Is Globalisation the Answer to Wholesale’s Survival? Retail Strategist Natasha Zurnamer Offers Key Insights

The wholesale business model is one of the most vulnerable areas of retail during Covid-19. The pandemic’s social and economic implications have seen demand plummet and sales stall. Retailers are cancelling orders for the new season, severing distribution avenues for wholesale brands and leaving them with inventory overflow.

This is especially worrying for a country like Australia, where most fashion brands operate on a wholesale distribution model. Brands will struggle to produce for next season if they are unable to offload existing stock – causing disarray for both brands and retailers in the future.

E-commerce has emerged as a lifeline for brands and retailers as physical stores have shut all over the world. This presents an opportunity for wholesale brands to explore beyond their horizons. They need to expand internationally, as their survivability depends on it.

In our recent webinar, Omnilytics’s Director of Retail, Matthew Lovett, and leading retail strategist and advisor Natasha Zurnamer discussed in great detail how to utilise e-commerce for globalisation and what the future of retail looks like post-Covid-19. 

Natasha Zurnamer, Retail Strategist and Advisor.

Here’s what you missed if you didn’t make the session.

Expand Internationally Through Digital Sales Channels

Physical store closures were followed by a mass exodus of brands and retailers to the digital space. Gaining market share becomes a challenge when fashion businesses saturate online channels. Brands and retailers have resorted to heavy markdowns to gain a competitive edge.

“While discounts are unavoidable with the current state of demand, seeking opportunities in other markets where demand is stronger can minimise the need for drastic measures.”

– Natasha Zurnamer

The key to successful global expansion is an in-depth understanding of which markets to penetrate. Knowing what products sell in a particular market, the price points that resonate and the prolific trends and colours are instrumental in identifying gaps and opportunities.

Brands can review existing stock to determine which products are suitable for distribution in new markets. These insights are also fundamental to guide the design process and merchandising in order to create a product mix that fits all the criteria of new markets.

Often it’s more practical to target emerging markets rather than competitive markets. For example, there are sizable opportunities in markets like Asia and European countries that are not as challenging to capture share in, compared to markets with a glut of competitive brands like the US and UK.

When you globalise, you need to localise.

– Natasha Zurnamer

In globalising, brands need to localise the way they move inventory in new markets. Brands that wish to expand independently with their own digital platforms would need to localise the customer experience within those markets. Quick and efficient distribution channels and adopting local payment methods can go a long way in providing comfort to consumers.

Brands can utilise market insights to discover the significant marketplaces and digital platforms within new markets that they want to target. Partnerships are an inexpensive exercise to expand a brands’ audience through exposure in an established marketplace that is already localised.

The indent wholesale model, where retailers purchase products from wholesalers, poses a challenge. Most retailers are cash-strapped due to Covid-19’s impact.

Brands have to approach retailers with the right product mix bolstered by current market insights. Be prepared for consignments given the current situation and try to negotiate alternative payment terms.

Another option is to utilise free and open channels like Asos Marketplace for distribution.

Creating the Right Product Assortment for Every Market

Merchandising is a crucial area to get right when expanding into a new market or joining an online marketplace. Marketplaces are also looking to minimise inventory risk and only a compelling assortment would convince them. As previously mentioned, extensive knowledge of trends that are prevalent in different markets is critical for this approach.

Spot potential brands or retailers to partner with by offering complementary products to list on their platforms. Successfully doing so can increase the average basket size and benefit both parties.

For example, a ready-to-wear brand in Germany could be open to selling an Australian swimwear brand on its website to attract more customers as the swimwear category is trending locally.

Trend performance by category in Germany. Image source: Omnilytics’s Trend Performance tool.

Another way to create a win-win situation with other brands and retailers is a counter-seasonal agreement whereby both parties can move inventory.

Brands in the southern hemisphere can direct focus to emerging markets in the northern hemisphere to push seasonal products that are starting to phase out in their region. In exchange, brands can offer to sell their summer stock in the southern hemisphere during Spring/Summer deliveries.

In globalising, mid-range brands have to re-evaluate both existing collections and international collections to cap investment while maintaining compelling assortments for their different channels.

The best option is to narrow down the assortment size by offering fewer options. To counteract reduced options, brands have to validate current market trends prior to designing.

Don’t be creative without being commercial.

– Natasha Zurnamer

This ensures they are creating products that resonate with consumers and will sell at highest margins. Choose the right products, produce just enough to sell out and continue the flow of inventory.

The New Normal

Brands have to start investing in technology like real-time data to support digitisation. It will become the new normal for retail as consumers grow accustomed to shopping online during the pandemic.

While physical stores will rebound, the digital experience will take precedence and will be the key to a brand’s success.

The need for globalisation to maximise market share also calls for retail intelligence for brands to make decisions with accuracy and speed. We’re excited about helping brands on that path.

Watch the webinar here to get more insights on how to navigate today’s Covid-19 landscape.