October 2, 2014
The Swiss army knife gets its own store in Switzerland
It’s becoming more and more common to see consumer brand manufacturers opening their own stores (both brick and click). Apple, Burberry, Hugo Boss, Nike, Microsoft, Prada, Procter & Gamble (e-store) and Tesla are among those looking to make direct connections with consumers to learn more about them and boost sales in the process.
Based on estimates, more than 40 percent of consumer brands now sell directly to consumers in one form or another. One example is Victorinox AG, the largest maker of Swiss army knives in the world. While the company already operates 75 stores around the globe, it doesn’t have a store in Switzerland. That will change today, Bloomberg News reports, when it opens its first flagship store on Bahnhofstrasse, the main shopping street, in Zurich. The 2,370 square-foot store opening coincides with the company’s celebration of 130 years in business.
"The investment in stores is really an investment in the perception of the brand," Carl Elsener, CEO of Victorinox, told Bloomberg. "With our own retail shops, we can support the strategically important markets and promote brand awareness."
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Discussion Questions
Do you see the trend of brands opening their own stores accelerating in the years ahead? Are companies such as Victornix better suited to operating their own stores than manufacturers of food or common household items?
Poll
Without question, manufacturers gain valuable insights with a branded retail experience (web or physical). Marketing and advertising efforts can be measured better for effectiveness, consumer demand is better understood and the higher margins provide room for brand building and experimentation.
This trend will continue and accelerate for larger branded manufacturers.
The biggest challenge for manufacturers, though, is getting to and managing stores at scale. A handful of stores spread out geographically can be hard to operate efficiently. Getting the right mix of technologies is tough. Often a big manufacturer is used to buying expensive enterprise software, yet their retail operation (given its relatively small size) should use an SMB solution.
However big brands are expected to deliver the highest level of customer experiences at retail. This means matching what the best retailers do in their vertical. Same-day in-store pickup, returns to store, etc., are all difficult to do with SMB retail solutions nested inside a big manufacturing business.
To further complicate matters, brands are increasingly expected to offer local inventory data and pickup availability throughout their retail partner network.
Manufacturers will continue to get into retail, and at the same time their ultimate success will be dependent on retail technology evolving to serve their unique needs.
In an omni-channel world, consumers can research and purchase virtually everywhere, including the “gray market,” online. So it is understandable that brands want to open their own stores to create a positive perception of their brand quality. More importantly, brand stores create the opportunity for brands to change the experience and engagement with consumers in ways not possible online.
The trend of brands opening their own stores is likely to accelerate in the short-term. The critical question will be whether these stores represent “brand marketing” presence, or whether they can be run as real retail stores that turn a profit.
The trend of brands opening their own stores is definitely a sign of the times. Ironic, but true, that it makes sense for stores to have physical presences as well as online presences, and for the reasons given by Victorinox’s CEO, “With our own retail shops, we can support the strategically important markets and promote brand awareness.” I would expect Victorinox or any brand to have much greater knowledge and capabilities within their own product and service range—and, of course, it cuts out the complications of using a “middle man.”
It all depends on how much force you put behind the word acceleration. In a general sense, the answer is probably yes, but that doesn’t mean we are going to see tens of thousands of new direct-to-consumer stores opening soon.
Obviously food is a tough category for a store unless the manufacturer is very focused on certain categories (wine, cheese, organics, etc.) or broad enough to make things interesting through a mix of domestic and international lines (think Unilever).
Hard goods like knives, shoes, etc., might be a bit simpler to deal with in volume, but any manufacturer with a strong brand should be pushing to open some type of store—be it a small or a larger one.
Why? The store is the place where the manufacturer can get closer to their customers. They can understand why certain colors, styles, or flavors are not wise to create, or become dead items in stores or online.
They can experience the world of retail and how it has changed. How the shopper or their end consumer is different.
There are many top shoe brands that have stores near and far from their plants and staff the stores with people from the business, internally. Besides really learning about shoppers, the teams working the stores can become closer to their business and the end buyers. Great learning experience.
The short answer is yes. However as they do so they will find operating their own locations is a very different world that manufacturing and selling through other peoples’ stores. Operating at retail brings all the challenges that we are all familiar with. Having a limited number of geographically dispersed locations brings additional issues such as a different level of management and general business skills.
What most people don’t know is that Victorinox makes and sells more than their famous Swiss army knives. The items include things you might not expect such as apparel, luggage, briefcases, wallets and watches, to those closer to what they are known for like garden tools and kitchen knives.
