It might help you to know that the impetus for this post was an article I recently read in a well-known trade magazine for retailers. I won't mention the name of the magazine or the brand featured in the article because we don't sell that brand. Nonetheless, some of the statements made in the piece ring true for both Olympic Eyewear and our customers.
A Hot Brand for Runners
The article was all about one of the hottest brands of sunglasses for runners. The brand is about nine years old but didn't come into its own until a refocus brought on by COVID. Since then, it has experienced a meteoric rise through the ranks of smaller designer sunglass labels. The company is projecting growth of up to 40% this year alone.
What is their secret? Price point. They can sell a high-quality pair of sunglasses for under $50. Their low price point is enhanced by the fact that their products are designed to be fun. Rather than making overpriced, overengineered sunglasses that people don't really want, they are meeting customers where they are at a more affordable price.
They Need Strong Volume
Of course, when you target a lower price point, you earn less per unit. That is retail 101. But the way to make up for the lower margin is higher volume. Therein lies the tradeoff. If a brand decides to sell at half the price of a more accomplished designer label, that brand needs to be willing to push higher volume. The brand needs to sell more sunglasses to make the same amount of money.
This is not a bad thing, by the way. There is an old adage in business that says it takes more money and effort to win new customers then it does to keep current customers on board. It certainly applies to designer sunglasses.
Give customers the quality they expect at a price they deem fair, and they will be loyal. Continue to do that and you will keep more customers than you lose. That is the key to higher volume. Every new customer you bring into the fold should want to come back for subsequent purchases.
A Quick Word About Margin
I need to offer a quick word on margin before I close this post. Margin is the portion of total revenues that equals profit, measured as a percentage. Every business works on a margin that makes staying in business worthwhile. What constitutes an acceptable margin to you may not be acceptable to someone else. Retailers need to figure it out for themselves.
I mention this because the founder of the previously mentioned brand recounted in the interview how his company needs to be incredibly careful about margins. Keeping an eye on margin helps control spending so they are not wasting money on things that don't benefit the brand.
With an estimated 40% growth, I would say the brand is doing extremely well. They have mastered the price point and are now concentrating on moving volume. As a wholesale sunglasses distributor, that speaks to us. Hopefully it speaks to you as a retailer. Remember that the tradeoff for lower pricing is higher volume.
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