Retail Unwrapped is a weekly podcast hosted by Shelley Kohan from the Robin Report. Each episode dives into the latest trends and developments in the retail industry. Join them as they discuss interesting topics and interview industry leaders keeping you in the loop with everything retail.

Hi everybody, and thanks for joining our weekly podcast. I’m Shelly Cohan, and I am so excited and thrilled to welcome back one of my all time favorite people. Lisa and Lonnie. She’s the principal and founder of Retail Strategy Group. Thanks, Shelly. I am so excited to do this. Look from across the world. I know you’re joining us from Spain.

I should mention that. Um, and thank you for, uh, putting it into your calendar and being able to get this scheduled, but I, I literally, I at so many trade shows and I’m, you know, always out in the industry. I love chatting with you. I love talking shop with you. I’m constantly reading. I think you have some of the best social media.

I as. Aspire to be as good as you are with your very relevant and precise social media. Thank you. So I’m excited to have you on the show today. And what we’re gonna be talking about today is something that, about the wholesale model and what’s going on with the wholesale model. And I believe you recently wrote a book, is that true?

Oh yes. And it’s called the wholesale. Actually, um, and we just finished, we just actually handed in the manuscript of our next book. Yay. So really excited. It’s on, uh, process innovation, uh, specifically around product development and the materials process. So I’m very excited to, hopefully maybe in another episode we can, we can deep dive on the material life.

Oh, no, I would love to do that. I would love to do that. So, a a couple quick things. I know that, um, I read, I, I read your newsletter, the Merchant Life. If those listeners haven’t caught on to this great newsletter, please make sure you, uh, subscribe to, it’s called The Merchant Life and it’s so relevant. I love reading it.

It’s quick, it’s an easy read, but very deep, if that makes sense. So it always is fun for me to read and I was reading in it, and I have to say, I’m, I’m gonna admit something here, Lisa. So like, okay, don’t yell at me. But you mentioned about the wholesale model and how the wholesale model. You know, it was not dead and people shouldn’t say that.

I’m gonna fess up now before you do research and find out that, I actually wrote an article about, I don’t know, three years ago that said the wholesale, the traditional wholesale model’s dead. So I’m putting that out there that I’m one of those critics that said are traditional retail wholesale model isn’t working.

So that’s what we’re gonna talk a little bit about today. Well, I am really excited for this because as you know, I, like you come from this buying background. So being a merchant for 20 years for department stores, for brands, I’ve kind of seen that evolution of probably when you were reporting around this, um, you know, saying that wholesale could be dead.

But I’ve kind of seen the shift in how, um, retailers are partnering. Better with their brands so that everyone wins. And I think that’s where the wholesale model has shifted. It’s not just about getting product on the shelf. It’s about how do you, how do you get that product to stay there, the brand to stay there.

Obviously you want the product to sell, but how do you keep, you know, those brands on the shelf. Yeah. I think the other challenge that complicates things, and I know we’re gonna, I know we’re gonna talk about this, is, you know, some of that very traditional retail wholesale model in a major way with some department stores, um, is changing greatly.

But that’s not so much on the wholesale retail side, it’s more on the department stores kind of changing their strategy a bit. So we’ll talk, uh, briefly about that as well. So when you were eight, I just graduated high school. Did you? Yeah. So I know you put that in your, uh, merchant life about you were eight, uh, mentioning, uh, when something happened and I’m thinking, oh my God, I was in high school.

I had, I am graduating high school when you’re eight. But, uh, anyway, well, we look the same age shit. Uh, Shelley. So there you go. Oh, thank you. But, and I loved your, uh, the other thing I loved and then we’ll jump into the podcast ’cause this is a good jumping off voice. I’d love. In your newsletter you wrote about, uh, you had chat GPT actually create an image of sacks and Costco I did.

And what I saw and I’m like, oh my God. That’s like remarkably good. So I’d like to start by talking about this idea of luxury hitting warehouse clubs. Yeah, I mean, you know, I think we heard it now, it’s been a few weeks that we heard about Sacks, uh, being licensed eccentric, which I think that happened a while ago.

But what they wanted to do was, um, sell the men’s apparel at Costco. So what that means is the Sacks brand would be available to Costco warehouse members, and that’s where, you know, kind of. I use Chad GPT to create this image because I’m like, okay, I can picture it in my head, but is this really something that Costco warehouse shoppers wanna see?

So the members, um, and then what happens to the SACS customer? So. You know, what does that look like? So that’s where, that’s where the image came from. And, and just, you know, following up on that in terms of this idea of luxury being in warehouse, you know, whether it’s Sacks or someone else, we’re gonna use Sacks ’cause it’s a great example and it’s out there already.

