There are thousands of ways to delight a customer.
Capsule collections are one of them.
I learned this in my 20+ years as a merchant, building everything from the FIFA World Cup 2002 bag line to region-specific assortments at Ralph Lauren.
A capsule collection is an assortment that lives outside of the main line.
The collection is not a must-have and it doesn’t need to be created every season.
There are many reasons why such collections work for brands:
- Localize the product mix by region
- Test new products without committing to large quantities
- Align with a relevant marketing moment
When done well, capsule collections do a few things.
First, they sharpen the product story and they give marketing a reason to show up. Second, they delight loyal customers and attract new ones. Lastly, they can create urgency within an otherwise predictable seasonal flow in addition to a new revenue stream.
The Olympic Games is an example of a marketing moment that brands use to create a capsule collection.
Since many of us avidly watched our favorite figure skater or skier take the slopes, I decided to evaluate a selection of Olympic capsules using my not-yet-patented TCMCCC: The Chief Merchant Capsule Collection Criteria.
The criteria are as follows:
1. Alignment The capsule must be able to ‘live’ with your existing seasonal collection. Using existing colorways and prints or silhouettes connects parts of the capsule to the existing product mix. That connection matters, especially when the capsule starts to sell through and must integrate into the broader assortment.
2. Assortment Use at least 50% proven silhouettes. Why? They already work. This gives a brand some level of assurance that the capsule will sell through because there is some level of familiarity with the customer. The remainder must be created with discipline: * Keep quantities low enough to minimize risk. * Go deeper only in hero styles. * Use a replenish or test-and-react approach to chase demand if engagement is real. Capsules also give you permission to rebalance: consider a different ratio of tops to bottoms, a new category, or maybe a different store distribution for example. But it must be intentional, not random.
3. Pricing If the goal is acquisition, the entry point has to be accessible. Lean into opening price points so the product mix is accessible beyond your most loyal customer. If you’re apparel or footwear-led, accessories will work: socks, hats, charms, bags, or small leather goods. There should also be consistency across your pricing between products in the capsule collection and the main line. Finally, merchandising and marketing must work together, early. These are traditionally misaligned in the creation of the regular assortment. The stakes are even higher if the capsule is meant to ride the momentum of a very public and high-profile event. The best capsules win because the strategy and the storytelling are tightly aligned when the music begins.
Now, let’s see which brands hit or missed the mark on TCMCCC for their Olympic collections.
I gave a score out of five for each criteria and then a final, total score out of a maximum of 15.
Lululemon Team Canada:
1. Alignment = 5/5 – The collection can be merchandised with the rest of the seasonal assortment. – Red and burgundy colorways can be paired with styles in the main line.
2. Assortment = 4/5 – Soft accessory assortment is minimal, especially a winter wool collection of mitts, hats, and scarves. These styles tend to sell well in Canada. – Good selection of hero bags and apparel in the subtle Olympic print.
3. Pricing = 4/5 – Missing entry price point products, especially for customers who do not shop the brand because it is out of their price range.
Total Score: 13/15
Ralph Lauren Team USA:
1. Alignment = 5/5 – The collection can be merchandised with the rest of the seasonal assortment. – Polo knit shirts and other core items are included in core colorways as part of Team USA shop.
2. Assortment = 5/5 – The collection addresses various categories, and genders with over 50% of SKUs in proven silhouettes like Polo Bear sweaters and mockneck fleece tops. – The Team USA capsule is non-traditional with multiple subsets: Official Team Uniforms, Villagewear, Vintage, and customizable products.
3. Pricing = 5/5 – The brand has captured entry price point products by assorting core colors of it’s main line into the Olympic capsule. – Pricing is consistent across similar products in the capsule collections and main assortment.
Total Score: 15/15
Skims Olympic Collection:
1. Alignment = 3.5/5 – The capsule collection has minimal styles that can be assorted in the main collection.
2. Assortment = 3/5 – Less than 50% of the capsule uses existing silhouettes. – The hosiery product mix looks like an afterthought, containing 2 lounge socks (that look the same) and one thigh-high sock.
3. Pricing = 4/5 – Price points are all accessible although there is a disconnect between the capsule collection and the rest of the assortment. Similar products (in the same material and silhouette) are priced higher in the Olympic collection compared to the main line.
Total Score: 10.5/15
And we can apply this to other brand whether they are official outtfitter or just want to ride the Olympic wave.
Either way, the capsule collection delights the customer while aligning with a major marketing moment.
The capsule collection has a clear product story, aligns with the brand DNA, and gives marketing a lot to work with.
The collection can also live long after the Olympics are over which means more opportunities to sell at full price and minimal markdowns.
Which is what any brand should want.