Acceleration implies a geometric increase. Opening successful retail outlets is not easy so I do not see a geometric increase. However, an increase will happen for those products that are distinctive, would benefit from interaction with consumers and have varieties that provide an interesting display or point of comparison. This is more difficult for items with which consumers are already very familiar.
As we look at the direction that stores are moving in, places where the consumer can experience, become immersed, actually interact with product/service, it makes perfect sense that brands would be there also.
It is the brand’s opportunity to get personal with their customers, source new ideas, learn the direction the consumer is moving in. Also, these forays might even be done through pop-ups or store within a store, making for good ROI.
While not for every brand, I can certainly see this as the direction for many brands.
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Without question, manufacturers gain valuable insights with a branded retail experience (web or physical). Marketing and advertising efforts can be measured better for effectiveness, consumer demand is better understood and the higher margins provide room for brand building and experimentation.
This trend will continue and accelerate for larger branded manufacturers.
The biggest challenge for manufacturers, though, is getting to and managing stores at scale. A handful of stores spread out geographically can be hard to operate efficiently. Getting the right mix of technologies is tough. Often a big manufacturer is used to buying expensive enterprise software, yet their retail operation (given its relatively small size) should use an SMB solution.
However big brands are expected to deliver the highest level of customer experiences at retail. This means matching what the best retailers do in their vertical. Same-day in-store pickup, returns to store, etc., are all difficult to do with SMB retail solutions nested inside a big manufacturing business.
To further complicate matters, brands are increasingly expected to offer local inventory data and pickup availability throughout their retail partner network.
Manufacturers will continue to get into retail, and at the same time their ultimate success will be dependent on retail technology evolving to serve their unique needs.
In an omni-channel world, consumers can research and purchase virtually everywhere, including the “gray market,” online. So it is understandable that brands want to open their own stores to create a positive perception of their brand quality. More importantly, brand stores create the opportunity for brands to change the experience and engagement with consumers in ways not possible online.
The trend of brands opening their own stores is likely to accelerate in the short-term. The critical question will be whether these stores represent “brand marketing” presence, or whether they can be run as real retail stores that turn a profit.
The trend of brands opening their own stores is definitely a sign of the times. Ironic, but true, that it makes sense for stores to have physical presences as well as online presences, and for the reasons given by Victorinox’s CEO, “With our own retail shops, we can support the strategically important markets and promote brand awareness.” I would expect Victorinox or any brand to have much greater knowledge and capabilities within their own product and service range—and, of course, it cuts out the complications of using a “middle man.”
It all depends on how much force you put behind the word acceleration. In a general sense, the answer is probably yes, but that doesn’t mean we are going to see tens of thousands of new direct-to-consumer stores opening soon.
Obviously food is a tough category for a store unless the manufacturer is very focused on certain categories (wine, cheese, organics, etc.) or broad enough to make things interesting through a mix of domestic and international lines (think Unilever).
Hard goods like knives, shoes, etc., might be a bit simpler to deal with in volume, but any manufacturer with a strong brand should be pushing to open some type of store—be it a small or a larger one.
Why? The store is the place where the manufacturer can get closer to their customers. They can understand why certain colors, styles, or flavors are not wise to create, or become dead items in stores or online.
They can experience the world of retail and how it has changed. How the shopper or their end consumer is different.
There are many top shoe brands that have stores near and far from their plants and staff the stores with people from the business, internally. Besides really learning about shoppers, the teams working the stores can become closer to their business and the end buyers. Great learning experience.
The short answer is yes. However as they do so they will find operating their own locations is a very different world that manufacturing and selling through other peoples’ stores. Operating at retail brings all the challenges that we are all familiar with. Having a limited number of geographically dispersed locations brings additional issues such as a different level of management and general business skills.
What most people don’t know is that Victorinox makes and sells more than their famous Swiss army knives. The items include things you might not expect such as apparel, luggage, briefcases, wallets and watches, to those closer to what they are known for like garden tools and kitchen knives.
Acceleration implies a geometric increase. Opening successful retail outlets is not easy so I do not see a geometric increase. However, an increase will happen for those products that are distinctive, would benefit from interaction with consumers and have varieties that provide an interesting display or point of comparison. This is more difficult for items with which consumers are already very familiar.
As we look at the direction that stores are moving in, places where the consumer can experience, become immersed, actually interact with product/service, it makes perfect sense that brands would be there also.
It is the brand’s opportunity to get personal with their customers, source new ideas, learn the direction the consumer is moving in. Also, these forays might even be done through pop-ups or store within a store, making for good ROI.
While not for every brand, I can certainly see this as the direction for many brands.