Toys “R” Us and Fashion

I have been fielding questions from the press and colleagues about the bankruptcy of Toys “R” Us and its challenge to stay in business after shutting many stores in the chain. A leading question, typically asked with evident nervousness and need for reassurance: “It couldn’t happen this way in the fashion business, could it?” The answer: it could and it has. Some points to consider:

The Toys “R” Us model was to put familiar, heavily advertised brands into large stores for one-stop toy and game shopping. That worked in part because children see toy advertisements and play with friends’ toys with such regularity that “shopping” is often simply a matter of picking up what they have requested (over and over) and then fending off enough impulse purchases at least to give the illusion of parental control over the process. Trust me on this: I have an eight-year-old.

And trust me on this as well: pushing a shopping cart through large, undifferentiated corridors, plucking brand-name toys off shelves, is not an adult-friendly experience. Contrast that to the flagship Hamleys shop, which has cleverly positioned itself on London’s Regent Street, in easy walking distance from both my tailor and shirtmaker. Eager, helpful people are constantly demonstrating products, which is how, on my latest visit, I got two wafer-thin model airplanes for £10 that broke up on first crash landing and a coin-trick magic set I haven’t quite got the hang of yet—though I’m working on it. Yet it was a fun visit, which is quite the point. Just as important for the chain, a large portion of its merchandise is private label, which makes part of what they sell both exclusive and retailer-branded. If you want it, that is, you have to go to Hamleys, and when you bring it home, the name on the product reminds you from whence it came.

Providing a quality in-store experience and building a brand through exclusivity and desirability are very much points for any fashion retailer to consider. There is no benefit in falling back on the familiar mantra: “We are working to enhance our presence online.” Consider what, if anything, is unique about the Toys “R” Us website that would bring you there first instead of to Amazon. A certain segment of the population still wants to walk into shops, and what you provide online, at least in the near term, will be seen as an extension of what you provide in-store. Private label is still largely a bricks and mortar play, and it is often a very necessary one to reinforce the power of a brand and to build and hold onto customer loyalty. Private label has so far not had the same impact on fashion websites as it has in-store, in fair part because it is quite challenging to recreate the kind of storytelling experience that the best store brands provide in real space. (Is there any doubt, when you are in an Hermès shop anywhere in the world, that you have entered the Hermès world—one of chic sophistication, style and even, around corners framed by carefully arranged displays, a touch of mystery?) A website can support that experience, but so far, at least, cannot fully replicate it.

So the lesson for fashion retailers is simple: make them want it, and make them want to come in to get it. Which is to say, the lesson is what you already knew. Major bankruptcies are like traffic accidents. You drive slowly by, saddened by the damage; and, although you surely already knew that driving safely is a must, the experience brings the message home with great force.

Credit: Alan Behr


Matryoshka Marketing

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We have all seen Russian matryoshka (nesting) dolls: open one and out comes another, and open that and you get another, and so on. When a fashion brand incorporates components from another brand into its finished product, it is rather the same thing, with a difference: although the brand covering the finished product is the brand that in all likelihood is the primary branding driver of consumer demand and the primary branding influence for consumer purchasing, that brand will not exist in isolation. It will be helped or hurt by the quality, function and aesthetic appeal of the brands of the constituent parts.

Perhaps the easiest place to see that at work is watchmaking. There are many more well-known watch brands than there are watch movement makers. Although most watch brands design and make their own cases, they often rely on others to make the most important thing in the package: the actual movement. If the movement is not working properly—if the watch is not keeping time—good luck trying to convince the consumer that all he or she really wanted was a well-designed bracelet with a watch-face for decoration. Typically, the maker of the movement is not even mentioned in advertising, on the product or in the accompanying instructions. Clothing, however, is a bit different since there are some key fabric vendors whose brands are considered important enough to drive sales, which is why garment makers are willing, if not eager, to place the Gor-Tex and Loro Piana trademarks on clothes made with fabrics bearing those brands.

All well and good, but a couple of key points should be considered:

First, no matter how you, the manufacturer, market the finished piece, you are helping build good will (and therefore value) in the brand of your supplier. Your vendor is the legal owner of that goodwill, not you. Your advertising will promote and otherwise benefit the vendor, which at times might also participate directly by adding its trademarks to the ads. All of that should be considered when entering into the agreement by which the vendor’s trademarks will appear on your fashion products. In addition, your vendor will likely require an agreement permitting it to exercise quality control over the use of its marks—which is again what the law expects—so be prepared to have the vendor involved in production in a way you might not typically expect from a supplier of components not displaying B2C branding.

The other key point to consider is that, even if the consumer is aware of the vendor’s brand and the vendor’s contribution to your finished product, the consumer will most likely hold your brand accountable for the performance of your product. Going back to the watchmaking example: ETA SA Manufacture Horlogère Suisse (a subsidiary of Swatch Group Ltd.) makes movements that go into a number of watch models made by Breitling SA, which is an unrelated, privately held Swiss company. Even a consumer who is fully aware of that fact is not going to say, “Hey, my Swatch stopped working!” in the (highly unlikely) event that his Breitling should cease to function—even though, in a purely mechanical sense, that is exactly what happened.

Just a few things to keep in mind when entering into supply contracts with important vendors.

Credit: Alan Behr