Blog/News

Ecommerce and Store Closures on the Rise

Sadie Keljikian, Express Trade Capital

Although fears of a “retailpocalypse” have mostly died down, the retail landscape is certainly shifting in favor of ecommerce, with more than 5,000 brick and mortar closures already announced in 2019. Many of the closures come from high-profile retailers like Gap, J.C. Penney, Abercrombie & Fitch, Tesla and Victoria’s Secret. Even Amazon has announced that it will close all 87 of its pop-up shops in Kohl’s, Whole Foods and malls nationwide.

A recent UBS study predicted that online sales will make up 26% of overall retail sales by 2026, from 16% today. Assuming current trends persist, roughly 75,000 more retail locations will close in that time. This amounts to approximately 8,000-8,500 closures per 1% increase in online sales. Amazon is expected to account for about half of the ecommerce market in the US at the end of the seven-year projection period. Of the 75,000 predicted closures, 21,000 clothing stores, 10,000 consumer electronics stores, 8,000 home goods stores, 7,000 grocery stores and 1,000 home improvement stores are expected to shutter.

Only time will tell whether these projections will come true, but on the bright side, Lasser and Sole say that the closures “should help the store productivity of surviving locations.”


Tech Shakes Up Retail

Sadie Keljikian, Express Trade Capital

As technology becomes increasingly present in our daily lives, it changes the way we do nearly everything, most notably how we buy and sell products. Keeping up with the intricacies of digital sales can be overwhelming, particularly given the ever-evolving nature of technological functionality. Here are a few of the latest and most prominent ways in which technology has revolutionized sales techniques.

  • Multi-channel approach.

Contrary to popular belief, physical store locations are not going away entirely. With more ways than ever to reach prospects and customers, a multi-channel approach is essential to successful sales. Whether you’re selling consumer goods, commercial equipment, or anything else, it is important to integrate your online presence with any brick and mortar locations as seamlessly as possible.

The recent trend in previously online-only businesses opening store locations (Wayfair, Warby Parker, Casper, and Untuckit among them) is a great example of this. While modern consumers appreciate the convenience of ecommerce, they miss certain aspects of the in-store experience and frequently choose to blend their shopping methods.

This has proven particularly popular in industries like apparel, where consumers are hesitant to buy items they can’t try on, or large appliances and furniture, where consumers often prefer to see the item firsthand and ask questions before they make a final decision. Some apparel retailers have even opened mini-locations with limited samples of each item for customers to try on before they order them online.

  • Personalization

Some big-box stores use augmented reality to provide an in-store experience from home. Target, for example, launched an AR feature in 2017 that allows customers to take a photo of a space in their home and see an approximation of furniture pieces and home goods as they would appear in the space. This personalizes and simplifies the selection process significantly in terms of dimensions and style and prevents unpleasant surprises when items arrive.

Additionally, methods like individually tailored sales emails and social media marketing based on curated data are becoming the most popular strategies businesses use to market and sell their products and services. Brands are also expected to not only cater to each customer’s lifestyle and esthetic preferences, but to their philosophical beliefs as well. As a result, companies that make a point of using charged imagery or pointed messages in the way they sell their products are often among the most successful.

  • In-store tech.

Many retailers that depend primarily on in-store sales have begun incorporating technology into the customer’s experience at their locations. In some cases, they use virtual reality to add an element of fun in select store locations. Walmart’s tech incubator, Store No. 8 offers an immersive VR experience followed by a gift shop.

Others offer a visual search station for customers to locate the items they wish to buy, saving them the difficulty of finding the product they need on foot. Other retailers have begun using interactive apps that allow customers to learn more about a product by simply pointing their phone camera at its label. Luxury resorts have started offering AI services to allow guests to plan their visits and personalize their experience by communicating with chatbots. Grocery stores and department stores have even started using mobile robots to monitor obstructions in the aisles and customer reactions to free up human employees to assist customers.

Systems like these not only give the customer a better sense of engagement and control of their experience, they also offer retailers similar insight into their customers’ habits and preferences. Consequently, on-site technology can be as useful to market research as web traffic and sales numbers, allowing brands and stores to further optimize the way their customers’ experience and buying habits.

