STRATEGIZE - your exit strategy – OR DIE

As a former skater who turned 50 this year, I reflect on my younger days when my investments skating never quite aligned with my aspirations. In the 80’s, my friends and I often inscribed the phrase “Skate or die” on the covers of our notebooks. The stark contrast between both actions (skate/die) emphasized by the word “or” offered us a choice, a chance to change our minds, and an opportunity to continue thriving.

Far removed from the half-pipes and skate parks, I have been fortunate over the past decade to engage with key decision-makers in the fashion industry. I have listened to their strategies, sought to understand their apprehensions to off-price, and challenging their points of view.

The most successful stakeholders I met recognize that in the fashion industry, implementing a clear “stock exit / clearance” strategy should be a top priority for a leadership team. It should be regarded with the same importance as managing distribution channels, designing new collections, developing partnerships, identifying the right customers or having a clear price positioning. This approach honors the legacy of the brand’s founders while safeguarding the future of the organization and its teams. Strategize or face the consequences.

Desirability is a key asset that sets premium and luxury brands apart in the market, positioning them at the forefront of fashionistas’ minds. I have invested considerable time and, admittedly, persistent effort in changing negative perceptions about off-price. Over the past years, I have encountered many non-responses and push-backs from decision-makers. Nevertheless, I remain convinced that the insights I aim to share can help brand decision-makers rethink their stock exit strategies from a fresh perspective.

I believe in Carol S. Dweck’s concept of the “power of not yet” which emphasizes the importance of a growth mindset. It encourages individuals to view challenges and setbacks as opportunities for learning and improvement, rather than as failures. This mindset fosters continuous development in knowledge and understanding, ultimately helping people find the right answers and achieve their goals.

In 2022, a CEO dismissed me from his booth while presenting his SS23 collections at a fashion show, “labeling” me and my industry off-price peers as brand destroyers. Today, I support him in his off-price strategy - including the SS23 collection :) - he showcased at that time. Although I was initially furious, over time, his perception changed thanks to a curious and courageous team that convinced him of the importance of a clear strategic approach to off-price management. This experience underscored the necessity of professionalizing off-price strategies, replacing short-term transactional acts with a well-defined exit strategy.

Brand equity can suffer if you make fast and wrong decisions with your overstocks. Decisions based solely on (1) simple sell/buy transactions without considering their long-term impact on brand equity, (2) failing to listen to consumers during peak brand moments, (3) using noisy distribution channels giving brands high discounted visibility for a low conversion, impacting the perception of brand’s full price policy or (4) lacking curiosity, can all contribute to this damage.

Leveraging a business model with a rich heritage to discreetly support brands in their off-price strategy can indeed strengthen brand equity and boost desirability. This approach allows brands to maintain their premium and luxury image while effectively managing inventory and reaching a broader audience (market share).

So, whether you’re navigating the half-pipes of the skate park or the intricate lanes of the fashion industry, remember:?Strategize your exit strategy or Die. After all, it’s all about making the right moves and being curious to keep thriving!

Luis Arias