Last month, the Michael Kors fashion brand announced it would be closing 15% of its retail outlets. Following a huge surge in consumer demand driven by the designer’s presence on the Project Runway television franchise, expansion of the brand was aggressive, followed by a demand through that drove the decision to close 125 outlets over the coming 2 years.
Releasing an IPO in 2011, following the success of his entry to the retail market in 2004, Kors followed with an aggressive expansion that featured 800 outlets of the chain, cross-country. Based on a trend toward luxury handbags, the brand would soon see the trend collapse and, as a result, mounted an effort to move stock which had rapidly become excessive in the market.
This post offers 3 retail management tips from Michael Kors closing stores.
From scarcity to glut.
The Michael Kors brand took advantage of a spike in consumer interest, riding a wave that had an inevitable “best before” date. It’s anyone’s guess, when gauging consumer tendencies, when supply will outpace demand, especially in terms of a mega-hot market driven by media celebrity.
But conservatism and a steady hand are always in order, in terms of inventory on hand. This was not the case at Kors. Market optimism drove the brand to over-extend, resulting in the need to offer luxury goods (associated with scarcity) at a tremendous discount. Suddenly, Kors was affordable, a reality which undermined the brand message.
The lesson is to be aware of changes in demand and about what your consumers are buying. Watching trends for downturns is a key ingredient in maintaining only the stock you know you can sell at a profit.
Here today, gone tomorrow.
One day, it’s a bubble-hemmed dress. The next, it’s a Michael Kors handbag. Trends come and go. What flew off the shelves yesterday may gather dust, today.
Watching the market and what competitors are doing (and selling) is key to understanding when the time has come to abandon the trend ship. Consumers are notoriously fickle and trends can dissipate quickly. A cautionary note is that Michael Kors’ discounted items, once they were no longer mega-hot, were suddenly ubiquitous.
At one point, his formerly “must have” items were seen to be occupying fully ¼ of the sales floor at retailer Bloomingdale’s designer discount outlets. That’s not the look MK was going for.
Experience. Experience. Experience.
Location. Location. Location. This was once the mantra of retailers. Today, it’s consumer experience. A huge part of the consumer’s in-store experience resides in your sales floor staff. The quality of your people is what moves your product in a physical retail set up.
Finding staff who understand the importance of face-to-face interactions in the consumer journey is key to maintaining retail health today. It’s the “X” factor that differentiates brick-and-mortar retail from the online challenge. Your people are the movers and shakers of your brand, offering unique, personalized consumer interactions that move product.
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