Consumers have never had higher expectations of their retail experience. For big brands, this emphasizes the importance of diversifying their offerings and allowing their customers as many customizable options as possible. For smaller brands, it means homing in on the specific preferences and values that most accurately align with their target demographics. Ultimately, there are more ways than ever to use technology to guide product development and research markets, allowing brands and retailers to come up with solid solutions that allow their businesses to thrive.


Managing Director Mark Bienstock Talks Trade War with California Apparel News

Business owners who rely on China’s abundant manufacturing facilities and low production costs may be in for a massive challenge. The ongoing trade war the US government has waged with China may not end by March, meaning more potential tariffs that could disrupt the global economy.

ETC’s own Mark Bienstock and other industry experts spoke to California Apparel News this week about strategies to protect yourself and your business from the effects of this ongoing international conflict.

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Tackling Common Problems, Part 1

Sadie Keljikian, Express Trade Capital

Running a wholesale business is financially and logistically complex. There’s a lot to monitor and numerous variables can force you, the business owner, to think and act quickly to effectively manage unforeseen difficulties. Fortunately, most of these difficulties fall into a few categories of common problems that come up for small to mid-sized businesses.

Since these issues are common, solutions are readily available, though perhaps not obvious to less experienced business owners. Addressing them is just a matter of having enough experience to know how best to do it. Here are a few examples of common hiccups for which new businesses might not be prepared and what to do if they come up:

  • Problem: you’re a clothing designer and you decide to start producing and selling your designs independently. You have your designs and samples ready, you’ve sold some pieces direct to customers online, and you’ve even had promising discussions with local boutiques that would like to sell your pieces. There’s just one problem: you’re running this business by yourself and there’s no way you can produce the quantities the boutiques want in the given time frame. How can you get your business off the ground and establish a sustainable production structure?

Designers and inventors consistently run into the same problem: how can I produce the required amount of my product by the time my customer needs it without overextending my resources? There are a few ways to handle this. One is to simply turn down orders you can’t reasonably fulfill using your current production processes, but that means you’d miss out on opportunities for growth.

Another approach is to hire a team to manufacture your products on-site. This is an expensive option since it involves hiring new employees and acquiring new equipment, but it allows you to control product quality and directly and provides a foundation for increased output. As long as the business doesn’t grow more quickly than your overhead can accommodate, manufacturing on-site is a perfectly viable option.

Alternately, many designers and inventors choose to outsource their manufacturing processes, which removes the need for additional employees and specialized facilities. Some creators aren’t comfortable handing their designs over entirely, usually because they worry that their design will be plagiarized or that product quality will suffer. While quality and security concerns are valid, sufficient research and vetting will indicate whether a production facility is trustworthy. As long as you do your homework, outsourcing is an effective and efficient way to increase production.

  • Problem: a buyer at a big-box retailer contacts you to place a huge order. Your production line is ready, but you soon realize that the cost of fulfilling such a big order will leave your operational funds severely depleted. You don’t want to pass up the opportunity to gain bigger customers and expand your business, so how can you fulfill the order without dipping into funds you need to run your business?

Many flourishing wholesalers lose traction because they pass on big orders from influential retailers out of fear that they’ll lose equity or acquire unmanageable debt. What a lot of new business owners don’t realize is that there are ways to supplement business-related costs that don’t involve expensive traditional-style loans.

One way to approach the issue is to apply for a line of credit with a bank or private financial institution. Just like a credit card, a line of credit allows you to defer expenses that might be prohibitive. As long as you and/or your business is creditworthy and you are able to pay on time, there is very little downside to securing a line of credit on behalf of your business.

Another option is to use alternative lending (or “alt lending”). Alt lending is a growing and thriving field in which lenders use creative financing methods, meaning that you don’t necessarily need perfect credit to receive funding. Private financial institutions who offer alt lending solutions can offer funding against purchase orders, invoices, equipment, and even unsold inventory. Most importantly, this method allows you to borrow small amounts as needed, rather than borrowing a lump sum and worrying that you’ll accrue excessive interest.


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Managing Director Mark Bienstock: Factoring in a Changing Retail Landscape

Managing Director Mark Bienstock spoke with California Apparel News yesterday. As part of a curated panel of trade finance experts, Mark discussed the changing retail landscape and consequential changes in the commercial lending industry.

