Jan 11, 2016 - McDonald's to focus on brand extension, delivery biz this year

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from TradeBriefs FMCG Daily Newsletter

Sree Vijaykumar

From the Editor's Desk
One category of brick-and-mortar retail chain that is flourishing despite today's online era is the off-price chain selling high-end brands. The largest of these in the US, TJMaxx and Ross, both sell brands like Michael Kors and other designer labels for 30% to 70% off. The business model works on buying excess inventory/previous season merchandise at discounts from the brands. The customer expectation is that of a 'treasure hunt', an experience tough to generate online. Also, this allows these stores to be no-frills and thinly staffed, helping with store margins. For high-end brands, this is an effective channel to supplement revenue from inventory that would otherwise have to be written off. There have been failures with this model too, like Filanese Basement in the US and The Loot (in India), which started off with a similar model. However, it's something worth considering for brick and mortar chains struggling to fight the ecommerce wave - Comment

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