Is wholesale going away? The future of retail

Retail is changing.

Malls are closing, 300 are expected to shut their doors in the next decade. Online shopping is growing in popularity and efficiency—it increased by 23% in 2014. Customers can now order an item from Amazon Prime and have it arrive on their doorstep two hours later, all without changing out of their pajamas. It’s safe to say that ‘going shopping’ doesn’t mean the same thing it did in 2000 or even 2010.

This is clearly bad news for malls and stores that don’t evolve, but what happens to the people who actually make the stuff that stock our malls and stores? Doug Stephens, founder of Retail Prophet, thinks that wholesale is also going extinct. This means designers and manufacturers will no longer sell their items to stores, they’ll have to market directly to the consumer.

Brands can no longer just create a good product, says Stephens, they also need marketing expertise, investment and merchandizing skills – things that go beyond designing clothing.

The wholesale model just no longer makes sense, says Stephens. “Imagine yourself as a retailer where you are being asked to buy in bulk, ship the goods to your store, merchandize them, train your people on them, input all the data into your systems and then ultimately take some of that product back in the form of returns all so you can eek out a profit between the wholesale price and the retail price all while your brands are selling direct to consumer.”

Stephens points to Bonobos, an online men’s clothing store, as a great example of what it takes to succeed in today’s retail world. The company uses physical showrooms, a place for men to try on clothing for fit or consult with experts, before ultimately making their purchases online. “It should be startling to retailers how quickly a brand like Bonobos scaled up,” he says.

The good news is that designers no longer need to build an empire, “if you have a great idea, you can begin online and do a tremendous amount of market research so when you do put a foot in the physical environment you can make sure those stores are stocked right.”

Stephens believes media and stores will become more integrated in the future. He believes that brands will even pay retailers to be represented by their brands—instead of the other way around.