Discovering New Markets: How Stüssy and Creed Do Globalisation Strategy
The business track for the afternoon kicks off with a discussion on discovering new markets. Hosted by Iris Schiefer, a member of the MACH Alliance Growth Council and a…
The business track for the afternoon kicks off with a discussion on discovering new markets. Hosted by Iris Schiefer, a member of the MACH Alliance Growth Council and a part of the large retail sales team at BigCommerce. The session aims to cover several pillars of international expansion. These include planning and strategy, channel and market selection, marketing strategy, and scaling operations. The panelists, Gavin Williams, the Global Digital Director at Creed Fragrances, Josh Duggan, one of the Co-Founders of Vervaunt, and Diego Fria, the e-Commerce Director at Stussy, introduce themselves and provide some background on their work. Diego, originally from Buenos Aires, is currently based in London and works for an American company. Josh Duggan, on the other hand, is a co-founder of a performance marketing agency and eCommerce consultancy, working with premium fashion brands such as Stussy and Molten Brown. Gavin Williams, who has spent most of his career expanding luxury brands into new territories, is currently the Global Digital Director at Creed Fragrances. With only 30 minutes, Iris Schiefer decides to skip the icebreaker session and dives straight into the discussion.
When it comes to assessing the viability of entering a new market and ensuring success, it’s important to have a decision-making framework that takes into account various factors. The Covid pandemic has highlighted the need for fine-tuning such frameworks, particularly in the e-commerce space where the demand for expansion is high. Gavin recommends thinking further down the line, beyond a spreadsheet, and asking four key questions when considering entry into a new market. These include current sales offline, category penetration, e-commerce category penetration, and the vacuum in the market. With these inputs, it’s possible to make a simple calculation to determine whether the market is worth pursuing. It’s also essential to keep in mind that entering a new market requires significant investment in marketing and acquisition costs, and it’s unlikely to result in profits for at least three years. Gavin emphasizes that 80% of the work should go into discovery, while only 20% should be spent on execution. Ultimately, the decision-making process should be based on meeting demand and localized carefully.
The success of a brand is largely determined by how well it understands its consumers’ behavior. In this regard, Stussy relies on a simple approach to study its customers’ demand and satisfaction. The brand analyzes its sessions and uses information from local fans, colleagues, and friends to understand how its customers represent the brand. With the key moments in the customer’s journey, Stussy tries to assess whether it’s meeting that behavior or not. If not, it creates a project to execute and continuously evolves. The importance of keeping a student mindset and learning about the market is emphasized. Vervaunt’s strong performance marketing practice suggests that consumer confidence and wider considerations, such as a full-funnel approach and physical presence, are crucial. Brands should not rely heavily on social media and instead focus on building a strong physical presence in new markets. Stussy’s strategy is centered around creating experiences for customers, engaging with creators and people with talent, and not people with injections, similar to China’s approach. To be successful in a new market, brands should have physical pop-ups, wholesalers with physical presence, and feet on the ground.
Stussy was relying heavily on wholesale to penetrate markets. However, they are now moving away from it and focusing on their own physical stores, which they see as a place where people can go and experience the brand. Diego also emphasizes the importance of culture and creating a brand story that is unique to them. He stresses that not every brand should follow what Facebook says, as it can be dangerous to put your trust in algorithms or someone who can control your reach. Instead, they focus on bringing people to their newsletter database so that they can have direct conversations with their customers. Diego believes that it’s important for every brand to follow what they think is best for them and not what someone else says. In terms of striking a balance between selling through retailers and maintaining brand control, Diego prefers to work collaboratively with partners, not just retailers or wholesalers. He believes that a strong brand will always be represented well by retailers if they partner with them and provide the content and stories that they’re looking for.
Entering a new market can be a challenge for any brand, but it can also present opportunities for growth and expansion. Josh, Diego, Gavin and Iris discussed the factors that come into play when deciding how to enter a new market. One important consideration is the MACH consideration, which takes into account brand demand, the competitive landscape, and other broad implications. When entering a new market, it’s important to have the infrastructure in place to handle factors such as returns and to focus on specific markets rather than taking a “blank EU approach.” Building a community and relationships with customers can be easier when you have a physical presence in the market, and it’s important to be aggressive with spending to see results. However, profitability also needs to be considered, and brands need to understand how much they are willing to invest or sacrifice margins-wise. By considering these factors, brands can make informed decisions on how to enter a new market and ensure their brand is delivered in the way they want.
When it comes to expanding a brand into different markets, understanding the local culture and behavior is crucial. This includes everything from shopping habits to customer service expectations, and it requires a deep immersion into the market. In some cases, this might involve hiring local staff or traveling to the market to gain a firsthand perspective. While consistency of brand is important, there is a growing recognition that brands must be adaptable to different audiences and contexts. The traditional approach of a single, flat brand that is consistent across all markets is no longer effective. Instead, brands should provide a framework for local teams to operate within and give them the autonomy to make decisions that are relevant to their audience. The success of brands like Nike, Adidas, and LVMH, which have embraced this approach and leveraged collaborations with opinion leaders and thought leaders, demonstrates the importance of innovation and adaptability in today’s global marketplace. Ultimately, the responsibility for embracing this approach falls on brand people and businesses to ensure they are keeping pace with the changing landscape of internationalization.
In conclusion, successful internationalization of a brand requires a deep understanding of the local market, its culture, and its customers’ behavior. Brands must realize that one size does not fit all and that each market is unique. Consistency is important, but it should not come at the expense of creativity and innovation. Brands should allow their local teams to have autonomy while maintaining a framework to ensure brand guidelines are followed. Companies that invest time and resources in researching and understanding the markets they want to enter will have a better chance of success. The world is constantly changing, and brands must adapt to keep up with the ever-evolving global marketplace. It’s time for businesses to break free from the traditional advertising generative approach and embrace the new reality of personalized and localized branding. As the world becomes more interconnected, it’s crucial for brands to be open-minded and willing to learn from different cultures and perspectives. By doing so, they will create a more diverse and inclusive brand that resonates with customers around the world.