In 2016 New Balance opened a distribution center in the middle of the country. It’s a similar play to how Nike has made Memphis the center of its distribution network.
Insider Ties: New Balance opens distribution center in St. Louis
In the article above I explained that the moves New Balance and other brands are making is something that brick and mortar outlets needed to pay very close attention to. The problem is that retail outlets like Foot Locker and Finish Line are spending so much time trying to work on why sales are sluggish at retail that they aren’t looking closely at the brands they carry. Margins for every retailer are getting smaller as the promotional environment has lasted much longer than it has at any time in the last ten years. As margins become smaller, brands are implementing strategies to gain better control of their inventory and maintain their MSRP to offset the perception of brand quality. Do you get what I’m saying here?
Brand quality/equity is a combination of right price, right marketing, attraction and connection. If a brand is on the shelf of a retailer and it’s marked down, the perception is the brand isn’t desirable. The only thing that can offset this perception is history and the amount of product by the brand carried in store. For example, Nike can have an endless row of products marked down. The brand has enough equity that a sales tag does not diminish the desirability of Nike/Jordan. It should, but it doesn’t. Nike still carries the front of the store with every retail outlet because they have placed the money into sponsorships and endorsements/marketing and the brand is identified as being cool and having relevance even in its worst moments.
Contrast this to New Balance who has very little retail wall space. More important, that wall space is relegated to small sections at the back of the store. Sales tags on New Balance shoes diminishes the brand. New Balance has understood this for a while now, but they aren’t in a position to completely remove themselves from retail walls… they are working on it though and this is where all brands are moving.
New Balance began their shift to DTC with brand gating on Amazon. In 2014 third party sellers could no longer sell New Balance without evidence of an account. I’ve stated this a number of times on the site. This time I’m adding New Balance’s Click-N-Buy article to the mix.
What is Click-N-Buy? New Balance is taking the time and effort to remove the number of clicks needed to complete a purchase. Think of it in terms of Amazon and One Click. The reason Amazon has been such an amazing platform is because they have taken away the multiple funnels to purchase. Everyone in e-commerce understands the problem with abandoned carts. Once you have an account with Amazon you can purchase as an afterthought. Amazon has pushed this one step farther with Alexa and voice ordering which doesn’t require any clicks at all.
New Balance has created their own version which you can turn on inside of your dashboard. As brands become more savvy with e-commerce they will undoubtedly gain a larger share of sales decreasing their reliance on wholesale relationships. This is evident in a recent release by New Balance that has almost sold out without any marketing via social or a campaign of any kind. Retail outlets are playing catch up to the brands who are moving forward and functioning like startups. Retailers need to follow suit.
New Balance Enters Chunky Outsole Market With the PRJ 1.0 a Performance Model
Additional Note: Below is information sent out upon your enrollment into the Rewards program for New Balance. Rewards programs, Click-N-Save, Test Run, New Balance has an offensive comparable to Nike’s CDO and no one is paying attention.
