What: After a pandemic pivot to e-commerce, many brands are back to working with third-party retailers, this time the terms are better.

Why it is important: More than two years since the pandemic kicked off an e-commerce revolution, many brands are now bolstering their wholesale distribution again.

Neiman Marcus, Saks Fifth Avenue and others have seen an uptick in foot traffic or brick-and-mortar sales in recent months. Brands are also giving the channel another look, seeing stores as an affordable alternative to online marketing.

But the brand-retailer relationship itself has transformed. After a turbulent 2020, both stores and the brands they stock are more open to collaboration and compromise. Emerging from the pandemic leaner and, in some cases, financially healthier, retailers are seeking out fresh brands to draw back customers, especially as some of the biggest luxury labels are focusing on direct sales. Neiman Marcus added more than 200 new brands to its roster this spring.

Brands are using newfound leverage to negotiate better terms. Nothing is off the table. Mara Hoffman, for instance, got rid of return-to-vendor agreements, where unsold merchandise is sent back to the brand, altogether in the past two years.

The relationship between vendor and brand has become much more collaborative, with both parties sharing marketing efforts as well as customer insights. In some cases, the business model has also evolved, shifting from traditional bulk orders to revenue sharing via concession or drop-shipping.

There’s been a move to better support vendors on marketing initiatives and events. Neiman Marcus’ SVP, general manager for brand partnerships and merchandising, oversees several divisions including women’s fine shoes and accessories, as well as fine apparel. He is also the head of brand partnerships, which means some brand-retailer collaborations are streamlined under one team. The event debuting an exclusive capsule collection, for instance, will be planned in tandem with the collection itself.

Brands are now more willing to experiment with different wholesale models, including concessions. The concession model allows brands to build out their own space within a larger retailer, with full control over what to sell and how to display the products. Rather than ordering in bulk up front, the retailer receives a percentage of each sale. It offers higher margins for the brand but requires more work. This is the predominant model in European department stores like Selfridges and Galeries Lafayette but has become more widespread in the US recently.

Even as brands beef up their wholesale channels again, the savviest are picky about who they choose. Beyond negotiating the best terms regarding discounting and sell-through rates, or how much a vendor needs to sell per collection without having to purchase products back from the retailer, sharing the same goals and approaches to driving sales is an important facet of any partnership, brand executives say.

Navigating the return of wholesale