Reversing The Trend: How online retail is taking cues from brick and mortar and how retailers can respond

Why do competing businesses the world over cluster together in the same place? Go to New York’s Fifth Avenue and you’ll find Saks, Abercrombie & Fitch and Gucci all vying for your attention. Head down to the waterfront in Auckland and you’ll find a line-up of restaurants complete with an eager maître d’ trying to entice you in.

Less glamorous but equally relevant, if you are looking to tile your bathroom in Wellington, you’ll head down to the ‘tile mile’ at the bottom of Ngaio Gorge where you’ll find a whole swag of tiling businesses parked right next to each other.

The reason for this is that when competing or complementary businesses band together in a cluster, whether that be Fifth Avenue, the Auckland Waterfront or even the tongue-in-cheek ‘tile mile’, everyone benefits from increased sales. The best of these clusters become brands in their own right.

Buyers flock towards the central brand and if your business is not there, you’d better have a rock star individual brand or you’ll miss out. Also, in the case of a strong brand such as Fifth Avenue, the association is not at the expense of the individual brands that are connected to it. Far from it. Saks’ brand is ‘Saks Fifth Avenue’, increasing their brand’s value by ensuring everyone knows where they are situated.

The same is true online, where standing out from the crowd can be even more challenging. This is why business collectives are trending. A recent notable example is New Zealand craft breweries with Wellington brewers Yeastie Boys and Tuatara Breweries, Renaissance Brewing from Blenheim, 8 Wired Brewing Co from Warkworth and Three Boys Brewery from Christchurch recently forming the New Zealand Craft Beer Collective to help market their brands to Asia.

So what can retailers do to ensure they are ready to take advantage of this trend? Firstly it is important for retailers to find themselves a niche and become an expert in that area. Niches, such as Funk Estate and their Seriously Funky Brews allow them to take advantage of a craft brewery collective but still stand out from the crowd.

By establishing a niche, retailers can maintain margins in an online world where consumers have access to products from all over the world. In addition, operating within a niche provides an opportunity for retailers to grow their audience. Where once a retailer was limited by their geographical boundaries and lack in numbers to service a niche, now, by adopting a multi-channel strategy which includes physical retail and ecommerce, they can tap into already-established communities of customers around the globe who are passionate about what they are selling. And by joining collectives, retailers can effectively sell to the converted.

So we see an online retail world which increasingly mirrors the physical one, with collective brands surfacing in ever increasing numbers. Before your trip to New York, you’ll be jumping online to find your favourite products from your favourite Fifth Avenue brands, before even setting foot in The Big Apple. Or maybe you don’t have the luxury of a trip to New York and that’s okay too, because in the future of retail, you can bring Fifth Avenue to your very own living room.

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