FUTURE MAP 2025-2045: Discover the Crucial Trends Consumer Brands Must Act on to Prosper in this Massively Transformation Era. See that here.
This is a question I was asked to answer on Quora. My answer is below.
By retail I take to mean that the brand is selling in retail. Getting into retail is not easy and it is common now to sell direct before going into retail, so past sales history is usually required. Some measure of success must be there before the brand gets into retail.
So if the brand is in retail, then it has had some measure of success, so what would cause it to fail. Here are some reasons:
- Trends change and the brand does not keep up. The brand fails to evolve their products to keep up with trends.
- No tradespend support, or not enough. The brand does not offer tradespend to help support the products at retail, so sales decrease and the category manager replaces with another brand. Or, I have seen great products still selling but removed from distribution because the brand did not offer incentives to its distribution channel to help sell it.
- Internal supply chain issues. Supply chain and production problems can cause out-of-stocks, which if happening too much, will cause a brand to be replaced in retail.
- Cash flow. Retail is expensive and a brand needs a good cash management position to afford it. If they do not have this, then the business will fail.
- Marketing support. A brand could not be supporting its sales with outside marketing, so sales fall or are less in comparison to competing brands.
- Retail contract changes. Category buyers may change contract terms, such as requiring more margin and/or tradespend from a brand and the brand cannot afford it.
- Tariffs. Brands can be affected by tariffs and global trade issues that raise their cost of goods sold, but they are not able to pass those costs onto the retailer (likely because they are not able to pass those costs onto the consumer by raising prices).