But, um, what, what does that dilute Sack’s brand? I mean, I get. I definitely see Costco and Warehouse shoppers wanting luxury. They want that access to luxury products, but what does that then happen to the brand itself? I think it really depends on the category that is gonna be sold at Costco. Now, if it is men’s underwear and intimates, I would say.

A hundred percent. I think that’s actually a great idea, right? We see Calvin Klein underwear there. We see all of the, uh, performance brands, right? We see Under Armour and Puma and even, I don’t know if we see Nike, but we definitely see a lot of branded, uh. Branded underwear in men’s and even socks and some joggers and and those sort of categories.

So I call them essentials. I think essentials, I could see it, right, if they were to introduce any other categories, I think that’s where they would really have to be careful and they would need to tread lightly because the vendors might not love this move. The customers might be okay with it, but the vendors might not love this mood.

Uh, this move considering, you know, what’s been happening in the space around payments and, um, you know, just a lot of vendors are unhappy, so I think they need to tread a bit lightly. Yeah. And I think, uh, is it easier to do men’s in these types of unique environments as opposed to women’s? And why is that?

I was a merchant like. So many years ago, so you’re gonna have to help educate me and my listeners on, you know, product categories that might fit better outside of essentials. In terms of these types of partnerships, I would say anything in an opening price point. Uh. Could be very interesting for the Costco customer.

Now, if you think about Costco, their buyers are extremely strategic and very, very picky in who they partner with in bringing those brands to life in their stores. So it has to make sense. From the Costco buyer’s perspective, whatever category that they’re bringing in now, we know that the Sacks brand as a brand, as a luxury brand will probably do well in the store.

Um, essentials for the most part and basics do very well at Costco. Uh, any brand. And so I think it’s gonna be really interesting to see what category, uh. The Costco buyer is bringing in because it’s really the two parties have to work together in order to make this work, right? They’re using insights, they’re using customer feedback.

Uh, Costco is one of the best retailers in the world. I mean, I love Costco. I shop at Costco a hundred percent, but uh, you know, am I buying my luxury brand there? Maybe not, but I might buy essentials. Yeah, that makes sense. So, um, let’s talk a second about this, uh, wholesale retail model in terms of merchants specifically, uh, when things happen, like mergers, so sax and neiman’s merging together.

Okay, this brings up so many, so many questions about assortment and strategy and differentiation and so. Tell us a little bit about what is happening in terms of assortments and the merchant from a merchant perspective. What are you seeing in that Sachs Neiman merger? Well, I’m seeing that, um, the roles are being combined, which we knew that would happen.

Uh, there is this focus on menswear right now. For s Sex Global, which I think is very interesting considering we were just talking about Sax men’s being at Costco. So the fact that there is this huge investment in this, um, in this particular category, gender, uh, I think it’s gonna be really interesting to see what happens, especially right now because of the men’s wear shows.

I think with. This combining of roles I think is gonna be really interesting what happens in women’s wear and accessories, which are usually the differentiator within the luxury market and the retailers within the luxury market. It’s also about experiences, and this is something that Sachs has recognized.

I think they just launched a few days, maybe five, six days ago, their um, luxury survey. And that was also interesting because, um. Emily Esner had said that the company SACS Global has to work a lot harder to convey value, timeliness, um, and high quality of fashion products that it sells, um, because they wanna make sure that the assortment contains investment pieces.

So what does that mean for the buyer? Does that mean they’re gonna reduce the assortment? They already have, um, a lot of vendors that maybe are pulling back. So I think it’s gonna be very interesting to see what the assortment looks like at the back half of the year, and of course in 2026. And are you thinking there’s gonna be two assortments, one for Sacs and one for Neiman’s, and it’s be very clearly divided, but is it gonna be the same buyer in a category that buys for both?

Yeah, I think that’s, that’s a very realistic possibility as you would in any, uh, allocation strategy or assortment strategy. You would have to curate the assortment to be as localized as possible, which means the Neiman Marcus customer, who is very different from the Bergdorf customer. Very different from the sax customer.

You would need to localize those assortments as best you can. And as a merchant, and I know some of the team at at Sax Global and I think that they are looking to do that. Um, they’re very smart merchants. I think if they have the right, um, if they have the right tools, um, the right open to buy for each.

Retailer. I think that they could definitely make it happen. The tricky part is are they going to number one, devalue their their brand because of this Costco situation? Right? Or, you know, how are they going to differentiate each, not only the, the product sort, but the experiences across each of the banners?

