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PSFK and PCH Present: The Art of the Drop

PSFK and PCH Present: The Art of the Drop

In this inaugural post in a series based on the Art of the Drop research report, we spotlight key drop strategies as well as supporting best-in-class examples of retailers carrying them out to inspire brands across verticals to leverage this hype-building tactic

When you think of a product ‘drop,’ what first comes to mind? Maybe, in the pre-COVID era, queues wrapped around the block from KITH, or perhaps the white and red logo of Supreme. Streetwear retail has always understood the enormous power of the direct-to-consumer product drop, which has now started to enter the mainstream. And now, there’s more opportunity than ever to drive hype around new releases in a digital, direct-to-consumer context, no longer requiring the physical channel. Even luxury brands are embracing the trend—the likes of Gucci, Louis Vuitton, Burberry—as they are ideally suited to capitalize on that sense of scarcity and exclusivity.

While other categories, such as electronics, have been slower to adopt them, drops represent an enormous opportunity for brands and retailers of any type: They serve as a mechanism for retailers to establish a direct relationship with their consumers and ensure that a brand stays top of mind through a regular model of engagement, ultimately building loyalty and rewarding fans with exclusive products and experiences.

In order to be effective, though, drops require a coordinated effort across an organization in order to deliver the right product at the right time. To help retailers in any category benefit from a drop strategy, PSFK has teamed up with PCH International to launch a free deep-dive report called The Art Of The Drop, which outlines in a three-stage framework how to plan, execute, and leverage a drop, providing a comprehensive and actionable guide to the process.

In this introductory article kicking off a series sharing content from the report, we highlight key drop strategies from each stage as well as supporting best-in-class examples of retailers carrying them out to inspire brands across verticals to leverage this hype-building tactic.

Predictive Merchandising

Being able to predict what consumers want before an item ever hits store shelves is now a pivotal part of the drop strategy, with 33% of retailers currently using advanced analytics for merchandise planning and another 48% planning to. By harnessing data and predictive analytics to uncover shifts in consumer preferences and accurately forecast demand, brands are able to improve supply chain efficiency, merchandising strategy and inventory management. For instance, in the Nike Live concept stores, products are stocked based on the purchasing habits of local users. Using data collected on the NikePlus app, each store’s inventory is dictated by what shoppers in the neighborhood are buying. 

Ongoing Drops

Among the biggest changes in fashion over the past decade was the concept of ongoing drops, harnessing the power of online retail to release new merchandise at regular intervals instead of seasonal collections. Offering shoppers an incentive to return frequently to discover what’s new creates prolonged engagement, while providing brands with the opportunity to quickly test and learn. DTC luxury shoe brand M. Gemi creates continual newness with its ‘Monday Drop,’ launching new styles and exclusive collaborations weekly over Instagram Live. The live drops include behind-the-scenes content showcasing designers, as well as crowdsourced styling advice. 

Crossover Collabs

Designing limited-edition collections in collaboration with another brand or cultural figure in order to bring together two communities of fans is one of the most common drop strategies, not only generating excitement but potentially introducing a brand to an entirely new audience. Big box retailer Target, for instance, pioneered a designer collaboration, offering high-design items at an accessible price point. To fête the 20th anniversary of its first collab, Target released a limited-edition collection of 300 reissued products from 20 partner designers over the years.

Shoppable Shows

The proliferation of live streaming has had major implications for how we shop—in fact, a 2019 survey found that 44% of Gen Z are more likely to spend money on an experience because of something they saw on social, versus 34% of all consumers. Using live-streamed programs that allow audiences to collectively view content in real-time, brands can now give customers direct access to exclusive products, blending shopping and entertainment into a streamlined experience. NTWRK is a mobile experience that combines a schedule of compelling programming with live shopping, where viewers tune into live episodes showcasing pop culture icons, and are able to shop the exclusive featured products in-app.

Members Only

According to the data, when consumers feel more connected to brands, they are 76% more likely to buy from that brand over a competitor and 57% more likely to spend more. Looking beyond loyalty points, there are numerous ways to get creative and reward committed brand fans, be it with early access to new products or one-of-a-kind experiences. To hype the  release of its Air Max 720 shoe, activewear brand Nike created an exclusive virtual pop-up store where shoppers can buy limited-edition merchandise only after purchasing the sneaker itself, accessing the shop with their order number.

Deeper Engagement

Many brands are tapping into fan passion for their favorite brands to promote deeper engagement. Compared to satisfied customers, emotionally connected customers have a 306% higher lifetime value (LTV), and will recommend brands at a much higher rate (71% vs. 45%). Rewarding loyalty program members for a range of actions beyond making a purchase, such as sharing on social media, encourages ongoing engagement. Activewear brand Reebok created a tiered loyalty program that rewards members for interacting with the brand. Not only can members earn points for their purchase, but they can also earn points toward experiential rewards for attending events, reviewing products and simply creating an account.

This was just a selection of the strategies included in the Art of the Drop report, among other helpful information like best practices for drop strategies as well as expert quotes and stats. Stay tuned for more in-depth articles, and download the full free report here