EP073 - Evercore ISI Softlines Analyst Omar Saad

EP073 - Evercore ISI Softlines Analyst Omar Saad

Omar Saad is a Senior Managing Director and heads Evercore ISI's Softlines, Luxury & Dept Stores team.  In February 2017, he published a report "Softline Wholesale Channel Must Evolve or Die." (PDF Download).

In the report, Omar predicted that one of the most pronounced effects of the digital disruption we are currently living through will be the elimination of middlemen throughout the economy.  He views department stores and other retailers of third party products as one form of middlemen (between the product manufacturer and the consumer) that is already being dramatically disrupted and will need to re-invent itself to survive.  In the softlines category, he believes this disruption will also effect the products brands dependent on a middleman based supply chain, and it's economic model.  As a result he downgraded the status of seven brands he follows.  Shortly thereafter, many of those firms reported disappointing earnings and/or predicted significant headwinds in their businesses.

In this interview we cover:

1. Why the Middlemen are being eliminated:

a) consumers have instant visibility into price, selection, and value across retailers and brands; b) celebrities, fashion bloggers, and YouTubers (not department store buyers) define style and synthesize trends; c) brand building is achieved more through social than traditional media; and d) the new standard of convenience is same-day delivery, not a shopping center with a bunch of stores in one place that requires a several-hour time commitment

2. What effect this will have on retailers 

It's going to be hard surviving as a business selling other peoples stuff.  Retailers may shift to more of a "Concession" model in which retailers charge brands for space, and the brands sell their own goods.  This model is of course already very common online (Marketplaces) and is also common in Asia.  Omar suggests that this element of Ron Johnson's JC Penny strategy may have been right.

3. What effect this will have on manufacturers

In the long run Brands that create innovative product, produce strong content, and are able to connect directly with consumers will thrive.  However, Omar predicts severals years of significant challenges for brands as they wean themselves off their current supply chain model.

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Episode 73 of the Jason & Scot show was recorded on Tuesday February 28st, 2017.

http://retailgeek.com/podcast

Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at Razorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.