Articles

Sustainability: What Does it Take?
Sustainability: What Does it Take? 1440 428 ASG

Sustainability is mission-critical for retailers. Consumers demand it. Shareholders want it. The earth needs it. So why is it so hard to walk the walk?

There’s a common misperception among retailers that investing in sustainable building will be too costly to achieve any kind of ROI. Yet efforts to reduce carbon footprint, while perhaps more costly upfront, can be beneficial for retailers in the long run. While it takes effort to source products that are sustainable, using eco-friendly designs and recycled materials in retail locations are just two examples of ways brands are getting closer to sustainability goals.

As we’ve explained before, improving sustainability requires a willingness to do business differently. We’ll explore sustainable building in retail and what the future holds for this approach.

The Importance of Sustainable Building Practices in Retail

According to Microsoft, sustainability is a growing priority in retail and consumer packaged goods. Industry leaders, employees, investors, partners, and consumers who buy the goods care about sustainability.

  • 93% of CPG leaders spend more time on sustainability issues today than five years ago
  • 73% of Millennials prioritize sustainability over pricing
  • 55% of recent CPG market growth came from sustainability-marketed products

By implementing sustainable practices, retailers not only gain a competitive advantage with eco-conscious consumers but also reduce their carbon footprint.

Virtue Signaling vs. Environmental Commitment

Retailers who talk sustainability without verifiable actions raise doubts about their commitment. Virtue signaling – talking the talk without walking the walk – can instantly destroy a brand’s credibility. And even though there is a gap between what consumers say they expect and what they purchase, the intent for better sustainability is a growing trend among consumers and stakeholders. And with more legislation requiring specific commitments to sustainable practices, getting ahead of the curve can be cost-effective.

Sustainability Begins Before Building

As retailers refine their sustainability efforts, the first consideration is location. More than ever, sustainability includes answering the question, “How far do I expect my customers to travel to shop in my store?” The answer is often not as far as they used to. Smaller stores embedded in neighborhoods are a more sustainable alternative to larger stores that use more energy and require a longer trip to access.

What Steps Are Retailers Taking to Be More Sustainable?

There are a number of ways retailers can incorporate sustainability into buildings and materials—some might be easier and more cost-effective than you think.

Energy-Efficient Lighting
Energy-efficient lighting is one of the key components of sustainable building. It’s more than just LED lights, although that is an important component. LED lighting uses much less energy than traditional lighting and can last decades longer. However, other considerations can help with more sustainable lighting as well. Choosing to construct buildings in ways that take advantage of natural lighting can help save even more.

Efficient HVAC
Energy-efficient HVAC systems help significantly reduce energy consumption. While lower utility bills are the most obvious benefit of an efficient HVAC system, other benefits include better air quality and reduced health risks for employees and consumers.

Eco-Friendly Materials
IMM-Cologne explores the use of sustainable materials in retail design in great depth. They suggest solutions from the circular economy:

  • Terazzo floor slabs, bricks, and recycled concrete produced from construction waste.
  • Recycled PVC or vinyl floor coverings.
  • Recycled clothing made into curtains, shelving, counters, and more.
  • Alternative construction materials such as hemp, rapidly regrowing bamboo, or recycled plastic.

IMM-Cologne makes the argument for the importance of pursuing sustainability:
“Rising energy costs, shortages of raw materials, the new awareness in society and the increasingly visible consequences of climate change call for a new way of thinking. This should ultimately benefit everybody: companies, people and, above all, the environment.”

Eco-Friendly Retail Design
Sustainable building can also include using eco-friendly designs like green roofs and walls. Green buildings reduce heating costs by adding insulation while also reducing the urban heat island effect. According to the University Corporation for Scientific Research on urban heat islands,

“Heat islands form as vegetation that is replaced by asphalt and concrete for roads, buildings, and other structures necessary to accommodate growing populations. These surfaces absorb—rather than reflect—the sun’s heat, causing surface temperatures and overall ambient temperatures to rise.”

When retailers incorporate green roofs and walls into their structures, they help reduce this effect.

The Benefits of Sustainable Retail for Businesses and Consumers
Sustainable retail practices are good for the environment, but they also provide measurable advantages for businesses that implement these practices and the consumers who support them. Sustainable building can save retailers money on energy and water bills while also allowing them to connect with consumers on a deeper level, earning more customer loyalty. Plus, consumers benefit from a healthier shopping experience in buildings with improved ventilation and natural lighting.

“Some people will say sustainability is an additional cost, but once they’re doing it, it becomes second nature and integrated into how they do business,” said Sabine Schlorke, global manager for manufacturing at the International Finance Corporation, a member of the World Bank Group, in an interview with PWC. “If you see it as part of your business, it’s not a cost; it’s an opportunity.”

A Consumer Shift

“I hope when the industry slows down (in a good way), we will be able to focus more on using the sustainable products of the future—fixtures, building materials, flooring, and even playing around with 3D printing to make small tables and stuff,” he says. “It’s the future. I hope we can use it to think bigger.”
– Andrew Miller, ASG procurement and materials manager.

Consumers are becoming more environmentally conscious, choosing products with sustainable packaging and shopping brands whose values match their own with regard to sustainable efforts. Retailers have been rushing to get ahead of pandemic-related supply chain struggles, but making efforts to implement sustainable building practices where feasible demonstrates that they are listening to their customers. The effort and transparency go a long way in building a strong brand reputation and earning customer loyalty.

Are You Ready for the ‘Escrow Surprise?’
Are You Ready for the ‘Escrow Surprise?’ 1440 428 ASG

Every year at this time, we wait with bated breath for the spring renewal of all things beautiful, and somewhere in the middle, everyone scrambles to ensure their regular dance with the IRS is complete, and funds are exchanged. This same dance happens in retail at a much larger scale, in an episode that I now call the “Escrow Surprise!” It’s almost like an Easter egg hunt but not quite as full of childlike joy.

Every year, retailers’ leases require them to place funds in escrow (a prepaid an estimated expense, typically divided equally between twelve months) toward their portion of the Landlords’ annual tax billings. At the end of every year, Tenants receive a reconciliation of their share of the tax obligation, less what they have already paid toward that obligation, with a balance or credit due based on the actual assessments.

This year, as opposed to prior years, we are seeing wide variances in these estimated tax payments (escrows) and the final reconciliation. These variances often create large outstanding balances for retailers, sometimes in the tens of thousands of dollars. Whether this is a product of the government’s late-to-update property assessments, or owners/Landlords being behind in recognizing the increased obligations to retailers, the Escrow Surprise can cause angst for a Tenant with this new, unaccrued, and hefty financial obligation, particularly in an industry that has hit a wall.

We have some thoughts about protecting yourself. When it comes to commercial real estate tax escrows for retailers, both Landlords and government agencies play a crucial role in ensuring that these payments are made timely and accurately. In order to avoid missed escrows, it’s important for both parties to take proactive measures to stay on top of their responsibilities.

For Landlords, this means regularly reviewing their property tax bills and ensuring they are paid promptly. In jurisdictions where they are given discounts for early payments, they should seize these opportunities unless they plan to appeal. They should also keep accurate records of these payments and provide copies to their tenants as proof of payment. Additionally, landlords should communicate with their tenants regarding any anticipated changes in property taxes, new levies, or other fees that may impact their lease agreements.

Government agencies also play a critical role in preventing missed escrows. They should provide clear and concise information about property taxes, including due dates and payment options. They should also have accessible systems to track payments and ensure they have been properly credited to the appropriate accounts. Finally, government agencies should be responsive to inquiries and concerns from Landlords and provide assistance when needed to ensure that tax payments are made on-time.

