An Introduction to a Four-Part Series
No industry has gone untouched by the massive change stemming from recent digital disruption, but nowhere does it seem more apparent than with brand manufacturing. Big brands are working to hold on as smaller brands fight to emerge through the digital noise. New technology is disrupting traditional supply chains and revenue streams, pushing modern brands to pursue growth in new places.
At Ally, we have the opportunity to speak with brand manufacturers on a regular basis about their unique challenges, big wins, and growing fears. Across the board, brands are looking for a way to future-proof their business by unlocking sustainable growth in an unstable market environment.
Here are just a few of the common problems we hear from brand manufacturers on a regular basis. We will be diving deeper into each topic in our four-part series. Here is a snapshot of what is to come.
A retail apocalypse.
Brand manufacturers are being forced to evolve their sales strategies to keep up with an unprecedented pace of change in the retail world. Nearly 9,000 retail stores closed up shop in 2017, and the ‘retail apocalypse’ will continue as shopping continues to shift towards online channels. What will this mean for brands and how can brands build a strong online engine? Stay tuned for Part 1 of this series to learn more.
Fierce competition from digitally native brands.
Established brands are struggling to maintain a loyal customer base as they compete with vertically aligned and digitally native sellers, seemingly sprouting up overnight. Consider Dollar Shave Club and Casper. Both of these brands gained instant popularity and quickly snagged market share despite competing in industries that have historically been dominated by a handful of legacy brands. Casper is especially interesting because the idea of purchasing a mattress online (without testing it out in person) previously seemed inconceivable. This is further proof that the direct to consumer approach is a requirement, not a trend; and no matter how established or impenetrable a brand may seem, it must stay agile and customer-centric to stay relevant.
Race to the lowest price: Amazon vs Walmart.
Competition between the two retail giants, Amazon and Walmart, has skyrocketed, causing prices to plummet. A recent study has shown that on average, Walmart prices are 34% lower than Amazon’s. But this race to the bottom has directly impacted margins of sellers as each attempt to win in the multi-channel space. Brands are required to cut their wholesale prices drastically, and in some cases, brands may lose money on sales if they meet the ‘low price’ demands.
Amazon’s growing dominance.
Amazon, the force keeping all brand manufacturers up at night, has established its dominance with a market share that’s expected to reach 50% by 2021. Brands are searching for ways to play nice with the retail giant without completely eliminating their margins. But as Amazon’s power grows, brands are losing control of the channel and need a viable solution. So how do brands leverage the enormous reach and traffic of Amazon, while building a direct to consumer channel as well?
Thanks to new technology and quickly shifting consumer preferences, today’s brands are facing massive disruption and profit pressures. Only the brands willing to embrace change and the speed of innovation will survive. In this four-part series, we’re taking you on a deep dive of the top challenges brand manufacturers are facing today to help you paint a clear picture of the current market environment and better prepare for what lies ahead.