Well positioned in the era of social media, Top 500 apparel makers make gains online.
Jon Love , Associate Editor, Research
Apparel brands grew their web sales the fastest among consumer goods manufacturers in 2012, in keeping with a similar trend over the last 10 years of research for the annual Internet Retailer Top 500 Guide. In this year’s Top 500, 7 of the fastest-growing 10 manufacturers are apparel makers. In the last decade, 10 of the 16 fastest-growing brand manufacturers that have been ranked by Internet Retailer have come from the apparel/accessories category.
Conversely, the computers/electronics category has seen its share of Top 500 consumer brand manufacturer sales decrease. That’s a product of broader woes for makers of personal computers: as consumers have bought more smartphones, many of them iPhones and iPads from Apple Inc., they’ve bought fewer PCs from other manufacturers. Global PC shipments decreased 13.9% in the first quarter of 2013 from the same period a year earlier, and U.S. computer shipments have declined year over year for 10 quarters in a row, says market research firm IDC. The only fast-growing brand manufacturer representing computers/electronics category is V2Cigs.com, which sells electronic cigarettes, a trendy new product.
Manufacturers, as a group, have seen their share of Top 500 sales decrease since the initial publication of the Top 300 Guide in 2004. Of the 300 retailers listed in the inaugural guide, 38 of them were manufacturers. The group’s collective 2003 web sales of almost $8.14 billion represented 20.2% of the Top 300 sales. While this left them well behind retail chains (40.6%), the group was within arm’s reach of web-only retailers (24.1%), the second-largest merchant type in the guide.
In the 2013 edition of the Top 500 Guide, however, the 66 brand manufacturers’ 2012 web sales of $24.54 billion represent just 11.4% of overall Top 500 sales. Solely in terms of sales, consumer brand manufacturers have fared worse online than the three other major categories of e-retailers: web-only, retail chains and catalogs/call centers.
However, web sales aren’t the only measure of success for manufacturers, as they typically avoid aggressively discounting online for fear of competing with the retail stores that sell their goods. Even as they try to steer clear of that kind of channel conflict, their e-commerce sites remain critical, as shoppers often turn to manufacturers’ sites to research products. A 2012 survey from Forrester Research Inc. shows 60% of the online shoppers surveyed had visited a brand or manufacturer’s web site in the previous six months to research products they were considering.
The brands that have increased web sales the fastest have adapted to the increasingly rich imagery of e-commerce sites and online shoppers’ penchant for sharing favorite products via social networks. That applies most directly to apparel makers, say Nikki Baird, managing partner at research and consulting firm Retail Systems Research. “Community and content have been the central themes in the last several years for online retailers,” Baird says. “While computers can be sexy, it’s much easier for a fashion retailer to create unique and exciting content that shoppers share using social media.”
Instead of channel conflict, the goal is “channel harmony,” says Debra Clark, senior vice president of marketing at Lafayette 148 New York, a maker of designer apparel for women that launched its site in 2005 and has grown its web sales to over $41 million last year. “We’ve found that there are more opportunities to generate sales and product awareness through multiple channels than there are conflicts,” Clark says.
Fashion apparel maker Tory Burch (No. 186) is taking advantage of mobile technology to build sales, providing iPads to employees in its 65 stores so they can help shoppers find desired products in a size or color that might be out of stock, or to let customers see what they’ve ordered previously, says Miki Berardelli, chief marketing officer. Those employees also can show customers unique content, like Tory’s 42 city guides that employees can access through the iPads.
Inspiration and brand awareness are important online goals for many consumer brand manufacturers. Another goal is not to anger retailers by competing aggressively on price. As long as most consumer goods makers rely primarily on retail stores to sell their goods, the fear of channel conflict will keep them from selling as much as they could online. That means their success on the web must be measured not just by web sales, but also by the web’s impact on results in all sales channels.