March, we’ll be exploring the Future of Brands as one of our key themes. Below are a handful of sessions on the Shoptalk agenda—and a few of our great speakers—who will contribute to this topic.
Building a Billion-Dollar Ecommerce Company
As a slew of direct-to-consumer businesses emerge, it’s becoming more difficult to identify the next billion-dollar brand. Often, the most successful companies are those that have disrupted a legacy industry by pioneering an innovative business model or reengineering a product–and have a truly visionary founder. The founders of two different companies with funding rounds valuing the company at $1 billion or more will discuss the challenges of building a billion-dollar ecommerce company.
- Houzz, which has raised $614 million in funding from Sequoia, ICONIQ, GGV, NEA and others, is an online platform for home remodeling and design. The company has stayed at the edge of innovation as it has grown, investing in areas such as deep learning to analyze users’ home photos to provide product recommendations and an AR tool that allows users to visualize what different pieces of home furniture, decor and remodeling products look like in their home. In this session, Alon Cohen, the President and Co-Founder will discuss how he and his wife started Houzz as a side project in 2009 and built it into a company with a reported valuation of $4 billion. He will be interviewed by Sequoia Capital’s Alfred Lin, a key Houzz investor and one of Forbes 2017 Midas List of the Top 100 VCs.
- TechStyle, formerly known as JustFab Inc, has raised $290 million since its founding 2010. The fast-growing company’s fashion brands include Fabletics, JustFab, ShoeDazzle and FabKids. TechStyle operates a membership commerce model that boasts five million VIP members. Its brands are available in the U.S., Canada, the UK, Germany, France, Spain, Sweden, Australia, Denmark and the Netherlands. In this session, Adam Goldenberg, the Co-Founder and Co-CEO, will discuss how he built the company from the ground up and how he’s used technology to create a sophisticated platform that can predict consumers’ preferences and create personalized offerings. He’ll also discuss how he’s built a billion-dollar brand while keeping almost all advertising in-house.
The Growth of Private Label
Private label brands are becoming increasingly popular with price-sensitive consumers. The cultivation of these brands presents retailers with several opportunities, including (1) providing them with exclusive merchandise that’s less susceptible to price matching, (2) reducing the costs associated with acquiring products from a third party, thereby enabling lower prices and (3) giving them greater control over products, from manufacturing to distribution. In this session, we’ll hear from one established retailer, one ecommerce company and one global manufacturer:
- Industry titan Macy’s has been producing private-label goods since the 1800s. More than 150 years later, the $26 billion department store is still recognized as a leader in the space. The company’s 15 private brands cater to a range of consumer tastes spanning multiple categories. Their value proposition makes them an important driver of Macy’s sales, accounting for a full 20 percent of the company’s annual revenue. Macy’s General Business Manager of Ready To Wear, Molly Langenstein, will share how the company builds private-label brands and distinguishes between the brands, catering product to specific customer lifestyle segments using data and moving decisions closer to the customer reducing development time.
- Germany-based Zalando is one of Europe’s biggest ecommerce success stories. Founded in 2008, this online fashion retailer’s revenues reached over $4.3 billion last year. The company sells almost 2,000 different international brands to customers in 15 different European countries. The company’s private label, zLabels, was launched in 2010 and now operates 17 different brands. In this session, Zalando’s SVP of Private Label/CEO of zLabels, Jan Wilmking, will discuss how the company determines which new private-label brands to launch and how Zalando balances its own private-label collection with those of its thousands of brand partners.
- Founded in 1975, Israel-based Delta Galil is the global manufacturer behind many of the industry’s branded and private label goods. The company, which generates $1.4 billion in revenue, owns a stable of brands including 7 for All Mankind and Splendid; it also has licensing agreements with fashion labels like Calvin Klein and Lacoste. Tim Zawislack, Head of Ecommerce, will share the company’s process for designing, manufacturing and delivering private label goods–including Amazon’s private brand for intimate apparel. He’ll also discuss his role in managing the Amazon relationship for more than a dozen of Delta Galil’s apparel brands and licensed businesses.
