Can Outdoor Gear Brands Also Become Retailers?
The recent peak trading period saw a substantial increase in spend on search advertising. This was true of some retailers and the more ecommerce-minded brands. In both cases, they were prepared to spend to capture the maximum number of purchase-minded searchers. As a consequence of this increase in spend by some key names, players that shied away from the expense involved in search advertising saw declines in visitor numbers and search-originating transactions.
Making these spend judgements is very difficult, especially if you’re an outdoors business without dedicated ‘ecommerce’ personnel, as the situation changed dramatically during the few weeks before December. If you based your peak trading expectations and actions on your rankings and volumes (paid and organic) in, say, October and the 2017 peak period, you would have suffered as some big players, particualrly brands, ramped-up their online activity levels.
Maybe more important was the continuing trend for brands to enter retail channels. Whilst this friction-creating dynamic was around long before the internet (think flagship stores, shop-in-shop and even vouchers to build consumer databases), the digital possibilities have taken it to a new level.
To provide some perspective, one global outdoors brand was typically bidding on fewer than 600 search terms in Google Ads throughout most of 2018, whereas the number for December was in excess of 2300 search terms (more than double the 2017 peak). Of these terms, well over 1500 were in positions 1 or 2 – dominating the potential clicks from searchers for key brand search terms, but also more generic terms. For example, this brand outspent major retailers to take 1st position for ‘waterproof backpacks’ with this ad:
One major retailer, Cotswold Outdoor, has reduced their number of bids on text ads in recent months, seemingly preferring to spend on Google Shopping, relationship-building and brand. This looks to have been the dominant theme for the major retailers, with static or reduced investment in text ads, and more commitment to Google Shopping ads (which convert very effectively if well-matched to searcher intent). Go Outdoors, for instance, has Shopping ads appearing against all its top 50 organic (non-paid) search terms, providing multiple click options in search results.
Coming back to brands, the objectives of some are changing, whether through a desire to engage directly with consumers, improve margins or to be vertically integrated. The online world is a place where this blurring of brand engagement and product selling is easier to achieve. It’s now become typical for search results to feature the ‘shop’ pages of brand websites, rather than brand/informational pages, but the degree to which ecommerce is a core driver varies across brands – if we additionally judge it by a brand’s propensity to buy search traffic.
At one end, Mountain Equipment may dominate brand-related organic search with a variety of destination pages (check out ‘mountain equipment jackets’), but spend nothing on Google text or Shopping ads, avoiding overt competition with retailers. Likewise, Rab have relatively few Shopping and text ads, while Berghaus tend to sit in the middle.
At the other end of the spectrum, a certain Canadian-based premium brand join the aforementioned global brand in having a major stake in building its ecommerce traffic. The Canadians have Google Shopping ads appearing for pretty much all their major search terms and this Christmas saw them bidding on four times more search terms than last year, although the clicks growth appears to have fallen short of this due to last-minute competition from retailers.
In the short term, I see the inherent conflict of brands acting as partial-retailers as likely to grow (aggressive online selling is a far cry from a few flagship stores). This is simply based on the experience of sectors that have previously faced this challenge. In the longer-term, some resolution will be found, through a variety of models, including traditional retailers, traditional brands, but also ‘retailers as brand showrooms’, ‘brand experience’ spaces and retailer-led online marketplaces (e.g. La Redoute in France and Otto in Germany are examples from other sectors).
It’s also worth considering that some industry players are already meeting the challenge through vertically-integrated models incorporating brand, product and retail, whether that’s the mass-market approach of Mountain Warehouse or the specialist approach of Alpkit.
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