Find New Revenue Streams for Your Retail Business
Retailers are having to find new sources of revenue to fill in loss gaps and adjust to a new retail world by making adjustments to their business model. According to Retail Dive, here are a few ways retailers are creating additional revenue streams:
Offer other services
As the cost of running a store and e-commerce operations continues to increase, providing a service or sharing technology will be key in helping stabilize and maintain a strong bottom line for retailers.
For example, Walmart, offered its delivery platform to other companies via Walmart GoLocal. Companies like Chico’s and Home Depot are now clients. Similarly, ThredUp’s back-end, “resale as a service” platform has helped partners like Madewell, Walmart, Everlane, eBay and Gap navigate resale. Amazon, known for its profitable AWS cloud unit, has also begun providing other service offerings. The company began selling its cashier-less technology to other retailers, which enables consumers to pay for goods in physical stores without waiting in line to check out.
Create the right balance of wholesale and DTC
Many brands are shifting to more DTC channels, and while the strategy can lead to higher margins, it’s not necessarily the right move for all retailers. Some well-established brands are cutting wholesale partners and increasing DTC channels, while digitally native brands are finding the right fit in expanding through choice wholesale partners in addition to their own e-commerce and stand-alone stores.
Having and maintaining the right balance of sales between direct-to-consumer channels and wholesale depends on the business. One size doesn’t fit all. A shift toward the middle is natural and likely the direction of most brands as they attempt to find the right balance between DTC and wholesale channels in the near future.
Reconsider the purpose of the brick-and-mortar store
Even before the pandemic, the purpose and existence of brick-and-mortar stores was slowly changing. The decline in malls changed the landscape of the physical store in decades prior, and in the last two years amid the pandemic, along with the spike in e-commerce, shopping in an actual store became near extinct.
All of this has led retailers to drastically shrink their store fleets in recent years. At the beginning of 2019, even pre-pandemic, retailers were closing more than 9,000 stores, far surpassing openings. Many retailers chose not to reopen some of their locations that had been locked down for weeks due to the pandemic.
In 2021, the direction changed as fewer companies considered closures according to Coresight Research. However, in an effort to make those stores really count, retailers had to rethink store formats, remodel floor plans, relocate and more. For example, Dollar General recently announced a 1,000-store expansion over the next four years of its PopShelf concept, a higher-end discount store with a treasure hunt appeal and higher price points. Macy’s and its more upscale business, Bloomingdale’s, are both trying smaller format stores in strip centers that are more likely to have a Kohl’s or Target.
Use private labels to grow your brand.
Private labels as they previously existed, are no more. Back in the day, retailers attached their names to cheap, plain and low-quality private label brands. Now all types of retailers, from home items to athletics, consider private labels a strong anchor for sales and more market share. Many have launched their own private brands and are continuing to grow them.
In 2021, Target grew its roster of private brands to 48, eight of which were introduced in the past year. Bed Bath & Beyond plans to launch at least 10 private labels as part of its broader three-year turnaround plan. Players like Foot Locker, Dick’s Sporting Goods and Peloton have also implemented their own private label plans.
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