Working in retail these days can seem awfully depressing. All around you, things are glum. Fewer consumers are coming into traditional stores and the internet is chipping away many companies’ performance. Fashion sales are down overall, consumer tastes have changed and consumers seem to be unreachable by traditional means.
But there is a universe of companies in retail-related businesses that are experiencing the most interesting, exciting change and growth I have ever seen. I recently attended the Millennial 2020 conference in New York and I wish there had been more time to meet more companies. They are turning boring businesses into exciting opportunities and what they are doing couldn’t be more thrilling. What do they have in common? They are offering:
- unique products not otherwise accessible to consumers
- sales direct to consumers, no retailer in between the brand and the consumer
- mostly founders who came from outside the industry they’re in, often from finance
- lower prices on their own branded products
- emotional values like relevance, authenticity and transparency, that legacy brands don’t have
- connection to consumers’ lives
It’s not likely that all of them will ultimately be successful. But they all have a great chance and the ones that fail will probably fail because of factors outside their company that they can’t control.
Here are some of the companies I met with:
Naadam makes sweaters. What could be more boring than that?
Naadam founder Matt Scanlan was taking a break from his life as a venture capitalist and took a trip to Mongolia. He met some other travelers and went along with them for a drive that wound up taking 20 hours on a dirt road. When they arrived, Matt found himself stranded for a month in one of the most remote locations in Mongolia with no way of returning to a more populated place. He got to know the people who lived in the region who turned out to be wool growers. Because the location was so remote, the buyers of wool came around only once a season and dictated the price to the growers. The buyers took the wool, cashmere actually, and sold it to a daisy chain of traders and eventually it wound up in garments being sold to consumers.
Scanlan thought the growers were being cheated. He saw that they had no market power and thought he could do better. He bought the wool from the growers at twice the price they were getting. Instead of reselling the wool, he had sweaters designed and had the wool made into the sweaters on his own, eliminating numerous steps in the supply chain. Then he set up a website to sell the garments direct to consumers. He also expanded what he offers to the grower – Naadam added veterinary programs, livestock insurance and breeding development for wool growers. The sweater business took off.
Today, Scanlan has a rapidly-growing, high-margin business, even though he is still paying the growers twice the price they previously got. He is offering beautiful product to consumers with transparency and the ethical behavior that consumers today want. He believes there’s a potential opportunity to create a similar business with vicuna and alpaca and he’s exploring that.
If you had to think of what might be even more boring than sweaters, young kids’ shoes would be a good guess. The industry was typically made of licensed brands for adults that shrunk the adult product down to kids’ sizes and sold it in colors appropriate for kids. Plae founder Ryan Ringholz, an experienced footwear designer formerly with Puma, Diesel and other major brands, had a different idea. He partnered with an experienced tech CEO, Jonathan Spier, and created kids’ shoes that are
- Have great traction
The shoes are comfortable, fit to kids’ feet and not to smaller versions of adults’ feet. They have designs that moms and kids can both like. If you buy a pair of shoes from Plae and your child grows out of them in the first 30 days, they will sell you another pair for half off. They are a rapidly-growing business, very substantial in size, communicating directly with their consumer as well as through some major retailers in a wholesale business and growing rapidly.
Vrai and Oro
Vrai and Oro sells jewelry online direct to consumers. They offer tasteful jewelry without the cost of distribution through multi-brand retailers that jewelry often carries. Vrai and Oro has something unique – the diamonds in its jewelry are literally made by its parent company. They are not fake or cubic zirconium, they’re real diamonds called lab-grown, made in a factory. Their composition is the same as diamonds found in the ground, even an expert with a loupe can’t see the difference because there is no difference, they’re real diamonds. They’re cheaper than mined diamonds by about 25% and they are environmentally friendly, don’t cause people to be paid slave wages and no one is killed for them. With its advantage in diamonds, Vrai and Oro has started a new division selling engagement rings. Taking a page from Warby Parker, Vrai and Oro’s Vow Division will send you three samples of the settings you select so you can see them in your own home before you choose them. They are creating a way to…