Overall, the key to avoiding missed escrows in commercial real estate is clear communication, careful record-keeping, and proactive measures on the part of both landlords and government agencies. By working together, they can help ensure that Landlords are not burdened with unnecessary penalties or fees that cannot be passed on to the retailers.

How Retailers Can Protect Themselves

Most leases contain protection for the Tenant to avoid overpaying on expenses that are ultimately passed on to the Tenant (a pro-rata obligation). These come in the form of exceptions wherein Tenants are not responsible for fees assessed to the Landlord, or that Tenants are not responsible for paying at a rate they would otherwise pay, if they were paying these directly to the agency, county, or provider, especially with utilities.
Certainly over the past few years, what first seemed to be anomalous weather events that brought increases in Tenant-related expense for electrical, gas, HVAC, trash, insurance, snow and ice removal costs; appear to have quickly become the basis for escrow increases to these expenses passed on as an anticipated cost for the Landlord. Whether or not the logic holds, cost increases have propelled Landlords to bill at higher rates with the understanding that these “one-off” weather events are now a part of their anticipated costs, ultimately burdening retail Tenants with more upfront cost, and with the hope that they do their due diligence in reconciling these expenses correctly at the end of their periods, crediting any overpayments back to the Tenant.

For newer retailers, or retailers who are looking to renegotiate their leases, moving toward fixed-rate expenses (as often as possible) simplifies their portfolio and helps them to account for these expenses over the lifetime of their leases (read: ASC842, rent accounting). These fixed expenses, often with fixed increases each year, are easier to maintain and prevent any surprise costs from being passed through to the Tenant. A great example of this was the case with the Texas power outages of 2021.

Communication Is Key

Typically Landlords and Tenants have some form of process in place that is standardized for them. Landlord’s lease agreements, while potentially standardized for the larger national and international management companies, still have unique-to-Tenant language that must be reviewed and challenged by Tenant’s teams.
What we’ve learned over a period of time is that for many Landlords, utility expenses, additional Insurances, and overall increases to operating costs have been rarely communicated in a way that is justifiable to the Tenant or their leasing teams. Even when they are justified, clear communication is the best way to ensure trust in the Landlord-Tenant relationship, either by providing budgets in advance when Landlords anticipate escrow increases, or by more quickly making escrow adjustments on expenses when a reconciliation has been done and Tenant has any kind of credit or additional obligation (i.e., have been sent a Year End Adjustment).

Outsourcing Lease Management Can Help Protect Tenants

The onus is, unfortunately, on the shoulder of the Tenant at most times to push back on the Landlords when caps, fixed increases, and unallowable expenses are billed through on real estate taxes. However, it is the responsibility of the Landlord to, when appropriate, respond quickly when these discrepancies and disputes are presented, rather than tread water when a Tenant presents evidence of disparities. Preservation of the Landlord-Tenant relationship here is crucial when Tenants go to reevaluate their terms and any future lease agreements, and ultimately will impact the entire retail sector if- or when- Tenants evaluate their footprint in the physical retail marketplace.

The Modern Mall
The Modern Mall 1440 428 ASG

An Exciting New Chapter for the Modern Mall

The traditional mall, once a staple of American retail, has been undergoing a significant transformation in recent years. As consumer retail trends shift and evolve, retailers need to adapt to stay relevant in the changing landscape. While many analysts claim the mall will become a thing of the past, these retail centers can survive by embracing innovation, reinvention, and evolution.

From Shopping Centers to Experience Centers

Gone are the days when malls were simply places to buy clothing or electronics. Modern malls are becoming “experience centers” where consumers can immerse themselves in a wide array of activities beyond traditional retail. Mall operators and retailers alike are reimagining these spaces as dynamic destinations that offer a unique blend of shopping, dining, entertainment, and community experiences.

What’s driven this evolution? Well, Millennials and Gen Z report valuing experiences over possessions. Community gathering places are critical to these major demographics, who want places to connect, socialize, and make memories. As a result, modern malls are incorporating more experiential elements, such as entertainment venues, fitness centers co-working spaces, and community gathering areas, to provide a multi-dimensional experience that goes beyond shopping.

Consumers crave an interactive touch-and-feel shopping experience again. Many retailers have undergone major renovations, focusing on creating an upscale, hashtag-able, entertaining experience. While not every mall can have the full NYC Hudson Yards vibe, all retailers can create spaces for consumers to shop and play. A unique and memorable experience will drive traffic and, in turn, sales.

An Omnichannel Experience

While the pandemic had most consumers on a click-to-buy pattern, now that the world has reopened, consumers are ready to get out and shop again. But consumers are still in the buy-now mindset, expecting in-person retail to be just as quick and easy as e-commerce.

How are malls reacting to these new shopper expectations? Some malls are repurposing vacant retail spaces into fulfillment centers or last-mile delivery hubs, enabling retailers to meet the growing demand for online shopping and same-day deliveries. Other retailers are leveraging malls as showrooms or experience centers where customers can try out products before making online purchases. This allows them to showcase their brand and create an interactive shopping experience, while still capitalizing on the convenience and efficiency of online sales.

The integration of online and offline retail creates a seamless omnichannel experience for consumers, blurring the lines between physical and digital retail.

modern mall

Other Consumer Preferences Transforming Malls

Let’s take a closer look closely at some of the key consumer retail trends that are influencing the transformation of malls and explore the evolution we can expect to see.

  1. Experience-Driven Shopping: Unique and immersive experiences that go beyond traditional retail are driving younger generations to the mall. Modern malls are incorporating experiential elements, such as entertainment venues, interactive installations, and community events to create memorable and engaging experiences.
  2. Technology Integration: Consumers use tech in their everyday lives, and they expect retailers to use it to enhance their shopping experience. Expect to see more features like augmented reality (AR) and virtual reality (VR) experiences, digital signage, personalized/targeted marketing and specialized apps.
  3. Community-Centrism: Malls have an opportunity to position themselves as more than shopping destinations, but hubs for community engagement. Malls can make their mark on a community by hosting local events, supporting local businesses, and creating spaces for social gatherings, like rooftop gardens and event spaces. This trend is driven by the growing desire for authentic and localized experiences as consumers seek connections and a sense of belonging in their communities.
  4. Convenience: Consumers demand time-savings solutions and shopping experiences that cater to their busy lifestyles. And with the rise of e-commerce, they have come to expect it. Malls are adapting by incorporating services like curbside pickup, same-day delivery and streamlined returns.
  5. Sustainability: Consumers expect retailers to incorporate sustainable practices, such as recycling, green spaces and energy-efficient lighting (at the very least). This trend is driven by the growing importance of sustainability and social responsibility in consumer purchasing decisions.

A Dynamic Destination

The modern mall is undergoing a remarkable transformation to meet the changing needs and high expectations of today’s consumers. We are excited to be at the forefront, watching how retailers and mall owners embrace innovation, creativity, and technology to reinvent the mall experience. From immersive and experiential offerings to convenient and sustainable practices, the modern mall is poised to become a dynamic and engaging destination that goes beyond traditional retail.

Tapped Out: What It Takes for DTCs to Thrive Now
Tapped Out: What It Takes for DTCs to Thrive Now 1440 428 ASG

At first, the DTC model seemed unstoppable.

Companies found they could cut out intermediaries like retailers and distributors to offer their products at lower prices. With greater control over their brand and product offerings, DTC companies could provide a personalized and convenient shopping experience. With a sea of customer data, DTCs have valuable insights into customer preferences, allowing them to also optimize product offerings and marketing strategies.

