For legacy companies facing disruption, corporate innovation won’t be enough

Today corporate innovation is all the rage. Large companies host accelerators, launch internal startups, and court potential startup partners in a quest to harness young companies’ innovativeness and energy for themselves.

But large legacy companies shouldn’t throw the baby out with the bathwater by neglecting their core business and assuming it has minimal room to grow.

In this article, I will detail how our company, Randa Accessories, grew from 25 to 50 percent market share in several categories and channels by focusing on its core business and adjacent “bridge” categories, and offer some takeaways for other businesses based on that experience. (I will also describe how Randa launched its own successful internal startups — I’m not saying corporate innovation isn’t useful, just that it needs to be one part of a broader strategy to excel.)

First, a little about Randa. You many not know our name, but you know our products. Our products are available under 50 brands, and are sold at over 20,000 points of sale, and millions of digital touch points.

We’re the world’s largest men’s accessories company. We sell ties, and belts, wallets, bags, hats, slippers and luggage.

Randa is completely vertical, business-to-business and direct-to-consumer, with 4,000 employees working from 23 global offices.

Our culture emphasized growth and efficiency and led us to success in revenue, margin, penetration, and market share.

For example, we’re the leading supplier of belts to Nordstrom… and to Walmart, to Kohl’s and to Amazon, and The Hudson’s Bay, Liverpool, Printemps, El Cortes Ingles, David Jones, John Lewis and to Costco.

We spent over $50 million to assure that when a consumer walks into a retail store for pants, they immediately see our belts nearby. Dress shirts? There are our ties…

And then, we hit a wall. 

Continue reading “For legacy companies facing disruption, corporate innovation won’t be enough”

The End of Mass Marketing: Go Small, or Go Home

Once upon a time… business success was based on providing a narrow segment of consumers with a narrow segment of products, uniquely suited to their needs, sourced and advertised locally, and sold at a local store.

Over time, the spread of mass media — TV, national newspapers and magazines — along with the expansion of national retail stores, and the growth of a global and highly efficient supply chain, led to a world of mass marketing, mass production, and massive retailers. The retail world moved from personalized products for localized, niche markets to mass-produced products for mass markets.

Mass marketers thrive on “must-have” items — huge volumes of single styles, sold across many market segments to an audience of consumers eager to have the item they saw advertised in mass media, and which, in turn are produced in great scale and efficiency.

This strategy worked. Until it didn’t.

Continue reading “The End of Mass Marketing: Go Small, or Go Home”

What if Amazon is Retail’s Only Hope?

“Retail Apocalypse.” The term has its own Wikipedia entry. This transformation, of “biblical” proportions, is often blamed on Amazon.

What if Amazon is not the brick-and-mortar store killer? What if Amazon is retail’s champion?

To paraphrase Mark Twain, the reports of retail’s death have been greatly exaggerated. The retail industry is not in dire shape, it’s in a different shape. Change is essential: it’s not easy, nor painless.

And, there is an important difference between correlation and causation. Amazon’s success and the disruption of the legacy retail market are certainly related, this does not mean one caused the other. Amazon did not overturn the traditional retail model: Macroeconomics drove this disruption.

Amazon is strategically and significantly investing in mortar-and-brick retail. Further, the company provides valuable tools to third-party retailers to help them succeed. And, critical to its own success, Amazon needs other retailers to thrive.

6 Reasons the Current Retail Transformation Was Inevitable

Continue reading “What if Amazon is Retail’s Only Hope?”

Disruption & The Bridge: A Video Clip

The world’s leading experts studied the challenge, identified the opportunity, and – sparing no expense – built the solution. It was perfect. It performed as expected. And, it was useless.

Lately, the term “disruption” is often used, and misused. In the business community, disruption is used to describe economic transformations, changes to consumer path-to-purchase, shifts toward digital consumption, the “retail apocalypse,” and jobs lost.

At our factory in Central America, disruption takes on a deeper meaning.

This video is about disruption, innovation, and leveraging historical expertise…

Disruption & The Bridge Video Clip

What I Should Have Said, But Didn’t

 

Last week in Las Vegas, during the largest fashion industry trade show, MAGIC/PROJECT, I delivered the keynote presentation for the YMA Fashion Scholarship Fund and UBM Advanstar. It was entitled, “Disruption is the Mother of Invention.”

At the end of my presentation a woman stood up to ask a question. Actually, she made a statement.

“I own a fashion retail store,” she exclaimed. “I’m a good merchant, it’s a good store. It’s been in business a long time. Customers shop my store with their smartphone in their hand… and then they buy the item on Amazon Prime.”

She cried out, “it’s not right. It’s not fair.”

And then she said,

“What do I do?”

My answer was “textbook,” when the last thing needed was a textbook. Continue reading “What I Should Have Said, But Didn’t”

Will Another 80,000 Retail Stores Close?

Take a deep breath… 

UBS Financial estimates that for every 1 percent increase in eCommerce penetration to total retail sales (excluding food & gas), 9,000 retail stores would need to close in order to maintain current levels of sales per physical store. 


This would be the equivalent to shutting down seven Toys ‘R’ Us chains. 


Continue reading “Will Another 80,000 Retail Stores Close?”

“Leadership is Not a Destination” – FutureCommerce Podcast

“No company can afford to stand still” – we sat down with David J. Katz – a LinkedIn Top Voice in Retail – to discuss how technology is changing consumer demands and pushing companies into creating better experiences.

Topics include: Robotics, Retail, Ecommerce, Technology, Fashion, and Jeff Goldblum.

Grab some popcorn, and a notebook.

Continue reading ““Leadership is Not a Destination” – FutureCommerce Podcast”

Disruption is Inevitable, Essential & Painful

America has too many stores, too much inventory, and too few shoppers.

Macy’s, JC Penney, Sears, J. Crew and other major retailers have already announced that they will be closing stores because in the new retail landscape they cannot justify the return on these expensive fixed assets – and because customers no longer choose to spend their money in old-model retail stores.

The market capitalization of American department stores dropped nearly $80 Billion since 1999, according to Census data.

The cost of disruption is more than store closings and diminished market caps, it’s people and jobs. Macy’s and JC Penney, alone, will be closing over 200 stores and eliminating over 12,000 jobs.

You can not shrink your way to success. However, you can buy yourself more runway. Continue reading “Disruption is Inevitable, Essential & Painful”