There is a fault line in the retail universe and while I don’t expect the big one to erupt in 2013 I’m sure we’ll see some rumblings. Quite simply, the cost difference between selling online and selling offline is too big, something needs to give. Maybe we see some big retailers go down. Maybe commercial real estate prices collapse instead. Or perhaps they just go power law, more expensive at the core, cheaper on the periphery. Maybe only the vertical retailers survive in a world of “showrooming.” Or maybe we’re headed to a space where brands would rather build showrooms than sell on the high street. Maybe physical retail becomes a marketing expense, rather than a revenue stream. Better yet hopefully someone out there is thinking of a better way to do things “out in the street.”
We just killed the wholesale side of Outlier completely, so we’re that proverbial money on the sidelines right now. It’s clear that there is lots of value to “selling in the real world” but it’s also clear that the existing model is on shaky ground (with the exception perhaps of those brands with incredible vertical supply chains, e.g. Apple and Zara). We’re focusing on building our brand online, not because it’s the best way to sell clothing, but because it’s the best way to provide value. We’re excited to see what’s standing when the dust settles on the new offline retail landscape, because we’re sure it’ll be an interesting place to be.
Read more 2013 Predictions here.