But now, the DTC model is coming into question. Let’s dig into what has changed for DTCs and learn why it’s not so easy to thrive now.

Stiffer competition: As the DTC model found its footing during the pandemic, more brands jumped into the game. But this crowded marketplace has made it difficult to stand out and new entrants have difficulty differentiating themselves enough to capture market share.

Scaling is tough: Whether the DTC is a slow burn or an overnight success, scaling the brand can be an impossible balance between speed to consumer and maintaining the level of product quality and customer experience that got the brand there in the first place.

Continued rising CAC: The cost of customer acquisition has continued to increase with the increases in marketing costs. CPC is often too high to reduce the cost of acquisition. According to a new study, CAC has risen 60% in the last five years.

Supply chain issues: DTCs, like every other retailer, rely on a myriad of solutions to move their products through production and into the hands of consumers. Every step along the way can be costly, with disruptions that can swiftly cause trouble for the brand.

Profitability Is elusive: The DTC model demands a lot of upfront investment – in product development, marketing, and customer acquisition as well as supply chain. Profitability can be slow to achieve, making it difficult for the brand to sustain long enough to get there.

How DTCs Can Strengthen their Brands

Building and scaling a strong brand and delivering an exceptional experience is the goal, but achieving profitability requires addressing challenges in new and innovative ways. Yes, DTCs need differentiation and cost control; they need operational excellence and agility; and they need to deliver an unmatched customer experience. But these are the results, not the actions.

What actions can DTCs take to improve viability?

As the market contracts and more DTCs are going under, the ones who are determined to survive will need to become experts in diversification, pivoting to in-person, embracing wholesale, right sizing their brand, and repositioning with agility.

How DTCs Can Strengthen their Brands

“I remember there was a time where we used to acquire customers for $16 per customer — I mean, it was kind of crazy,” Sara LaFleur explained in an interview in Modern Retail. “We always thought of the subscription box as the acquisition channel, and then our customers would find themselves in either our showrooms or our e-comm channel shopping for themselves. And so that’s how customers were being pathed. And I think with the change in performance marketing and realizing just subscription was no longer working as an acquisition channel, the thought there was let’s shift our acquisition channel to now be from something else, and [using] our stores [as] a source of acquisition. And it actually absolutely has been. So rather than thinking of showrooms and retail as a retention channel, we’re now playing around with it also being an acquisition channel.”

Pivot to In-Person

For many DTCs, the best way to attain profitability and longevity is to make the move to in-person. Strategically opening physical stores can help raise brand awareness, attracting customers who were not already aware of the brand and increasing loyalty from existing customers.

“Consumers inherently trust brands that have a physical presence over those based solely online. In a recent report by global data intelligence company Morning Consult, roughly one-third (34%) of US consumers surveyed stated they don’t trust retailers with just an online presence. Meanwhile, 68% trusted retailers with just a physical store, and 73% trusted retailers with both a physical and online store.” – Chute Gerdeman

Embrace Wholesale (Again)

From partnering with larger online marketplaces to getting the DTC brand featured in a store like Target and other retailers, partnerships allow the brand to gain visibility while reducing marketing and customer acquisition costs. Two major sneaker companies – Adidas and Nike – were all in on DTC just a few years ago; now, in the face of ongoing struggles to maintain profitability, both brands are regrouping with a new love for wholesale. Another DTC sneaker company, Allbirds, reported a 40% decline in stock value. Their CEO, along with Nike and Adidas executives, all explained their plans to slow down on store openings and increase wholesale partnerships.

Compare those results to Skechers, who are on the path to achieving $10 billion in sales by 2026 by focusing on a true omnichannel, integrated experience for customers.

“We want to get the product to wherever the consumer is going to be.” – Skechers CFO John Vandemore.

Social Selling and Influencer Marketing

Social selling and influencer marketing is undergoing seismic shifts. DTC brands want to reach consumers where they are, when they’re ready to buy. But it’s much harder to gain traction as a new brand or an existing DTC with new privacy laws coming into effect. HBR recommends focusing on the 4 Cs of manufacturing organic marketing (content, consumers, creators, and celebrities).

“…between privacy concerns and Apple’s iOS 14 changes, Facebook has become much less effective in targeting customers, reducing the overall efficiency of digital customer acquisition. These changes have led brands to search for ways to manufacture organic marketing again. Faced with these challenges in 2023, new DTC brands, as well as existing incumbent brands, have to develop strategies that will allow them to generate organic attention and marketing.”

Pop-Ups

Pop-ups give DTCs the chance to test out the world of in-person retail without a huge commitment to a lease or a location. The amount of data the brand can collect from a pop-up location is immeasurable and can help define next steps.

“The pop-up is the equivalent of a fancy customer intercept survey. You can gather a lot of customer data with very little investment to determine whether or not it’s a good location, what kind of traffic you can expect, and what your product mix should look like, explains Carrie Barclay, President, ASG – Chute Gerdeman in ASG’s Path to In-Person Guide. “Pop-ups have increasingly become an effective way to test a market and make sure it’s a good fit for your brand before getting too heavily invested in the location.”

Right Sized

The goal of being right-sized is to achieve growth without sacrificing quality and experience. But for DTC brands, being right sized can have layers of meaning, from the kind of packaging being used to the number of showrooms, popups, and retail stores are opened. It can influence product mix, number of staff, and more. So what does it mean to be “right sized”? Right sized is the magic of finding the perfect balance between growth and profitability, operating at that point where their ability to scale is both sustainable and cost-effective.

Repositioning

While repositioning is always a part of retail strategy, when the market is contracting it is more important than ever for DTCs to use relevant and current consumer data to tighten their focus on meeting the need and wants of their customers, adjusting product mix quickly with marketing and customer experiences that reflect the quick response. It’s more than just being out there; it’s telling the story that connects the brand to the consumer in a way that shifts their behavior. As Matt Charlton writes in The Drum,

“The whole point of marketing, insights into the irrationality of people, real creativity, clever media, and brilliant product and experience is to allow brands to not have to wait around for consumers to organically adopt stuff. Anyone can do that, but to find ways of opening up awareness, desire, and validation to get people to change what they think they like and believe you have to make everything you can truly memorable. If I don’t remember much then you have to hope I buy because I’ve got no other choices and that is not what most D2C is about.”

What’s Next for DTC?

In an interview with Forbes, Bryan Mahoney, co-founder & CEO of Chord, a Commerce Platform-as-a-Service for fast growing D2C and omnichannel brands, explained the concept of DTC 3.0:

“DTC 3.0 is defined by a more substantial connection to customers, and a real reliance on first-party data. It’s almost as if we’re going back to basics: the focus is on getting close to consumers, understanding what they need, and offering them a unique experience that includes community. That’s what this new iteration of DTC is proving itself to be: a more collaborative, brand-building relationship between businesses and consumers.”

DTCs are facing sometimes insurmountable challenges, with more players going out of business. To survive and thrive, it will be necessary to make changes to strategy.

Fashion-Forward: Unconventional Business Models for Modern Consumers
Fashion-Forward: Unconventional Business Models for Modern Consumers 1440 428 ASG

Fashion and apparel brands with unorthodox business models are shaking up the industry, challenging the status quo, and creating exciting new opportunities for consumers and retailers alike. From degrowth principles to the persistent rise of subscription e-commerce, we explore a few innovative, fashion-forward brands changing the face of the industry.

