MIA: Independent Makers in Department Stores

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Department stores are pushing to recruit next gen consumers. Legacy brands including Macy’s, Kohl’s, and Nordstrom plus other retailers are struggling to attract younger customers. Nordstrom is the only one of the three with more next gen than boomer customers; Macy’s, Kohl’s and the rest of them need to shake things up quickly to stay afloat over the next decade.      

Contrary to popular belief, influencers are not a panacea. A new trend in digital marketing to next gens? Authenticity is quickly losing ground as a primary quality they look for influencers. The tides of change strike again. Instead, an influencer’s posting frequency and follower count are now center stage. This has direct implications for the online discovery process… namely, young upstart brands with a strong ethos should present their own engaged consumer base to legacy retailers considering a partnership.

Macy’s is hoping its small store formats will draw in younger customers and Kohl’s is stepping up its Sephora partnerships, adding Babies R Us, Limited Too, Aéropostale, an expanded assortment from Madden Girl, and life stage merchandise. Nordstrom is big on its third-party marketplace. But here’s a more interesting idea to attract next gen customers.

It’s no secret that next gen consumers see themselves as iconoclasts that prioritize individuality, a strong brand ethos, and value. Legacy stores are starting to wake up to the fact that showcasing independent designers––like LMVH prize winners,  Diotima, and Anna Quan at Bergdorf Goodman––is a fast track to hacking this iconoclastic mentality. Partnering with independent makers can help strengthen legacy brands for next gens, although there are both challenges and opportunities in these relationships with small brands and emerging designers. From creative differences to supply chain logistics, thorough research is necessary to guarantee a mutually beneficial partnership.

Independent Makers Aren’t Just Another Option

Retail has never been more oversaturated. As the shipping and logistics industry continues to evolve, land barriers no longer prevent brands from accessing a global consumer base. But all retail marketplace brands aren’t created equally. Many of the first-in global marketplaces to offer consumers affordable shipping lack the ethics, consumer trust, and product quality that are symptomatic of niche, independent retailers––think SheIn, Temu, and Alibaba. These brands are not exactly paragons of ethical consumption or quality control.  In fact, a definitive 36 percent of Gen Z and 40 percent of millennials have boycotted a brand in the past year; trust is everything to a retailer’s ability to tap into this huge consumer base.

Consumer interest in unique, authentic products is at an all-time high. But can retailers provide unique products profitably and efficiently as their businesses scale to reach a wider audience? The good news is that independent makers can tap into niche markets that the big guys are challenged to touch on their own. Legacy brands can cater to young consumers who discover and become loyal to indie brands on social media, and these brands can offer a direct pathway to increased customer loyalty and traffic for larger retail partners.

This has big implications for today’s retail sector: Nordstrom is the only brand of the Big Three to successfully achieve next-gen customer loyalty. It’s also loaded with independent brands and designers, to keep ‘em comin.’ Nordstrom’s affinity for up-and-coming designers is evident in SPACE, the company’s online hub for “emerging and advanced” designer brands ranging from COMING OF AGE to Comme des Garcons. This focus on emerging and hype beast designers is also a highlight of Nordstrom’s physical stores, which draw upon the potential for the discovery of emerging brands to attract young fashionistas.

Online Stores Provide a Unique Opportunity to Step It Up

Indie brands showcased online provide an alternative to small-batch, in-store assortments. A digital marketplace approach provides unique opportunities for retailers to dropship goods from independent merchants. It’s a fast track to attracting next gens with digital or social media native independent brands, and as we know, doing independent research on social media is Gen Z’s preferred method of brand discovery.  

Target, typically a first responder to next gen trends, is taking advantage of this opportunity by partnering with independent merchants selling on Shopify. Not only is Target cultivating this partnership to add indie-made goods to Target Plus, but the behemoth will also add a curated selection to its brick-and-mortar stores. This means the discovery element that consumers (quite vocally) find to be missing in many legacy department stores will have a strong presence in Target’s physical destinations––cementing Target as the millennial destination and, in all probability, rustling up strong consumer loyalty with differentiation-motivated Gen Z consumers, as well.

Challenges of Indie Brand Partnerships

If we’ve learned anything from Kanye West’s Yeezy and Gap’s failed investment, it’s that partnerships with independent brands can be detrimental to legacy retailers’ reputations. But unstable brand spokespeople aren’t the only thing legacy retailers need to look out for in partnering with indie brands: product quality and consistency also need to be monitored––particularly on drop shipped products from countries with counterfeit issues. A designated quality control team can provide quality assurance when working with diverse indie brands.

Contrary to popular belief, influencers are not a panacea. A new trend in digital marketing to next gens? Authenticity is quickly losing ground as a primary quality they look for influencers. The tides of change strike again. Instead, an influencer’s posting frequency and follower count are now center stage. This has direct implications for the online discovery process…namely, young upstart brands with a strong ethos should present their own engaged consumer base to legacy retailers considering a partnership. Partnerships aren’t lifelines for failing indie brands; they’re extensions of the brands’ existing success as a standalone company and their burgeoning consumer base.

Let’s Talk Solutions

Independent brands are anything but “one-size-fits-all.” In fact, many brands catering to next gen consumers pride themselves on tailoring their offerings to their unique audience excluding everyone else. We’re living in an era of differentiation. The indie brands’ retailer partners don’t just need their own consumer base, but they need to be tailored to the purchasing preferences and priorities of that retailer’s target audience. Not an easy proposition, but a dedicated curation team can do the extensive research necessary to properly vet potential brand partnerships.

Retailers onboarding an independent maker need to first check in with their own consumer base. The fourth wall between a retailer and consumers is burning down. Consumers expect to have a say in the curation process, and there’s no better way to do that than utilizing their expertise in brand partnership and product selection. After all, there’s no stronger advocate for a brand or retailer than a loyal consumer.

As we look toward the future, expect to see more retailers follow in Target’s footsteps, embracing independent brands to bring in diverse next gen consumer demographics. However, as Gap/Yeezy has shown us, these partnerships can be as much a liability as they can be a boon for both parties. Hiring a dedicated curation team and polling consumers before onboarding new indie brands can help retailers guarantee brand alignment––to ensure their partnerships provide a pipeline to next gen consumers for years to come.

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