I think that’s where it’s gonna get really interesting. Yeah, that is interesting. So, um, let’s move on. I wanna talk a little bit about, so Nordstrom’s, as you know, just went private, took a long time, finally everything went through. Um, but, uh, tell me about how does going private impact that merchant side of the business?

Do you see this as a positive on the assortment strategy side? I really do. I think now Nordstrom really has this opportunity to focus on long-term operational investments as well as, you know, continuously improving their assortment strategy. Now, Nordstrom is one of my. Favorite retailers to go into mine too.

And I think that, and I’ve also seen this shift, um, across the rock stores, you know, a lot more curation in their assortment. Um, the stores are looking much better. So I can see that there, there is investment happening. Um, I think what’s gonna be interesting is. The full price growth and of course gross margin, um, at the end of the, the second half of the year.

I think that’s where we’re really gonna see. Okay. Have the teams made an investment in, um, curating the product assortment a little more clearly? Um, are they reducing those skews and those brands that just don’t work for the customer? And are they investing in their private label strategy? I think that’s also, um, really important for.

A retailer like Nordstrom where they can learn from their third party brands in order to improve their assortments across their private label brands. Yeah, I, it’s interesting when you talk about investments, so I’ll tell you what I’m seeing in investments. Uh, specific to the merchandising side of the business.

So one thing I’m seeing is SKU optimization. I’m sure there’s maybe even another word now where Yeah, a lot of the, um, I, and you’re gonna school me on this in a minute, but, um, so a lot of companies are really just looking at the amount of SKUs that they have and they’re really making very surgical and.

Um, I guess decisions about what skews they’re going to carry based on either loyalty that the customer’s looking for or profitability. I don’t think it’s all about profit. I think it’s about having the right mix that does two things, drives loyalty, but also remains profitable. The other thing I’m seeing in terms of, uh, investment is.

Over the past year reading like hundreds of annual reports, which you probably will find very boring, but I find very exciting, um, is that a lot of the companies are relying, the brands are relying less on wholesale and really going deep into the direct to consumer. So when I look at investment strategies, those are kind of two things.

Skew optimization and really leaning into D two C. So SKU optimization, SKU rationalization, whatever we call it, is common practice. Um, I would say across any brand and retailer, especially if new leadership comes in, it’s the first thing they do is they cut SKUs. The fact is that. A lot of brands and retailers today are still throwing supply at consumers and what we know to be true is that more supply does not necessarily equal more demand.

So cutting skews, yes, of course that’s a great exercise they should do, but how do we avoid getting to that? Point where we need to cut skews in the first place. How do we assort the right product at the right time and the right place? And of course, the right price for the consumer. We need to close the customer feedback loop.

We need to incorporate insights at the right moment, um, moments across milestones, uh, when we’re creating a product assortment. And you need to find the right balance of branded products. And your private labels, because that’s where you can fill in the gaps. Uh, whether it’s by category, by style, by silhouette, by skew, and then of course, layer on things like experiences and build that trust with, with your community, with your customer.

And I think it’s really important for retailers, brands today to evaluate. All points of engagement with the customer, whether it’s DTC, whether it’s social commerce, whether it’s in-store shopping or a pop-up store. Right. Definitely. I. Um, so in, in your, the wholesale book. Yes. I love that title. Um, have it right here.

You talk Exciting. Oh, I love it. The wholesale. So, ’cause some of our listeners will think it’s wholesale. It’s the three words, the wholesale three words. Anyway, in there you talk a little bit about. Uh, wholesale versus direct to consumer. And you call it a, uh, profitability misconception. Mm-hmm. So can you talk to us a little bit about what you mean by that?

Yeah, of course. I think, I think there has to be a balance with how brands are going to market, whether it is DTC only, or slowly building out their wholesale strategy. Wholesale is very profitable, but. It is important to prepare, to plan and to partner with the right retailers in order to wholesale successfully, and that’s when.

Wholesale can be very successful is if you partner with your retailer. If you comp shop, if you understand what you know, the risk is for the retailer to invest in your brand and why they should invest in your brand. I mean, there’s so many, there’s so many great guidelines and. And insights in the book that I would encourage, you know, if you’re a brand at any stage to read through, uh, some of the insights we talk about, you know, the types of distribution channels, whether you’re looking to partner with a Costco warehouse or an off price retailer, and what that will do for your distribution strategy across.

The rest of the retailers you’re looking to get in front of. But we also talk about this, um, this thing called the wholesale conditions test. And I think that’s where. If you’re a brand, you know, answer these three questions. Which retailers are your target customers shopping at? What retailers are your competitors in, and what retailers align with your brand, DNA?