Modular Fashion

The fashion industry is constantly evolving, and one of the latest trends to take the industry by storm is modular fashion. This concept involves creating clothing that has detachable components, enabling a piece of clothing to have an extended life cycle.

Fashion brand Buhndi has embraced this trend by allowing customers to create multiple looks from a single garment. For example, customers can purchase a base garment that matches all the blueprints and add-ons available. As new blueprints are launched, customers can keep building their look, reducing the number of clothes they purchase and extending the life of their wardrobe.

WGSN, a trend forecasting platform, has identified modular fashion as one of the top five trends for the next decade, attracting and empowering customers who are looking for a more sustainable and cost-effective choice.

Accessible Fashion Styling

Stitch Fix is a popular online personal styling service that uses data and technology to curate a personalized selection of clothing and accessories for its customers. The company’s business model revolves around leveraging algorithms and human stylists to create a unique and customized shopping experience for each customer.

Stitch Fix‘s business model combines technology and human expertise to offer a personalized shopping experience for its customers, which is both convenient and enjoyable. By leveraging data analytics and machine learning, the company can provide a tailored selection of clothing and accessories that match each customer’s style and preferences, while also allowing them to try items at home and providing valuable feedback to improve future selections.

Degrowth Principles

Degrowth is a concept that involves a managed reduction of the economy to bring it in line with planetary boundaries and meet climate goals. It has recently entered the mainstream sustainability lexicon, and some fashion brands are embracing this approach.

Early Majority, an outerwear brand, operates on a community-driven membership model and applies degrowth principles to its designs to create functional garments that can be worn anytime, anywhere.

In a Vogue Business article, founder Hoy Howard said the brand aims to create clothing that is not only sustainable, but is also functional and fashionable.

“The functionality and aesthetic of each garment should be able to take you from the bike to the boardroom, or from the bar to the backcountry, and the brand’s community member fees will eventually contribute more to overall revenues than product sales,” he said.

This approach aligns with degrowth principles, which aim to reduce consumption and promote a more sustainable way of living. While some view degrowth as a radical concept, many scientists believe it is necessary to meet climate goals.

Subscription eCommerce

Subscription commerce is growing at an exponential rate. In fact, the global subscription e-commerce market size was expected to hit just over $120 billion in 2022. It’s expected to reach more than $900 billion by 2026.

Subscription commerce allows customers to sign up for a recurring delivery of a particular product or service, such as clothing, beauty products or food. Brands use data and analytics to personalize the subscription experience. This model increases revenue through upselling or cross-selling relevant products.This approach not only increases customer loyalty but also helps brands to reduce inventory costs and better manage their supply chain.

At one point, many of us participated in subscription ecommerce (think back to our magazine and newspaper subscription days). However, subscription ecommerce has evolved into a solid strategy for other types of retail brands to reach a broader range of customers. In fact, subscription brands grew their customer base by 31% in 2021.

Some of the most popular subscription brands on the market include FabFitFun, which has nearly 200 million subscribers and sends them curated boxes of six to eight full-size items of the customers’ choosing. Digital content subscriptions like MasterClass has 1.5 million subscribers and provides video lessons taught by professional instructors and offers a special section of classes on design and style.

One advantage of the subscription commerce model is that it creates a predictable revenue stream for brands. Instead of relying on one-time purchases, brands can rely on a steady stream of revenue from recurring subscriptions. This allows brands to invest in product development, marketing and customer service to improve the overall subscription experience.

Clothing Rental

Rent the Runway is a clothing rental service that allows women to rent designer dresses and accessories for special events or everyday wear. The brand’s business model is based on the idea that women can rent high-quality clothing at a fraction of the cost of purchasing it. By renting rather than buying, consumers can enjoy the latest fashion trends without having to worry about the high cost of ownership.

Rent the Runway has also recently launched a subscription service called “Unlimited,” which allows users to rent up to four pieces of clothing or accessories at a time for a monthly fee. This subscription model allows the brand to offer an even more affordable and convenient option for customers who want to keep their wardrobes fresh and up-to-date.

Secondhand Treasures

There’s the saying, “One man’s trash is another man’s treasure.” More and more retail platforms are embracing this wise advice–and building a brand in the process.

Thredup is a large online retail platform for women’s and kids’ apparel, shoes and accessories that allows consumers to buy and sell secondhand clothing. The company’s business model is based on the growing trend of consumers shifting their spending toward secondhand clothing, which is gaining market share at the expense of fast fashion, department stores and luxury brands.

A recent study found that the global apparel resale market hit $182.4 billion in 2022. That same research found that resale has grown 25 times faster over the past five years than the retail clothing market.

So how can companies profit from this business model? Thredup attracts high-quality supply without directly spending money to acquire sellers. Sellers choose Thredup’s managed marketplace to conveniently clean out their closets and earn a payout that can be received in the form of cash, Thredup online credits, select RaaS partner credits or a charitable donation receipt.

Unique Models will Continue to Emerge

While traditional business models still dominate fashion, there are several unique business models that are gaining popularity among brands. By leveraging technology and innovation, fashion brands can create a unique value proposition for their customers, which sets them apart from the competition.

These models offer flexibility, convenience, and sustainability, which are key factors that modern consumers are increasingly prioritizing. As fashion brands continue to experiment with new business models, we can expect to see more disruption and innovation in the industry, leading to more personalized, sustainable, and customer-centric fashion experiences.

Trends in Outdoor Living
Trends in Outdoor Living 1440 428 ASG

There’s just something about being in nature. It helps relieve stress, it makes it possible for us to get in touch with our emotions, and it offers us a great excuse to disconnect from technology. People want to be outside, and they’re not waiting for vacation time to squeeze in a camping trip to the mountain lakes—they’re creating outdoor living spaces at home. Let’s look at the trends.

Outdoor living—or “backyarding”—has “become part of our daily lives,” says Kris Kiser, President & CEO of the TurfMutt Foundation. TurfMutt offers three characteristics of the master backyarder. If you are one of them, you may already be hip to these outdoor living trends.

Indoor-Outdoor Design

One of the biggest trends in remodeling is kitchen remodeling—but not just the kitchen. For high-end remodels, it’s about extending the kitchen onto the back porch or deck, creating an indoor-outdoor entertainment space with a cohesive design and an easy flow. During the pandemic, more people started cooking at home and embraced baking; tying that newfound interest to the ability to connect with people in person again has made this one of the hottest trends.  Grills – a $5.4 billion industry, with expected growth through 2032, are a big feature. We will see more grills with outdoor stovetops as well as grills with commercial-style pizza ovens and smokers.

Fully Functional Outdoor Kitchens

In addition to grills, homeowners are adding fully functional outdoor kitchens to their backyard spaces—we are talking sinks and dishwashers, refrigerators, and kegerators included, along with a patio cover or a pergola to make it usable more months out of the year.  Standalone wood-burning pizza ovens, creative lighting and heating, and comfortable furniture designed for entertainment are also in high demand. Outdoor furniture brands like Outer are capitalizing on the trend, launching neighborhood showrooms where customers can try out their outdoor furniture in other customers’ backyards before investing.

Backyard Theaters

Food may play a central role in outdoor living trends, but these trends extend beyond the kitchen. A popular use of the backyard space is an outdoor theater. Screens, projectors, and comfortable seating is really all it takes to create an experience for the whole crowd. Upscaling the experience, some homeowners are installing fully wired outdoor theaters with screens set into protective alcoves. Conscientious planning means considering the plants growing in the backyard, too—for fragrance and for snacking (think snap peas and home-grown popping corn).

