How to Recession-Proof Independent Retail

Wood Wood is defying the odds.

In spite of brutal market conditions for independent fashion retailers, the Danish multibrand store, which has flagships in Copenhagen and London, is expecting this year’s revenue to be double the total three years ago. The retailer’s success has allowed it to attract top talent to oversee the next phase of its growth, tapping Burberry and Browns veterans to head up its design and buying teams, respectively.

These days, such growth is rare for independent stores. Many closed during the pandemic, and the rest are now grappling with a potential recession, commercial rent increases, soaring business costs and cautious consumers. They’re navigating these challenges without the marketing budgets of bigger competitors, or the scale to offer perks like same-day delivery and free returns.

“It’s more expensive than it’s been in more than 10 years to run a retail store,” said Barrie Scardina, head of retail at brokerage Cushman & Wakefield. “Across the US, [commercial] rents are probably close to an all time high … the cost of capital is much higher, the cost of labour is much higher and the availability of labour is much more scarce.”

But some stores are finding ways to survive — and in some cases, thrive. Boutiques are keeping up sales by growing their private labels, inking product collaborations, hosting events and stocking niche brands consumers can’t find on Farfetch or Net-a-Porter. Wood Wood, for example, returned to Copenhagen Fashion Week on Wednesday to showcase its eponymous in-house label’s Autmun/Winter 2023 collection, while Atlanta-based streetwear retailer A Ma Maniere has leveraged fruitful partnerships with the likes of Nike’s Jordan brand to deliver sell-out sneaker and apparel drops in recent years.

“Customers are definitely more nervous about parting with their cash than before,” said Wood Wood chief executive Kyrk Macmillan. “Footfall has actually continued to be quite strong for us, but we’ve had to go back to basics and work really hard on conversion.”

Experimentation

Wood Wood credits its decisions to open more stores and broaden its offering of lifestyle products — a contrarian move in a turbulent time for independent retail — for its ability to grow its revenues at a time when many independent retailers were going out of business.

It introduced a new staff training programme, tapping key hires like former Browns menswear buyer Lee Goldup to update the store’s brand mix, and opened a concept-store boutique in Copenhagen Airport to access consumers where they’re not tempted by other independent retailers.

“Testing new retail formats in experimental locations can be a great way of mitigating costs associated with retail, like high rents,” Scardina said.

Wood Wood also incorporated new product categories it sees as complementary to post-pandemic wellness and home improvement trends, such as gardening, camping, ceramics and furniture. At its Copenhagen and London flagships among others, it rolled out “Wood Wood Life” shop-in-shops, which serve as dedicated areas for its interior and design products, including books, fragrances and homewares.

New Revenue Streams

Private labels — brands manufactured by retailers and sold under their own name — have long been a staple of legacy multibrand stores. Now, smaller stores whose businesses are run by founders with design backgrounds are using their private labels as a way to boost sales.

For some retailers, such as fashion and lifestyle boutique Goodhood, selling clothing designed in-house can act as a lifeline after a challenging few years. The founders were forced to give up equity as they took on financial support from an angel investor, after Goodhood went from being “a successful business in 2019,” to barely breaking even in 2022, after making a loss in the intervening two years, said co-founder Kyle Stewart. Even still, the retailer is “hanging on by a thread,” he told BoF.

Last week, the store, based in London’s Shoreditch neighbourhood, launched its second collection of tees, sweatshirts and trousers, under the name Goodhood Worldwide. The line is complementary to the store’s assortment of predominantly under-the-radar, independent brands like And Wander, Kowtow and Gentlefulness.

“We’ve always had some of our own in-house products which have been successful, so it was only a matter of time before we introduced a full line,” Stewart said.

While wholesale accounts for 60 percent of Wood Wood’s business, investing in turning its eponymous private label into a fully-fledged brand has had a positive effect on the company’s margins, Macmillan told BoF. Last year, the retailer hired Burberry veteran Dominic Huckbody as its menswear designer. Recognition of the label has led to collaborations with the likes of Adidas, Japanese sneaker brand Mizuno, and outerwear brand Rains.

Providing What Big Retailers Can’t

While smaller retailers often can’t compete with their larger counterparts when it comes to shipping speeds or the size of their marketing budgets, they can make other gains.

Stores with a clear market niche can provide a refreshing retail experience for customers used to trawling e-commerce sites looking for original pieces, said retail specialist Harry Fisher, who through his agency, Htown, has launched the wholesale businesses of brands such as Nensi Dojaka, Maximilian and Mowalola.

“This season, major retailers are also cutting back significantly on their buy of smaller, emerging brands,” he said. “For smaller retailers with a clearly defined selling point, this could really benefit them, by sending customers their way looking for brands they can’t otherwise access.”

Fisher, who also runs a small boutique in east London which predominantly stocks a range of younger, fashion-forward brands like Martine Rose, Chet Lo and Eckhaus Latta, says his store’s sales haven’t yet been affected by the economic downturn.

“Our customer is relatively young and international, and they usually buy with a specific purpose in mind, so consumer confidence has been less of a concern,” he said.

Small business owners are optimistic that market conditions will turn eventually in their favour. New boutiques are still springing up looking to capitalise on specific consumer or cultural interest groups. In October, Bahamian American artist Christophe Roberts opened Seed on Brooklyn’s Bedford Avenue, a multipurpose retail destination that includes two shopping floors, a café and a gallery space designed to champion and sell the work of up-and-coming Black designers and artists.

“We believe that customers are going to crave authenticity, real relationships with the people selling them clothes, to connect on a cultural level,” said Stewart of Goodhood. “It’s not all about influencers and how big your digital marketing budget is.”