The Rise of the Niche Brand
A new type of brand has emerged: Today’s shoppers are embracing products across different categories that redefine traditional categories and better meet consumers’ needs. These fast-growing brands are winning over shoppers who are looking beyond incumbents to brands that reflect their unique preferences and values. Traditional retailers are taking notice of this trend, sometimes partnering with or acquiring newer brands. In this session, hear from three venture capital-backed startups.
- Sphero created an app-enabled robotic ball and pioneered the connected play category in 2010. Since then, the direct-to-consumer startup has raised $107 million in funding and carved out a niche in the fast-growing connected toy category. The company’s innovation has grabbed the attention of consumers and multibrand retailers alike, and its products are now sold at Target, Best Buy and other third-party stores. CEO Paul Berberian will share how Sphero’s unique technology-driven products and licensing deals with the Marvel, Pixar and Star Wars franchises helped the creator of the BB-8 droid grow its business.
- Two-year-old Ollie is a direct-to-consumer startup that serves a niche customer in the $28 billion pet food industry. This startup, which has raised $17 million in funding, is tapping into consumers’ desire for fresh, natural food for every member of the family–including pets. Ollie tailors its recipes to each dog’s needs, recommends the perfect portion for its size and breed, and uses only real ingredients like ground turkey and kale. The Co-Founder and CEO, Alexandre Douzet, will discuss how Ollie has built a niche brand that meets its customers’ quality standards.
- Founded in 2015, Allbirds’ eco-friendly wool shoes use premium natural materials instead of synthetics. The company, which has raised $27 million in funding, works exclusively with wool that meets the strictest sustainable farming and animal welfare standards. It also uses less energy to produce its wool than is required for synthetic materials. Joey Zwillinger, the Co-Founder and Co-CEO, will share how Allbirds has established itself as a niche brand by appealing to shoppers’ desire for products that are sustainable and better for the environment.
Meeting the Demands of Today’s Health and Wellness-Conscious Consumer
Consumers are increasingly taking charge of their own health and wellness–shoppers now want to ensure that the products they eat, drink, wear and use are safe and have a positive impact on their bodies. They are seeking out activities that improve health and wellness and are flocking to new product categories that support these activities. This session features an established athletic wear brand, a meal delivery service and a consumer goods brand.
- ASICS, a multibillion-dollar athletic wear company, has been a leader in the sporting goods industry for over six decades. In 2016, Runkeeper joined the ASICS team as a key piece of the brand’s strategy to improve the Direct-to-Consumer (DTC) experience. Since the acquisition, the Runkeeper team has evolved into ASICS Digital. The division is responsible for the development of Runkeeper and ASICS Studio, ASICS ecommerce platforms, and other digital services that inspire people to move, get fit and stay healthy. Dan Smith, GM at ASICS Digital, will share how ASICS Digital is helping to transform the 69-year-old brand with digital solutions to meet the demands of today’s health and wellness-focused consumer.
- Launched in 2015, Freshly is a subscription-based food company that delivers fully prepared, healthy meals to subscribers’ doors. The company has raised $107 million to date, with CPG titan Nestlé contributing as lead investor to the most recent $77 million round of funding in June 2017. CEO Michael Wystrach will share how Freshly’s nutrient-rich, all-natural meals are capturing the attention of busy consumers seeking healthier meals.
- Co-founded by actress Jessica Alba, The Honest Company has raised over $300 million in funding to bring safe, eco-friendly products into consumers’ homes. By tapping into shoppers’ demand for natural baby and home products, the direct-to-consumer startup has catapulted into a household name in just six years. CEO Nick Vlahos will discuss how The Honest Company’s transparent, socially conscious brand promise has helped propel its business and get its products onto major retailers’ shelves.