Food Grown at Home

With both an eye on sustainability and a desire for fresh food at a better price, more people are growing food at home. We’re talking about more than just a simple backyard garden, too, although gardens have grown in popularity too. A company called Lettuce Grow is helping lead the way. In a Forbes article, the company is described as “a pioneering new brand helping them take the leap and try home growing for themselves” with a hydroponic garden concept that helped consumers  grow and harvest 20% of their own fresh produce, eliminating food waste and reducing water and carbon impact by more than 98%.” Other trends in gardening include creating spaces that support pollinators, moving away from high-maintenance lawns by better incorporating native plants, and making the outdoor garden space a bigger part of the entire outdoor living experience.

Trends in Outdoor Living

Pools and Water Features

Outdoor living is all about turning the backyard into an oasis. It’s no surprise, then, that pools and water features are extremely popular in helping to create the full experience. Pool Magazine spoke to designers who suggest waterfalls, deck jets, and fountains as ways to promote tranquility.  The designers explained the techniques they use to create a more contemporary outdoor living space, including:

  • Flow and symmetry to visually connect different areas
  • Seating that creates areas of comfort and recreation
  • Landscaping that encourages a natural and serene environment
  • Using cabanas, pergolas, and shade sales to offer protection from the sun
  • Lighting that creates a warm and inviting atmosphere and allows the outdoor space to be used after the sun sets
  • Sustainable, eco-friendly designs, like solar heaters for pools
  • Smart tech like AI-powered pool fences and cleaning robots
Trends in Outdoor Living

Work-from-Home Spaces

Also born from the pandemic, work from home is here to stay for at least half the workforce, whether it’s all the time or part-time. But most WFH veterans are well beyond the point of squeezing the office into a corner of the living room or bedroom. Today’s work-from-home offices are upscale designs, and the latest trend is to create a workspace in the backyard— a separate building designed to make the workspace a joyful experience separate from homelife but without the commute. House Digest offers 30 different backyard office designs inspired by this trend.

Bringing the Outside In

Homeowners aren’t just expanding their living spaces outside. They’re also bringing the outside in. Apartment Therapy explains the trend and predicts that it will eclipse indoor-outdoor living: “Think of outdoor-indoor living as inviting nature indoors regardless of whether you’re surrounded by towering pine trees or towering skyscrapers. Designers and architects are looking more to traditional outdoor finishes (like stone, slate, and untreated wood) to breathe life into interiors and create a connection between daily life and the nature that surrounds us.”

From backyard entertainment to luxurious oases, outdoor living at home is hitting its stride.

Redefining Bucket List Travel
Redefining Bucket List Travel 1440 428 ASG

From the bustling streets of Tokyo to the serene beaches of Bali, travelers are seeking out experiences that elevate their senses and ignite their curiosity. Travel is no longer just a journey; it’s an opportunity to explore one’s inner self, connect with the world, and make unforgettable memories along the way.

As the world becomes more connected, the urge to explore and discover new horizons has become an inherent part of the human experience. Interest in seeing new places has evolved to an artful pursuit of self-discovery and inspiration. With a world of possibilities at their fingertips, travelers are increasingly seeking out authentic and unique experiences that align with their passions and help them create cherished memories that will last a lifetime. For many, it’s become less about just getting away and more about bucket list travel experiences every time they leave their city.

Our team recently conducted extensive research on the state of travel today and how we expect it to impact the retail industry. Let’s dive into some of the themes we spotted, along with some opportunities for retailers.

bucket list

Taking The Scenic Route

Opportunity for Retailers: Cater to the road trip crowd. Whether it’s road food, designer car organizers, or tech to improve the ride for drivers and passengers, opportunities to make the journey more pleasant abound.

The COVID-19 pandemic has changed the way we travel, with many people opting for road trips over air travel due to safety concerns and travel restrictions. As restrictions eased, travel came back with a vengeance in 2022, but that didn’t mean travelers solely returned to the air. In fact, a 2022 survey from The Vacationer found that nearly 80% of U.S. adults planned to take a road trip that summer. “Travel was closed due to COVID, and people don’t want to forfeit those experiences now,” said Mindi Trank, VP Strategy, Chute Gerdeman and ASG.

Even with the pandemic emergency behind us, there has been a growing number of travelers choosing to hit the road and take the scenic route, rather than flying, to their destination. Driving vacations offer a level of flexibility and freedom that air travel simply can’t match. With a car, travelers can stop whenever and wherever they want, take detours to explore off-the-beaten-path destinations, and truly immerse themselves in the landscapes and cultures they are passing through. Plus, there’s something about the open road that just feels liberating and adventurous.

“Travelers are driven by the idea of controlling their time and where they are going,” Trank said. “With auto travel, travelers have control over where they are going, and the stops along the journey have become more important than ever. People are making more opportunities for something special to happen.”

From cruising along coastal highways to winding through mountain passes, the scenery and terrain of a road trip can be just as exciting and awe-inspiring as the destination itself.

With the rise of electric and hybrid vehicles, road trips are becoming more sustainable and eco-friendly than ever before. With electric car charging stations popping up along major highways and eco-friendly accommodations catering to road-trippers, driving vacations are increasingly seen as a responsible and low-impact way to explore the world.

Checking off the Bucket List, One Trip at a Time

Opportunity for Retailers: Create opportunities for “meaningful” travel experiences and target the younger generations who want to make memories.

A Stanford Medicine research project asked participants to share what is on their bucket lists, a list of experiences, accomplishments, or goals that a person wants to achieve or fulfill before they die (also referred to as “kicking the bucket”). The top response? The desire to travel, with nearly 79% of participants stating they hoped to explore new places.

At root for many of these bucket list travels the quest for meaningful experiences. A poll conducted by Bucket List Travels, a travel inspiration website, found that participants fear the greatest regret at the end of their lives will be that they didn’t explore enough of the world.

More than half of those polled said they wanted to see at least five additional countries and are currently working on checking off their travel bucket list. These numbers were particularly high among single travelers and those in younger age groups who want to make memories, according to the survey.

“People are looking at their lives and deciding how they want to focus, and then they find where that could lead them,” Trank says.

bucket list

Exploring Before Natural Wonders are Gone

Opportunity for Retailers:  The eco-tourism bus has already left the station. But if you are not yet in the business, unfortunately for the planet, new opportunities for helping consumers explore endangered natural wonders are certain to continue to arise.

As concerns about climate change and other environmental issues continue to mount, more and more people are starting to travel to see places or things that may not be there down the road.

From melting glaciers and disappearing coral reefs to endangered animal species and landscapes threatened by rising sea levels, there are a growing number of natural wonders that are at risk of being lost forever.

The World Wildlife Fund (WWF) has found that some of the most iconic tourist destinations, including the Amazon rainforest, the Great Barrier Reef and the Galapagos Islands, are at high risk of being severely impacted by climate change in the coming decades.

This has led many travelers to prioritize destinations and experiences that may not be available when they finally get around to scheduling a trip.

“Climate tourism is starting to explode. It stems from that feeling that maybe I want to see the Great Salt Lake before it’s gone,” Trank said. “Along with travelers checking things off their bucket lists, we are getting a sense with COVID that we may not have all the time in the world. It brought to the forefront for us that every vacation has to count.”

While many travelers are seeking opportunities to explore these threatened landscapes, they are also learning about ways to help protect them.

“Even with small trips, more are carefully considering where they are going and becoming more conscious about the footprint they are leaving behind,” Trank said.

