Traditional Wholesale Isn't Working Anymore. So, What Comes Next? - Fashionista

Over the past several years — and especially over the last few months — department stores have, well, not faired well.

Barneys New York, Neiman Marcus, J.C. Penney and Lord & Taylor have all declared bankruptcy, and things haven't worked out for a whole lot of the designers selling to them, especially smaller, independent ones. Retail chains' struggles with declining foot traffic, exorbitant rents and debt have trickled down to the brands they carry, often resulting in cancelled and returned orders and unpaid invoices, the burdens of which brands must carry. 

Even under the best, most economically-sound and virus-free conditions, the wholesale system was running many designers into the ground (as detailed beautifully in this New York Times Magazine piece) by creating constant pressure for newness and exclusives, without necessarily making it worth said designers' while. The pandemic seems to have accelerated the gradual realization that traditional wholesale isn't working. So, what's next?

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The movement towards direct-to-consumer retail has been strong and successful for many. But for others, wholesale partners are an important step towards brand awareness, be it online or in physical stores (the latter of which most young brands can't afford to open on their own). 

We could certainly see some leaders in multi-brand retail adapting to a more nimble buying process. (Some have even told us they plan to do as much.) But at the same time, some new options are emerging for brands who value the exposure and discovery that multi-brand retail offers, but who also want to take more control of their inventory and where it lives and when. Many operate on a retail-as-service business model: Instead of buying inventory from brands, they may lease out space and/or provide logistical and marketing support for a fee, in addition to potentially taking a commission on sales. Meanwhile, they're up to the challenging task of luring shoppers into IRL stores (or, in two cases, mobile apps) with promises of unique experiences and the chance to discover new products. 

Read on for a rundown of these platforms and marketplaces, how to shop them now and why they're so promising.

Neighborhood Goods

Location(s): Plano, Texas; Austin, Texas; New York, NY (Covid info)

Brands on board: Entireworld, Boy Smells, Hay, La Ligne and more.

Neighborhood Goods literally bills itself as "a new type of department store." With the aim of providing brands with a less risky, cumbersome and expensive way to dip their toes into physical retail, it typically charges brands a small fee to showcase their products in one or several of its physical locations and via e-commerce, as well as taking a percentage of sales. 

In its New York and Texas shops, Neighborhood Goods boasts an experiential, appealingly designed format with top-notch customer service and even regular food pop-ups. In April, in response to the pandemic, it launched The Commons, a section specifically featuring small brands who were negatively impacted by Covid-19, at no cost to their struggling founders.

Despite its physical store footprint, Neighborhood Goods' business model and $11 million in venture capital put it in a stronger position than most to weather the current retail storm. "In an industry struggling to adapt to the future, this whole crisis is going to accelerate the prevailing winds in the retail industry," co-founder Matt Alexander told me in April. "And we end up being in a relatively good spot on the other side." While stores are now open with restrictions, e-commerce is also available.

Forum by B8ta

Location(s): Los Angeles, Calif. (Covid info)

Brands on Board: Fvith, Timo Weiland, Haerfest and more.

Last fall, B8ta — a pioneering, heavily-funded, retail-as-service platform — launched a fashion-specific concept called Forum with a physical storefront on Melrose Avenue in Los Angeles. B8ta offers brands an experiential store design, freedom to curate their own little piece of retail real estate alongside likeminded labels, and data and analytics on in-store engagement. The store, like B8ta's other locations, was designed to host events that engage the local community who might then discover a cool new brand or product. It also partners with the CFDA to highlight its designers. 

While the store is now open, B8ta is also offering e-commerce and virtual appointments.

Showfields

Location(s): New York, NY; Miami, Fl. coming soon (Covid info)

Brands on Board: Coco and Breezy, Dr. Jart, Farm Rio, Solid & Striped and more.

Boldly billing itself as "the most interesting store in the world," Showfields aims to curate "the most mission-driven, design-oriented, innovative, unconventional, and relevant" digitally-native brands in one big, highly Instagrammable space (there's a functioning slide!) in Soho. 

It regularly embarks on new initiatives and events to draw attention and create buzz, even throughout quarantine. Showfields's top floor acts as a community space with food and events; there have been immersive theatrical performances with actors selling items, art installations, digital discussions and fundraisers, and a special curation of Black-owned brands sponsored by American Express. It charges brands membership fees, but the brands keep all their sales. 

While the store is back open with restrictions, shoppers can also shop via video chat, book individual shopping appointments or simply shop online.

Not Just a Label (NJAL) 

Location(s): Online

Brands on Board: Bliss Lau, Echtego, Zarvich, Calmo and many more.

Not Just a Label launched in 2008 as an international network/directory of sorts for independent designers. In July of this year, it expanded to include a retail marketplace accessible to consumers. 

"NJAL is unique and has a defensible right to win, by providing a solution to an outdated ecosystem," said founder/CEO Stefan Siegel in a statement. "Allowing our pool of designers to sell direct to the consumer is the future to fashion design, to commerce, to trade shows, to fashion weeks, to unsustainable practices." 

Brands are responsible for fulfillment and shopping; NJAL operates payment and marketing, taking 30% of every sale.

The Yes

Location(s): Your phone

Brands on Board: Everlane, Levi's, Prada, Khaite and more.

On the more digital end of the spectrum is mobile shopping platform The Yes, which has a slew of fashion and tech veterans behind it including Taylor Tomasi-Hill, Julie Bornstein (StitchFix, Nordstrom, Sephora) and Amit Aggarwal (Google, Bing, Groupon).

The Yes uses AI to to personalize every user's feed in real time. For instance, when you click "yes" on a style, you'll see more similar pieces. With great brands on board and $30 million in venture capital, the app's launch this past May generated headlines billing it as "the future of fashion retail" and a replacement for dying department stores

Each brand has its own little storefront in the app and The Yes uses dropship, meaning it doesn't hold its own inventory. It collects a share of revenue from each sale made through the app.

"I think we're gonna see a lot of brands struggle, but I do think that we will see a lot of brands taking control," Tomasi-Hill told us in May. "We're giving brands back the power and truly partnering with them."  

Shopping apps have long struggled to reach mainstream adoption. Could this be the one people are ready for?

Shop

Location(s): Your phone

Brands on Board: Over 1 million merchants with e-commerce powered by Shopify including Allbirds, Kotn, Universal Standard, Drunk Elephant and more.

Another mobile shopping platform that launched during the pandemic, Shop bills itself as your personal "shopping assistant." Launched by Shopify, it's a go-to tool for independent brands and retailers setting up e-commerce. 

Shop allows shoppers to, yes, shop all of those retailers in one place. One prominent feature is that it allows shoppers to find and shop businesses that are local to them (as long as they use Shopify), aiding in the avoidance of the Amazons and Wal-Marts of the world. It also offers speedy checkout and helps you track and receive updates on all orders. For brands, it offers access to customers' data and could help in customer acquisition.

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