Yet, beneath the optimism surrounding the retail space, a pervasive issue remains—many businesses are caught in a cycle of focusing on short-term gains. While bottom-of-the-funnel (BoF) tactics and metrics deliver immediate results, this approach may be stifling long-term growth.
In my experience working with fashion retailers, those struggling most with growth are often the ones overly reliant on strategies that prioritise instant gratification. The question then arises: is this focus on short-term tactics a fundamental part of the business’s DNA, or is it simply due to a lack of data to inform a more balanced strategy?
If the former is true, there's a strong argument that such brands risk becoming their own worst adversaries. As consumer behaviour shifts, the macroeconomic environment evolves, and promotional fatigue sets in, the diminishing returns from BoF strategies become increasingly evident.
From my firsthand experience and through our work with market-leading clients at Charlie Oscar, it's clear that the retailers who dare to adopt a more diversified acquisition strategy are the ones seeing incremental growth, even in today’s fiercely competitive market.
The most common misstep I've observed is an over-reliance on bottom-funnel channels to drive growth. It was listed as one of the main factors of Nike’s underwhelming Q2 2024 financial results (lowest share price since 2018). The shift from their tried and tested approach of moment/demand creation to the serve-and-retain outlook meant that most of their media investment was directed towards those who were already consumers, with the results speaking for themselves.
It's easy to focus on revenue or demand without considering their sources. Businesses that prioritise a brand-first approach risk exhausting their existing customer base, relying too heavily on repeat purchases without expanding their reach. In contrast, those who succeed push beyond their comfort zones, investing in upper-funnel channels like influencer marketing or YouTube. This strategy helps them build brand awareness, reach new audiences, and create lasting brand equity, ultimately leading to a stronger, more adaptable business.
Business DNA lays the foundation, but coupling it with a candid evaluation of both lower-funnel and upper-funnel marketing channels—something made significantly easier through tools like COmpass—holds the key to unlocking long-term growth levers. While this approach may require a greater upfront investment, the potential for substantial long-term returns is significant. AKT London experienced this first-hand and harnessed the power of influencers through a mass gifting campaign, driving over 300,000 orders in just three months and achieving a 2.4x YoY growth rate.
Retailers must be willing to experiment and adapt to changing market conditions. By diversifying their investment strategies and embracing a data-driven approach, brands can make more informed decisions and optimise their marketing efforts.
Ultimately, while the allure of short-term gains is strong, maintaining a holistic perspective is crucial for sustained success. Retailers who balance immediate needs with a vision for future growth are the ones best positioned to thrive in today’s competitive landscape.