In fact, according to Booking.com’s 2022 Sustainable Travel report, nearly 66% of travelers want to have experiences that reflect local culture, 59% want to leave the places they visit better than when they first arrived, and nearly 50% said climate change news is influencing them to make more sustainable travel decisions.

These decisions may include choosing to stay in eco-lodges and supporting locally-owned businesses to using public transportation and reducing plastic waste. This shift toward sustainable tourism is not only good for the environment, but it can also benefit local communities and provide travelers with a more authentic and immersive experience.

Sit Back and Relax with Hassle-Free Organized Travel

Opportunities for Retailers: Savvy retailers will partner with organized travel companies to provide products for wellness, travel or leisure.

With the rise of organized travel, planning a dream getaway has never been more convenient or stress-free. In recent years, organized travel has become increasingly popular among vacationers seeking a hassle-free and enjoyable trip–even before the travel begins.

Theme-based tours, travel companies, and other forms of organized travel have made it easier than ever to plan and book a memorable vacation by taking care of all the details–from transportation and accommodations to activities and dining.

REI is one of several companies that has jumped into the travel planning business with its co-op adventure travel program that allows outdoor enthusiasts to explore some of the world’s most stunning landscapes. As a cooperative, REI is owned by its members, who are also its customers. This unique business model allows REI to offer travel options like hiking and backpacking trips, all led by experienced and knowledgeable guides.

“This is a retailer that has really jumped in with both feet,” Trank said. “They offer trips in so many ways. For example, REI may help a single traveler plan a hiking trip by recommending the right gear and offering a Saturday hiking training class to get in shape for the trip. On the trip, she can carry her daypack and REI sets up the rest. There are also other classes where people can plan them with their spouses or friends.”

Another popular immersion travel trip that is planned for the traveler and goes beyond traditional sightseeing is culinary tourism. One person’s trip may include sampling local foods, learning about traditional cooking techniques and taking pre-arranged cooking classes. Other types of trips where every detail is well thought-out before departure are wildlife safaris and wellness get-aways.

Bucket List Travel

Going Back in Time with Heritage Travel

Opportunities for Retailers: By catering to this very personal niche, retailers can earn brand loyalty. Products that help document the journey, both physically and emotionally, will see demand. Personalized services in this area will continue to expand.

In recent years, there has been a significant resurgence of interest in heritage and culture among travelers. With the rise of DNA websites like 23andMe, more and more people are gaining insights into their ancestry and feeling a deeper connection to their roots. As a result, many travelers are now seeking out destinations that have personal significance to them and exploring their heritage in a more meaningful way.

A Global Wellness Institute study found that by this past year, heritage travel, which includes cultural and ancestral tourism, was expected to grow to $919 billion.

One way that travelers are engaging with their heritage is by visiting the places where their ancestors are from. Whether it’s tracing their family tree in Europe, exploring the villages of their forebears in Africa, or connecting with their Native American heritage in the Americas, travelers are seeking out experiences that help them better understand their cultural and historical roots.

By learning more about their heritage and culture, travelers are able to gain a deeper appreciation for their own identity and a greater understanding of the world around them.

Armchair Travel: Seeing the World without Leaving Your Home

Opportunities for Retailers: Not everyone is able to travel to the Eiffel Tower or the Great Wall of China. Find ways to bring the travel experience to consumers at home or closer to home.

While group tours are still popular among the aging population, the business model has changed to include what’s known as “armchair travel,” a term used to describe the experience of exploring the world without ever leaving the comfort of your home.

Armchair travel can take many forms, from reading travel books and watching travel documentaries to playing virtual reality games or taking virtual tours of famous landmarks and attractions.

“Older adults are staying closer to home, taking online classes and learning about new places,” Trank said. “Travel companies have shifted their models, making it easier to pay $300 for an online class that gives you the sense of going everywhere.”

This is one of the biggest advantages of armchair travel; it allows you to explore places that may be difficult or even impossible to visit in person. For example, you can visit the Pyramids of Giza in Egypt, the Great Wall of China or the Taj Mahal in India without ever leaving your living room. You can also explore the remote wilderness of Antarctica, the depths of the Amazon rainforest, or the vast expanses of the Sahara Desert without having to worry about safety or logistical challenges.

The State of Travel

Travel has had a major moment since COVID restrictions have lifted and people are ready to mingle and see the world. Having lived through a global pandemic, many Americans have a renewed desire to understand and explore new places and cultures. While our attitudes and priorities when it comes to travel has shifted, retailers have a massive opportunity to reach new audiences by finding where they could add value to travelers’ experiences.

The Pet Retail Economy
The Pet Retail Economy 1440 428 ASG

Were you one of the many people who made a lifestyle change during the pandemic? Maybe you started a new hobby or workout regimen, or maybe you were one of the 23 million Americans who adopted a new pet. One in five Americans nationwide took in a new pet, according to The Washington Post. Do you fall into this category? If so, you helped change the way pet retail looks and will look for the foreseeable future. And if you are a retailer in the pet space—the outlook is good.

According to ZIPPA, the pet industry is booming. The U.S. pet industry expenditure has more than doubled in the last 10 years and is projected to continue that growth. Here are some staggering stats:

  • 70% of U.S. households own at least one pet, 32% of them being Millennials, followed by Baby Boomers (27%).
  • During the pandemic, the global pet industry saw spending growth of about 28%.
  • Owners are spending an average of $1,332 a year, which adds up to $13,000 over the average lifespan of a dog or cat.
  • The pet industry is worth $76.8 billion and is projected to reach $325.74 billion by 2028.

Shifting From Children to Pets

With pet ownership at record levels, owners are increasingly treating their pets more like a part of the family—and they want to be the best pet parents they can be. In an article from The New York Times, Andrea Laurent-Simpson a sociology research assistant professor at Southern Methodist University and author of the book Just Like Family: How Companion Animals Joined the Household, states that Baby Boomers have evolved into thinking of their pets as family members, especially as the cohort has become empty nesters. Many in the younger generations are fully leaning into the idea of dogs as children, with more Millennials postponing pregnancy and Gen Zers passing on having kids altogether. In fact, in a 2022 Consumer Affairs survey of 1,000 pet owners, “58% of Millennials said they’d prefer to have pets over human children.”

The consumer mind shift from pet owners to pet parents has brought many new opportunities to the pet retail market. With pet parents willing to spend big on a nice life for their pup, the pet housing market is hot.

Pimp My Pet’s Crib

As consumers spend more time at home, the aesthetics of pet gear can no longer be an afterthought. Owners are making sure their pets live just as high quality (and stylish) life as they do. From custom playhouses, dog showers, built-in litter boxes, and crates, to personal watering stations, there are endless designs pet owners are incorporating into their homes. One pet owner building a new home in Tulsa, Okla. requested a dog kennel-like structure off the main bedroom. “The kennel has a dog door that opens from the outside and leads directly to the dog shower, as well as built-in crates and their own refrigerator and dedicated freezer drawers for their raw food.”

With a lot of pet owners still working remotely, brands like PetFitness are seeing success. In January 2022 they released a dog-focused exercise plan. The online library of 50+ workout videos (created with consultation from vets and dog trainers) is designed to build strength, endurance, flexibility and balance.

Another company, Get Joy, announced in 2022 the establishment of the first-ever dog park in the virtual world of Decentraland. “Get Joy aims to increase dog joy through three things: nutrition, the cornerstone of what we do; educating pet parents on how to be the best dog parents they can be; and now, expanding our commitment to establish and improve the places dogs can go,” said Get Joy Founder and CEO, Tom Arrix. “We are turning to the metaverse to dramatize the fact that in most real-life communities, there is an imbalance between the size of the dog community and the available recreational space for those animals.”

