“Exploration is the engine that drives innovation. Innovation drives economic growth. So let’s all go exploring.” – Edith Widder
In this world of the digitally empowered consumer, is inventory a threatened species?
Are classic retailer metrics such as stock hold, stock turn, stock intensity per square metre and working capital ratios yesterday’s news?
After all what is a classic retailer’s largest cost of business? Well one could argue it’s inventory, certainly such that range, width of range, and its management is a strong determinant of both cash flow and profitability.
Now a growing number of retailers are enhancing their offer by investing far less in inventory and far more in their digital interface, customer databases and social communities.
Their advocates and fans are being increasingly conditioned and motivated to the customised offer that brings all channels to the fore. Not seeking to purchase on the spot, far more motivated by the various caches that a true digital-inspired omnichannel retail business offers. Aware that a physical store is crucial to the overall offer yet doing so in a way that maximises both the customer experience and resultant experience.
Is this the store template of the future?
Disrupting the standard retail format certainly seems to be on the agenda for many of today’s innovative fashion start-ups. Online retailer Kent & Lime have created a successful retail model out of providing online style advisors to hand select items in the right size and sent directly to your door. Your home becomes your personal fitting room where you have three days to try on your items, show your friends and then return those you don’t wish to keep, only paying for what you keep.
Another success story in this area and a personal favourite of ours is Australian innovator Sneakerboy, as mentioned in previous posts. This week we visited another disrupter in this field, Grana.
Aiming to combine the world’s best fabrics at disruptive prices, Grana is all about high quality garments at a lower price point. Founded in 2013, Australian-born Luke Grana, realised that achieving this goal meant re-thinking the traditional fashion business model, and focusing on ‘outstanding logistics’ rather than design, to give the fashion retailer an edge on the competition.
Being based out of Hong Kong, the world’s largest logistics hub, allows the brand to ship internationally at almost the same cost of shipping locally in Australia with Australia Post. Working directly with fabric mills, all products are shipped direct to the warehouse and then straight onto the customer, cutting out the middle man, once again saving costs to provide ultimate savings to customers.
Last year the core team members of the company, including founders Luke Grana and Pieter Paul Wittgen set up a shipping container pop up shop in and around Sydney, which reportedly was well received due to the quality of the products. They have now returned to Sydney’s Queen Victoria Building with a ‘zero-stock’ concept pop up store set to last until January 2016. When speaking of their first concept store in their channel in Hong Kong which followed a similar concept allowing customers to try on apparel and have their orders shipped to their door, founder Luke Grana said, “our customers can receive the tailored customer service and interaction that only a brick and mortar location can provide, but with the ease of online purchasing.”
The Sydney store this weekend was buzzing, with consumers naturally adopting the new way of shopping. While some were a little confused at first, while we were in the store, once the concept was explained by an approachable and enthusiastic team member, all customers were taking items to the fitting rooms, and exploring the full range on the instore computers. The garments were attractively displayed within their styles, with place cards detailing where the fabrics had been sourced. From Peruvian Pima t-shirts priced at $22, to Chinese Silk Dresses from $99, it is refreshing to have such a transparent view of the supply chain communicated through the store experience.
We are interested to see what the future holds for Grana, and whether we may begin to see more Australian retailers start to adopt this model of retailing in the future. How do you think your customers would react to this retail format? Have you considered a central logistics hub to enhance your inventory management? Contact Brian and the team on 0294602882 to discuss more!
First published in Inside Retail, 14th October 2015.