In order to cope with the seismic shifts affecting trade at every level, lenders are either scaling back their services or bulking them up. With the consistent rise of e-commerce, wholesalers need fewer receivable loans and more inventory loans, even if they are selling similar or greater volumes. For lenders, flexibility is key to maintaining relevance in the apparel industry. Mark points out that an intimate understanding of apparel companies and their trajectory is vital to successfully financing them.

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Unclouding the Future of Manufacturing

Sadie Keljikian, Express Trade Capital

Job creation, especially in the manufacturing industry, is a hot topic in the US right now. Since last year’s presidential campaign, there’s been an ongoing debate among politicians, business owners, and news outlets about the future of domestic manufacturing. President Trump has blamed the uptick in outsourced labor and consequent job losses on NAFTA, calling it the “worst trade deal” in American history. However, numerous sources argue that technology and automation are the real culprits.

Several sources claim that machines (not outsourcing) are responsible for about 85% of US manufacturing jobs lost since 2000. Even so, many American-run companies are bringing domestic manufacturing back in anticipation of potential legal and regulatory changes emanating from the tumultuous Trump administration, like the proposed border adjustment tax. With advances in automation spanning every industry, even farming, and robotic technology becoming more affordable, it is hard to imagine that there are as many potential jobs in domestic manufacturing as voters have been led to believe. It’s easier for candidates to make vague promises than to explain the more complex and subtle truth. Thus, politicians have been stoking voters with pledges to bring back a golden age of employment that no longer exits and is no longer feasible.

Businesses are taking different approaches in their attempts to create jobs. Some are bringing manufacturing back to the US, banking on the cache of goods labeled “made in the USA” and on US consumers to support domestic businesses by purchasing them, even at a premium compared to their imported counterparts. However, since automation has taken over so many manufacturing processes, it is unclear whether it is a viable long-term solution for employment. Others are attempting to create new jobs by consolidating the retail experience. With recent difficulty in the retail industry, particularly among stores commonly found in malls, some retailers, like Walmart, are creating a mall-like experience within their stores. Many Walmart locations now include services like eye care, dining, and salons, which keep customers in the store by providing them with services they already need.

Other sources claim that there is a serious opportunity for job creation inherent in the current rise of e-commerce. As online shopping continues to grow in popularity, retailers who focus on e-commerce are hiring new sales staff at impressive rates. What’s more, comparable jobs in e-commerce have better salaries, paid leave, stock benefits, and insurance than similar positions in their brick and mortar counterparts. Unfortunately, however, these jobs are highly concentrated in major metropolitan areas, so they don’t reach most of the geographical US.

Some experts are still holding out hope for traditional US manufacturing jobs, just not in mass-produced products. In recent years, the US has seen a rise in domestic manufacturing of custom or handmade products. While these products will never reach mass-production volumes, they appeal to the conscientious shopper who is less concerned with cost than they are with knowing where their money is going. These businesses usually use eco-friendly, fairly traded raw materials and typically work on a much smaller scale, in terms of both space and workforce. Since the products are more expensive to make, they naturally cost more for consumers. However, marketing and sales of such products typically target consumers who are willing to pay the extra cost of purchasing ethically sourced goods, so low volumes aren’t as much of a hindrance to the success of smaller scale, eco-friendly, domestic manufacturers.

In contrast with all the above perspectives, some still say that domestic manufacturing employment is already far more prosperous than most of us realize. A recent paper from the Center for Opportunity Urbanism indicates that 52 of the country’s 70 largest metropolitan locations have actually seen an increase in industrial employment since 2011. Forbes agrees and both say that while manufacturing is unlikely to disappear altogether, the issue is not that the industry is disappearing, but rather that it peaked in the 1950s and will likely never reach or surpass those levels again. Both sources blame automation for the sea change in the industry.

Whatever the case going forward, several of the country’s most prosperous industries are changing the way they do business. Many companies employ technology to cut costs and increase efficiency, often at the expense of jobs. Others simply outsource their production to countries with substantially cheaper labor costs. Might this mean that the end of significant employment in the US manufacturing sector? Possibly. The shifting landscape indicates that the new challenge for governments, manufacturers, and especially for retailers, is creating new jobs. So far, that’s job we cannot automate or replace with technology. Either way, it seems clear that, as technology continues to advance, creative destruction will continue to bedevil any semblance of a stable labor market.


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