Back To Work

For Americans on the go or returning to the office, some of those household amenities might not seem appealing. But services like “doggie daycare,” pet healthcare insurance, and even pet-friendly restaurants and workplaces take priority for those pet parents. Many pets and their people have had to adjust to returning to the workplace, and it’s not easy for either party. Over half (57%) of American pet owners said they would be happiest returning to their workplace if they could bring their pets with them according to a recent Stylus report.

Many owners say they are concerned about the separation anxiety their furry friends may experience as they leave them for more extended periods of time. Doggie daycare may be reasonable for some pet owners with costs averaging round $30-$35 per day, while others want the flexibility to work part-time or bring their pets to work with them. A study by LiveCareer found :

  • 52% of respondents said that pet-friendly benefits and policies are important when considering an employer.
  • 49% said that a pet-friendly work environment could convince them to take a job offer.
  • 52% felt more supportive of pets in the workplace due to the pandemic.

Although bringing pets into the office has some negative sides such as allergies, accidents, and distractions, there are some studies that show pets help reduce stress, enhance physical health, and enhance one’s ability to think, plan and concentrate. Some large companies welcome dogs to the office, including  Amazon, Google, Petco, Kimpton Hotels & Restaurants, Procore Technologies, Cliff Bar & Company, Airbnb, and Kurgo.

From Pet Owner to Pet Parent

As people continue to adopt pets, they will continue to spend plenty of money on them. From cuddles to playtime, pets can contribute to your quality of life— so it only makes sense that pet owners choose to contribute to theirs in return. Not every pet owner will be purchasing items like designer dog clothes, human-grade dog food, or vegan luxury dog beds. But the shift in mindset from pet owner to pet parent means today’s pets have it good—and the brands creating the plethora of products for them have it even better.

Building a Brand Family
Building a Brand Family 1440 428 ASG

When Olivia stepped into the corridors of her local mall, she was on a mission to pick up a few much-needed clothing staples for herself and her kids.

Weaving in and out of stores like Aeropostale, Eddie Bauer and Forever 21, she found most of the items she was looking for on her list. For the rest, she would stop at a department store on her way out, where she could find favorite brands like IZOD, Volcom and Nine West.

Although Olivia visited at least four different stores and shopped half a dozen brands, like most consumers, she didn’t realize that each retailer she visited fell under a parent brand’s umbrella. In other words, she essentially shopped at one company—a brand family.

In her scenario, the parent brand was Authentic Brands Group, a brand management company whose portfolio spans various industry sectors, including entertainment, sports, and beauty and wellness.

While each merchant carries different products and features a unique personality, vibe, and characteristics that are entirely their own, they all fall under the same umbrella organization.

We all have our favorite store or brand, but the above scenario begs the question: Who owns it? You may be surprised at the answer, as well as how a multi-brand strategy can help brands become market leaders.

What is a Sub-Brand?

A sub-brand is a secondary brand that is associated with a parent company. Often, consumers are unaware of the connection, yet sub-brands are common in most industries, from food and beverage to electronics.

The Toyota Motor Corporation has several sub-brands, including Lexus, Hino Motors, Fiji Industries, Isuzu and Daihatsu. Madewell is a sub-brand of J.Crew, while Amazon owns Audible and Ring. If you’ve been to a mall lately, you’ve probably been tempted to stop at Auntie Anne’s, Cinnabon and Jamba Juice. They’re all under the parent brand, Focus Brands.

It’s easy to understand why it’s not obvious that these sub-brands are connected. Each brand has its own comprehensive identity that includes a unique logo, color palette, images and messaging. Each brand has its own target customer as well.

While some sub-brands coordinate closely with a parent brand for strength and credibility, other sub-brands stand entirely on their own.

Take Ben & Jerry’s, which is owned by Unilever, the same company that owns Seventh Generation, Dove, Axe and Vaseline. Ben & Jerry’s revenue is $450 million annually, yet the respected brand in the ice cream industry stands on its own as a highly recognized product. With a loyal customer base and a strong commitment to social and environmental activism, Ben & Jerry’s doesn’t necessarily rely on Unilever’s affiliation and resources.

Yet Unilever certainly benefits from having a successful company like Ben & Jerry’s under its umbrella, and for the parent companies that expand their product lines and target different customer segments, they often see the advantages like building brand equity and enhanced creativity across the entire organization.

The Success Behind Sub-Brands

A parent company doesn’t always begin as a conglomerate of brands. In fact, one of the primary ways a company develops sub-brands is through acquiring other businesses. Others may create a new sub-brand if they see a void in a market and want to capitalize. They may also have organizational goals to target different customer segments.

Regardless of the reason behind developing a sub-brand, companies recognize that having multiple sub-brands can provide many benefits, and ultimately, success.

New Revenue Streams
Sub-brands offer a unique way to unlock new revenue streams. Companies may use them to differentiate products or see an opportunity to expand into new categories. In 2000, Abercrombie & Fitch acquired Hollister Co., adding a new brand concept that focused on a “laid-back California lifestyle.”

Other times, a company may deliberately create a different sub-brand to reach a new niche or market, as Abercrombie & Fitch did in 2022 when it announced an all-new activewear sub-brand, YPB. YPB stands for “Your Personal Best” and advertises itself as a fashion-forward yet functional activewear for men and women.

Deeper Connections
Sub-brands also create deeper connections with specific audiences. By better connecting with customers based on their distinct interests or values, companies can tap into the buying power of entire markets.

Since its launch in 2014, Aerie, a lingerie sub-brand of American Eagle Outfitters Inc., has achieved remarkable success through its #AerieREAL Life campaign. This international campaign aims to foster positivity and inclusivity by featuring models from diverse backgrounds. Photo retouching is forbidden.

The campaign has struck a chord with consumers, resulting in an impressive growth for both the brand and its parent company. As of 2021, American Eagle Outfitters Inc. has generated more than $5 billion in revenue.

In 2021, clothing giant Hollister introduced its gender-inclusive apparel brand, Social Tourist, in collaboration with TikTok stars Dixie and Charli D’Amelio. The brand empowers teenagers to discover their unique fashion sense and engage with their beloved TikTok influencers. Social Tourist’s inaugural brick-and-mortar store debuted on Melrose Avenue in Los Angeles, utilizing Leap’s technology. With Social Tourist’s potential to appeal to a younger demographic, Hollister can enhance customer involvement and potentially establish long-lasting loyalty.

Success, Even in Failure
Even when brands don’t find success in exploring new concepts without compromising their brand identity, they take away valuable lessons that can help them grow their businesses.

Lululemon’s launch of Ivivva in 2009 is the perfect example of this. The launch was aimed at expanding into the market for young girls’ athletic apparel. Although the brand was ultimately unsuccessful, Lululemon was able to learn some valuable lessons from the experience.

One of the key insights that the company gained was that the concept performed stronger when it was linked to the Lululemon name. Building on this knowledge, Lululemon has since applied its learnings as it expands into other areas.

For example, the company launched a men’s concept that focuses on athletic apparel and accessories, and it has also launched Mirror, a high-tech fitness equipment and content platform. In both of these cases, Lululemon has leveraged its brand recognition and reputation for high-quality products to establish itself in new markets.

Lululemon’s experience with Ivivva demonstrates the importance of brand recognition and the power of leveraging existing brand equity to launch new products and expand into new markets. By building on its reputation and focusing on high-quality products that align with its core values, Lululemon has been able to successfully expand its business and reach new customers.

