Apr 05, 2017 26

How Independent Labels Are Challenging Mega-Corporations

It takes a certain magic to start a small business and build it into something special in today’s environment. But statistics show that the heat of innovation burns brightest in these independent businesses.

Huge corporate entities like Coke, Kraft, Unilever and L’Oreal have internally developed practically no new brands in the last ten years. In contrast, in the five-year period from 2008-2013, large brands lost market share in almost every field including 19% in the yogurt market, 3% in bath and shower, and 7% in coffee, just as a few examples.

The shift from mega-corporations to independent brands is driven by the flexibility and responsiveness of smaller companies, enabled by technology that brings consumers and producers closer together than they have been since the days of the medieval city market.

For example, Koch & Co. is a young footwear brand that is challenging the cost of traditionally expensive Goodyear welted dress shoes that would normally retail at £400-600 by selling directly to the consumer online. In doing so, they avoid expensive retail rents and pass on this cost saving benefit to their customers. More and more brands are adopting this business model which less than a decade ago would have been almost impossible to achieve. These independent labels are taking advantage of their virtual retail spaces that cost a fraction of traditional brick and mortar expenses to maintain.

The Internet closes the gap between customers and brands and helps level the playing field. This enables independent producers to challenge large corporations - benefitting everyone with enhanced accessibility, competition, and expectations of service and quality.

The digital world can be isolating but small brands return shopping to a personalised, human experience. Independent labels today are able to connect with customers more effectively than ever before. They are able to source their products with more care, allowing transparency in the provenance of the product. That means if it’s important to the consumer that the product is sustainably produced, in a fair working environment, small brands are better able to respond to the demand.

Consider the difference in purchasing a pair of shoes from H&M (inexpensive, mass-produced with cheap labor and a finite lifespan) versus a pair from Koch & Co. The latter product is guaranteed to be higher quality, made by an artisan working for a fair, sustainable wage, with an identifiable human face standing behind the product.

Smaller brands are in fact better able to shift gear and respond to all consumer demands, not just provenance. Large brands tend to miss changes in consumer desires because they rely on either brand managers to spot significant trends, or historical retail sales data. In either case, large companies are reacting to trends that already have taken off in a meaningful way, leaving the large brand behind the power curve.

It’s a gift of our current digital age: we can exercise our right as a consumer to choose brands that embody our values. And as a result, most of the time we find what we want in independent small brands, well away from cookie-cutter large corporations.