Does product drop culture have the potential to pull struggling retail stores back from the brink?
It’s been well documented that department stores are struggling. According to a survey by the Confederation of British Industry (CBI), department stores were hit hardest amid the ‘steep drop in retail sales in October 2017’, and US department store sales fell from £66bn ($87bn, €74bn) in 2005 to £45bn ($60bn, €bn) in 2015, according to the US Department of Commerce. Paul Lejuez, managing director of investment banking and financial services corporation Citi, believes that in the current retail environment ‘department stores are structurally disadvantaged to win’.
One department store chain looking to defy those statistics is Barneys, which hosted a two-day retail event in partnership with Highsnobiety in October. More than 80 brands were featured and 30 exclusive capsule collections were launched, and designers took part in Q&A sessions and signings.
‘We are introducing a whole new concept – blending exclusive launches from the best new designers, one-of-a-kind experiences, compelling content, food and music, and giving our customers a new and innovative way to explore and experience Barneys,’ explains Barneys CEO Daniella Vitale.
[email protected] marks an interesting shift in retail, where department stores are increasingly tapping into the hysteria or ‘hype’ generated by product drop culture, and begs the question: does product drop culture have the potential to pull struggling retail stores back from the brink?
In our Uptown Downtown microtrend we argued that department stores can no longer rely on their legacy as a means of getting people to visit their stores. Instead, they should collaborate with unexpected partners and create boutique experiences to attract a younger demographic.
Rather than just using the hype surrounding product drop culture to shift products, Barneys should also use it as a learning opportunity.
As a retail model, product drops certainly achieve that. Built on the idea of building hype around limited-edition streetwear releases, drops are characterised by the fiercely loyal, digital-first consumers who engage with them, and have given rise to a sophisticated underground reselling community. Drops from brands that champion this model such as Supreme typically sell out in a matter of seconds. According to Supreme partner Samuel Spritzer, on the first drop day of a new season, traffic to the brand’s website can increase by as much as 16,800%.
But while this strategy is great for getting mentions on social media and bringing new customers into your store, there’s no denying that its success is based on selling limited amounts of product. It’s restrictive, niche and not optimised for the mass market. And because they are dependent on social media buzz, product drops are highly agile, something a legacy brand such as Barneys would likely find difficult to recreate in a way that would keep customers coming back.
If department stores want to truly capitalise on the hype surrounding product drop culture they shouldn’t just use it to shift products, they should also use it as a tool to understand a new kind of buying power with the potential to pull them back from the brink. In our Hype Market, Luke Miles, creator of product drop app Restocks, warned that ‘if you live solely by the hype, then you can die by the hype’. Department stores looking to find success with the product drop model would do well to heed his advice.
See our Hype Market for more on how brands can learn to navigate product drop culture and generate hype.