A Multi-Brand Strategy: Top Trends and Benefits

If it ain’t broke, don’t fix it. It’s an old phrase used to express the idea that if something is working well, there is no need to change it. While this approach may be appropriate in some situations, it can also limit a company’s potential for growth and innovation.

In fact, a multi-brand strategy can provide numerous advantages to a company:

You increase your potential to expand your customer base. By offering different brands, a business can cater to a variety of customers’ needs and preferences, which can attract new customers who may not have been interested in the company’s previous products.

Cross-selling and up-selling becomes more effective. When multiple brands are available, it allows a company to offer complementary products and services to different customer segments.

You become the leader of the pack. A multi-brand strategy can help a company become a market leader. By offering a wide range of brands and products, a company can increase its visibility and appeal to a larger audience, which can lead to greater market share and revenue.

Internal competition is stimulated. Having multiple brands can stimulate healthy internal competition, which can lead to more innovation and growth.

Diversification reduces dependence. Building several brands allows a company to spread its risk and reduce its dependence on any one product or market. This can help the company weather market fluctuations and reduce the impact of any single product or brand failing.

A powerful tool for businesses, a multi-brand strategy offers many benefits. Yet it’s important to consider that having a successful multi-brand strategy requires careful planning and execution to ensure that the different brands complement each other rather than compete with each other.

Designed for Versatility: Q&A w/ Ben Checketts of Rhone
Designed for Versatility: Q&A w/ Ben Checketts of Rhone 1440 428 ASG

In just eight short years, Rhone has carved out a space for itself in men’s apparel with a focus on luxury materials and versatile products. We sat down with Co-Founder and Creative Director, Ben Checketts to talk about the brand’s expanding vision, intentional restraint, and knowledge gained along their journey.

Q: Ben, thank you for spending some time with us. First of all, “Creative Director” can encompass a number of things, so start by telling us about your focus at Rhone.

Ben: I am split between two teams, product and brand marketing, and we recently adjusted to bring product under one creative direction.

On the product side, I try and stay current on trends. I look at our positioning in the product category and what stories we can explore. In brand marketing, I explore larger seasonal themes and how they translate into individual campaigns and product marketing. On the brand marketing side, we are finding ways to show that we are a little bit more sophisticated and a little bit different than anything they’ve seen.

I obsess about how we talk to our customers, whether that’s in product or whether that’s directly through messaging and brand marketing. My obsession is understanding our customer better—the psychology behind why he makes certain decisions on his daily journey and how we can serve his needs better. The better I do that, the better the entire business is— both on the product and on the marketing side.

Q: Give us a little background on why you and your brother, Nate started Rhone and what you hoped to accomplish in the retail space.

Ben: When we started Rhone, we were one of the only brands focused on men and athleisure, although we prefer the term “work-leisure,” and we have a robust active performance side as well. We knew we had to be a brand that spoke to men of a certain age and demographic because at some point you graduate from wearing Nike and Under Armor. You want something a little sleeker and more sophisticated. ASG really did a fantastic job of helping us bring those concepts into our stores in a way that wasn’t heavy-handed. You know when you walk into stores and there are words plastered on the wall? We didn’t want that. We wanted something more elevated. Something that matched our brand.

Q: When you started thinking about Rhone’s ideal store, what was most important?

Ben: I wanted to create a space where men of all sizes, shapes, backgrounds, etc. would feel comfortable shopping. Our staff is committed to creating a place that’s safe for all men. Shopping is not the easiest thing for men. So how do we make it as comfortable and as inclusive as possible?

If we create a product that people love and create spaces that are safe for them, those are really our main objectives in terms of an in-person brand experience.

Q: Is there any correlation between bringing product under a single creative view and Rhone’s transition to physical retail?

Ben: Definitely. As we grew our retail presence, it became increasingly clear to us that our product was a little bit all over the place. We were hard to understand as a brand, mostly because of the variety of our products. A lot of brands get into this trap. We started out with four styles, and we had tremendous success, and we thought, you know what’s better than four styles, like 300 styles.

But the art of essentialism is doing less but better—and that was kind of the transition. So as we went into retail, we knew we needed to simplify in order to better serve our customers. Shoppers are just now starting to see some of the changes that we made to condense product as well as the execution of certain creative ideas and themes that make us easier to digest and easier to understand as a brand.

Rhone: Q&A with Ben Checketts

Q: How has your approach changed since opening the first store?

Ben: We incorporated storytelling (where appropriate) and let the product be the star. We are also educating on the products. Other brands call in-store associates “Educators.” We wanted an element of that, but honestly, for us, especially as men, we almost want to discover that for ourselves.

Our main objective is to just get guys to try on. There is this crazy stat we discovered that 83% of people who try on our clothing, buy it. Usually, in retail, it’s much lower than that. Our objective is to create curiosity and educate so that all they really want to do is just try it.

Q: Digitally native brands often feel like they have to bring technology into the stores. How does Rhone think about digital as part of the in-store experience?

Ben: We believe our product is the best statement of who we are as a brand and what we believe in. Even something such as a simple TV screen that shows videos of your campaign can distract from the product.

We want people to get off their phones and experience the story. We had people come in and tell us, you need a statement wall so people can post on Instagram. What 37-year-old man, who’s in the exact middle of our target demo, do you know that’s looking for a statement wall to take a picture with? I know of none.

But we do need new technology to make it convenient for our guy, to make it so that if he orders online, he can pick it up easily. If he has a discount that can apply online, it can carry through to the point of sale. But we don’t want anything that’s going to detract from their experience and that first interaction with the product or trying it on. If we can get him to that point in the customer journey, we know that more than likely, he is going to convert.

 Q: Rhone has worked with ASG now for over a year now. I would be foolish if I didn’t ask how the partnership has been for you and your team.

Ben: In a word, it’s been fantastic. It’s been transformative for our business. We had some initial calls and the ASG team fell in love with the way we talked about and positioned the brand and our values but they said, “look, we love this—but we don’t see this translating in any of your stores.”

ASG helped us see that not only is the in-person experience a statement about your brand in new and different markets, but it’s also an opportunity to inform about why we’re different from other options. They taught us that the physical store is really about the personal connection and the opportunity to speak about your brand.

Path to In-Person: A DTC Guide for Physical Retail

See the Guide >

Q: So, what’s next for Rhone?

Ben: We want to have a real community space. This is one of the areas in which I believe Lululemon got it right. They deserve all the credit for being an innovator and using their spaces for their community.

We have had groups of men come in for what we call Mind and Muscle. There’s a little workout or a breathwork class for 20 to 30 minutes. Then it’s 20 minutes of, essentially, group therapy. The format is men talking and responding to prompts and sharing their feelings, and it’s remarkable to watch. Especially within the world of physical fitness influencers, you see these guys who look like their body is Photoshopped—they don’t look real. And suddenly their walls come tumbling down. They tell you about the issues they’ve had with their father, issues they had growing up, the fears, and the anxiety they have as fathers themselves. We want to create these safe spaces, where men can come in and shop, but also where we could hold these community events.

We’re also looking at active. During the pandemic, people really fell in love with the idea of getting good at something specific. They started running marathons, started cycling, weightlifting, or powerlifting, trail running as opposed to distance running. We are creating products that are a little bit more specific on the fitness performance side—an active refresh that will sit perfectly alongside our work leisure apparel.

And then, it’s just all about expansion—finding the cities and the areas where we fit in best.

This interview is part of our continuous DTC series, Path to In-Person: A DTC Guide to Physical Retail

See the Full DTC Guide >
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