The last few years have seen some dramatic shifts in the footwear retail landscape.
It may have started quietly in 2014, when kids shoe retailer Stride Rite announced it would close 140 retail stores and shift those resources to ecommerce. Once a fixture in your favorite mall, Stride Rite was known for quality and service. It would now have to translate that long tradition online and develop its brand using digital tools. Today they sell from their brand website, boutique shoe stores and have more than 1,300 pairs for sale on Amazon.
If Stride Rite was the first to make that bold move, Nike was the last. In late June the Wall Street Journal ran the article, “Nike No Longer Runs From Amazon” telling of Nike reversing a long held stance of only selling through department stores and specialty retail outlets. Citing the decline of traditional retail volume, it felt the need to strike a deal directly with Amazon. For its part, Amazon will crack down on 3rd party sites and counterfeit goods, which helps Nike. Nevertheless, footwear retailer stocks Footlocker and Finish Line took a beating on the news.
Forbes ran an ominous sounding article headline on the same topic, “Amazon And Nike’s Partnership Could Mean The End Of Big Brands”. This article compared Walmart to Amazon, citing the effects of doing business with such powerful retail partners, and the long term decline in brand power as an effect. It forecasts a day when Walmart and Amazon together will have 50% retail market share and wield that control over big brands like Nike.
What is a brand to do?
Brands: At some point, if one retailer (online or traditional) dominates your distribution or channel strategy – they own you. We learned this cautionary tale at an early age about “putting all your eggs in one basket”. The same logic applies here. Brands should seek a balance of power with no one particular channel or retailer having the upper hand. In order to rebalance the scales, brands should seek to level the playing field by helping its traditional channel partners.
One way they are doing this is through “collaborative commerce”, where a brand assists in making the sale and passing that along to their channel network. Brands like John Deere have been doing this for years. A simple to use checkout process guides the consumer to select a unit, accessories and select from a list of nearby dealers that can fulfill the purchase. Dealers make sales. Brands offer convenience and control. Consumers are happy with brand and local dealer. Win-Win-Win. This is just one way that balance is achieved, and for iconic brands that are in it for the long haul, balance will continue to be important strategy.
Sources:
- http://www.foxbusiness.com/features/2017/06/22/nike-no-longer-runs-from-amazon-wsj.html
- https://www.forbes.com/sites/quora/2017/07/19/amazon-and-nikes-partnership-could-mean-the-end-of-big-brands
- https://www.digitalcommerce360.com/2014/07/22/stride-rite-disappearing-malls-and-investing-web
- https://jgsullivan.wpengine.com/home/technology/ecommerce