30 signs your retail program or aspirations needs some help
If you hear/see/think any of these signs, then you're in trouble...
Lots of DTC brands prefer to “figure it out” when it comes to retail expansion. Many of those leaders are used to “being scrappy”. The mantra is to “fail and fail fast”.
In most startup environments, that works; the cost of mistakes is less than the cost of investing in experienced operators/consultants, and losses can be cut short before they grow.
Unfortunately, retail expansion – even at a startup – is not a program to be managed as such.
The nature of real estate is such that the bulk of the time, energy and, most importantly, dollars are spent upfront before you even get to see performance results — in other words, everything becomes a sunk cost before you even know if it will work.
Even more unfortunately, DTC brands tend to approach retail in the same scrappy way they approach other growth initiatives — and many of these mistakes are the same.
Here are 30 signs that you either need to invest in an experienced operator/consultant or education if you’re pre-stores, or level up your real estate program if you already have stores.
If you don’t have stores and you believe:
Stores should become profitable in less than 6 months
Stores cost less than $50,000
You can go from “we want our first store” to opening that store in less than 4 weeks
You don’t need to support stores with store-specific marketing
Stores’ success should be measured solely on a 4-wall basis
You think you know more than brokers and experienced operators when it comes to site selection
You think landlords will give you a “free trial period”
Landlords don’t care about, or judge your lease candidacy on the basis of, the health of your overall company financials
You can’t negotiate a lease document
You don’t need to involve every other team lead in the first location’s launch
The takeaway: you can’t approach offline retail with the same framework or lens used for digital marketing.
If you have stores but are pre-scale and you believe…
Your popup timelines can be replicated at scale
Your popup budgets can be replicated at scale
Your existing vendors can support you at scale
Your existing team can support you at scale
You don’t need cross functional partners who also specialize in retail
Your existing governance (approval framework) is sufficient to protect your company’s best interests
All cannibalization is bad
Corporate marketing costs should be allocated proportionally to the retail channel on the basis of sales
You can easily exit a long term lease prematurely without penalties
Your General Counsel / corporate attorney knows how to negotiate leases
The takeaway: what got you here won’t get you there
Have many stores and have achieved scale: if you believe…
All your 4-wall unprofitable stores are drags on the overall business
The cost of operating at a loss is always greater than the cost of closure
Closing stores won’t impact your other channels
Geospatial data can’t help you quantify the best stores to close/keep open
Customers won’t notice your dated signage and fixtures
Relocating or renovating is a better ROI than investing in your field team
There is no reputational damage when closing stores
Landlords are unwilling to help you out
Positive sales growth can’t coincide with a poorly performing store
Closing a store will result in 100% loss of its customers
The takeaway: closing stores is a complex omnichannel decision and should be your last resort