All of those things are going to make a. Your wholesale strategy successful and in turn profitable. That makes perfect sense. So tell me about the modern wholesale landscape and where do you think it’ll be in five years from now? I mean, there’s a lot going on. There’s so much uncertainty. You have the tariffs, you have diversification of supply chain, you have all these right now, the hot topic, sourcing, sourcing, sourcing where to source.

Um, so. It’s, I know it’s tough to predict, but tell me what is it today, this modern wholesale landscape, and where is it gonna be in five years from now? I think what we’re seeing is a lot more. Investment from brands and retailers to win with the consumer. It can’t just be one or the other. As I said before, it’s not about getting on the shelf, it’s about staying on the shelf.

So getting customers excited about your product, your stores, your, the experience that you, um, you give them when they’re in the store. Those things have to be in partnership with the brand and the retailer. And that’s where I see wholesale shifting is a lot more partnerships, um, a lot more sharing of insights, a lot more sharing of information to make a.

Better product assortment decisions. And I think that is true not only for, uh, the brand and their supplier, but of course the brand and their retail partners. So it, it has to be across. All points in your distribution channel, um, and your go-to-market strategy, whether it’s, you know, we’re talking about early stages of, uh, your supply chain, but also post, uh, post-sale.

I think that’s becoming really important. Uh, when we think about resale and circularity and sustainability, these are values that are important to the customer. They are important to the brand and retail. Leader, I hope, but I mean, we are of course in the business of retail, so we need to make sure that it makes sense.

And I think this is where, you know, if you are a brand and you are, um, you have a circular model or you have um, you know, a really, like a great vertical transparent supply chain, this is something that the retailer will appreciate. So that’s something that, you know, you want. Might wanna partner with like from a marketing standpoint.

So I think we’re gonna see a lot more connection points across being trusted partners, uh, in wholesale and of course retail. I think the collaboration, I mean, ever since the pandemic, and I swear one of these days, I’m gonna stop saying since the pandemic I last year, I thought it was it, but no, here I am.

I’m still saying it. But ever since the pandemic, I’ve noticed such a great. Collaboration within industry, not just with, you know, uh, brands and their retailers or, or vendors and the retailers, but also retailers with retailers. And when you think about some of our most pressing issues, supply chain, circularity, sustainability, um, all of that, we can’t make great change unless we’re all working together towards those broader issues.

Yes, I completely agree with you, and I especially see that from a supplier standpoint. Um, you know, whether you’re a brand or you’re a retailer, creating private label, partnering with your vendors, your suppliers, your mills, uh, I think it can only make number one better product, more efficient. Process. And of course it will save on things like over assorting, uh, physical sampling costs.

I mean, we could go on and on about product development specifically, uh, which I think we should one day. Yeah, I was gonna say, that’s a whole nother podcast. It is absolutely a whole nother podcast. And I think, uh, there’s so much opportunity with. Vendors today that, you know, have a design as a service model or a sourcing as a service model.

Um, and I think that also gets, gets you faster to market, closer to market so that you can truly have a better sense of what the customer is looking for, what resonates with them. Because as you know, we, we create product a year in advance. Um, that’s, it’s too far away from market. So how do you get faster by being more efficient?

More efficient by innovating your process and by partnering with the right. Vendors and suppliers. That’s a great way to wrap up our podcast. Uh, first of all, I wanna thank you one, uh, you have a very robust consulting business and you’re so busy, you’re constantly speaking. You’ve been quoted, you’ve been interviewed on and on and on.

But here’s what I love most about you. You are always willing to help educate the future generations of our industry, and I wanna thank you for that. You’re always speaking to students, you’re helping with, you know, student assignments. You did some adjunct teaching, um, at Fashion Institute of Technology.

I’m sure you’ve done teaching at other places, but thank you for helping, not just doing the work you’re doing, but also really all the work you do for the industry and the future generations. Thank you, Shelly. It is, honestly, it’s my pleasure and I think, you know, if we can make these, you know, just few little changes, simplify things, I think that we can really do just such a, just a better job for not only our customers, but you know, for the people who work in the supply chain as well.

Absolutely. Well, thank you so much and thank our listeners. Thanks for tuning in. Thank you, Shelly. Thanks everyone.

Thank you for listening to Retail Unwrapped. We’ll be back in one week with another podcast. Please subscribe on Apple Podcasts, Spotify, or any podcast service. If you have questions, ideas for a podcast or anything else, please contact us via the robin reports.com.