Private labels, National brands and the Suppliers...
Hello,
On my previous blog, “Can Private label and national brand co-exist?” <<http://www.infosysblogs.com/retail-cpg/2009/09/>> I received many queries like: what I think will drive growth, how companies will cope-up with the volatility and what role will supplier play in the game. I will pen down some of my thoughts on this.
Last week WSJ reported: “Li & Fung Apparel Deal Boosts U.S. Expansion” <<http://online.wsj.com/article/SB10001424052748703816204574483211164417496.html? >>. Last quarter, we heard the clothing designers and manufacturers who together created and supplied to the women’s wear brand Principal (now partially leveraged, partially bought by Debenhams), coming together to form epiqfashion.com.
The reason for both of them may look different: Li and Fung because it is sitting on huge pile of cash and Epiq Fashions because Principle left it with huge inventory. Look closer: both these stories are closely linked to hunger for growth and ability to handle challenges. And this is what is defining role of suppliers in the growth story of retail business. Both the companies: Li and Fung and Epiq Fashions are primarily suppliers, who saw opportunity in retail and moved. There are numerous examples to take.
Look it from another angle. The companies which are very strong in product, are moving closer to customer. Nike, VF Corp, apple, Microsoft, Polo to name a few. Most of the CPG companies are looking forward for avenues of direct retail. Ditto with suppliers, although not as aggressively. What does this all mean?
In my mind, the implication is: New channels of customer engagement will emerge, in stores, web or mobile – Everybody will try to get closer to the customer. Understanding customer lifestyle will become the entry barrier and the ones who know their customer, will grow. Supplier will no longer stay as the backend partner. Supplier will play a bigger role in translating the customer needs to tangible products and services. Kingship of the customer will be redefined!
Your thoughts?
Mayank
