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Changing Channels

Posted: August 28, 2008, from the February 2007 issue of GCI Magazine.

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“Consolidation can both enhance and hinder a brand’s distribution. A small brand may obtain additional distribution opportunities, while a larger brand may suffer from a reduction in sales due to the consolidation of store inventories,” said Setzfand.

Consolidation also has given retailers the ability to demand more of a brand, thus shifting the traditional relationship. “Retailers have more power to exercise strength in numbers. They have coast-to-coast coverage and buying power that can support or be devastating for brands,” said Catalano. For brands, this means looking to non-traditional retail opportunities for growth, such as boutiques and brand stores that serve consumers looking for a personal touch.

Is Smaller Better?

Boutiques and brand stores offer smaller, niche brands a distribution channel outside of the mainstream while providing well-known brands to their customers. “These outlets are becoming destinations for loyal consumers to more easily fi nd their favorite products, while offering brands the opportunity to introduce their brand portfolio to new consumers who may not have seen them in a more traditional multi-brand store,” said Setzfand.

These boutiques also offer increased customer service and knowledgeable staff. “Time is usually on the side of servicing a customer in these environments and the knowledge base of the consultants is usually higher. Turnover can be less in these environments and, therefore, loyal customers can receive ongoing service,” said Catalano. Into this consumer-driven atmosphere comes Space NK, a U.K.-based beauty retailer that is expanding into the U.S. with fi ve fl agship stores during 2007.

“Space NK is based on a vision of my personal dream store,” said Nicky Kinnaird, president and creative director. “I wanted to create an experience that would impress me as a customer.” The Soho store offers a rigorously edited portfolio of 50 brands and its signature lines, along with a treatment room where clients can enjoy Eve Lom facials. The company will launch its full e-commerce store at the same time.