Archive for the 'Omnichannel' Category

Is Amazon Prime Wardrobe another disruptive move?

Amazon is introducing a new feature for Prime members: Risk-free trial of several apparel items with the ability to return what you don’t like. (And price incentives to keep more of what you chose.) RetailWire panelists mostly see this as another Amazon “game changer,” but I view it a bit differently as their response to the lack of physical stores:

If Amazon aspires to be the top seller of apparel in the U.S. (and it’s already getting close), it needs to add a “try before you buy” feature to keep driving more Prime memberships. It’s responding to the challenge of concepts like Trunk Club — but it’s also acknowledging its lack of a physical footprint. Think about it — stores like Kohl’s and Macy’s already have huge numbers of brick-and-mortar locations where you can return unwanted clothing that you bought online. This may be a rare case where Amazon responds to a competitive weakness in its formula.

On Amazon’s bid for Whole Foods

Talk about breaking news: RetailWire panelists had a chance today to weigh in on the announcement of Amazon’s bid to acquire Whole Foods. While many panelists see it as a way for Amazon to gain a bigger toehold in brick-and-mortar retail, I view it differently:

First, the move can help grow Amazon’s brick-and-mortar footprint, but it’s more about taking the Whole Foods brand to every household in America that may order groceries from Amazon. It gives Amazon’s fresh food businesses (meat, produce, organics) instant credibility in homes without a Whole Foods location in sight.

As to the skeptics about whether Amazon can handle the logistics — can they deliver organic produce and Cheerios at the same time — this is the smartest logistics management company in the world that we’re talking about.

Finally, Amazon has a longstanding willingness to lose money in a new business where it is trying to grow market share. The days of “Whole Paycheck” may be over.

Operations management needs a seat at the omnichannel table

Today’s RetailWire discussion focuses on the operating pressures caused by omnichannel and digital initiatives. Field managers absolutely need to be part of the planning process, and here’s my point of view:

Retailers pushing for omnichannel solutions (BOPIS, ship-from-store and so forth) absolutely have to involve store operations. There is no way to plan the costs of these services (especially in payroll hours) without field management at the table. And store management has a responsibility to speak up when pushed to “do more with less” — otherwise the costs of omnichannel programs erode the customer service that brick-and-mortar shoppers still expect.

Should Amazon buy Macy’s?

Here are some of my own thoughts from a provocative discussion on RetailWire:

Amazon shouldn’t buy Macy’s if its only motivation is to use the stores as pickup and return centers. And I’m not sure that Amazon “needs” Macy’s to give its own apparel business more credibility — some reports suggest that Amazon will already become the #1 seller of apparel in the U.S. this year.

It should only pursue Macy’s if it is prepared to reinvent the department store model from top to bottom — something that Macy’s itself seems unwilling or unable to do. Amazon is already dipping its toe into other kinds of brick-and-mortar retail, but this would be a big jump.

Thoughts on Macy’s self-service shoe and cosmetics departments

RetailWire panelists just took on the subject of a new test at Macy’s, in which its shoe and cosmetics departments are being converted to “assisted self-service” instead of the traditional associate-driven model. In the case of shoes, Macy’s is getting more of its inventory out of the stockroom and bulked out on the floor, with apparent early success. I’m raising a caution flag, however:

It’s hard to tell whether the reconfigured shoe department is meant to be a sales driver or an expense saver. JCP recently reconfigured a store that I visited to mass out its shoe inventory — DSW-style — instead of depending on salepeople to find the right size in the back. (And these associates are often paid a commission, just like cosmetics salespeople.) But it gets to the heart of what Macy’s wants to be. As Art put it, are they trying to be JCP or Kohl’s? Are they finding the hidden costs of “omnichannel” (BOPIS and so forth) to be unsustainable for a traditional department store?

And one more issue: By abandoning the Nordstrom model (where the salesperson is trained to bring out three pairs of shoes when the customer asks to look at one), Macy’s may in the long run walk away from the sales and margin potential of “upselling” that shoe and cosmetics departments should be known for. A declaration of victory may be premature.

Is the era of brick-and-mortar growth dead?

The wave of store closures this year (and beyond) casts a shadow over traditional brick-and-mortar retailing, but it’s premature to declare it a dead end for companies that still have growth prospects. Here’s my RetailWire commentary on the issue:

In business school many years ago, I took a retailing class from a marketing professor who often said, “There’s no such thing as ‘over-stored,’ but under-retailed.” Obviously the glut of square footage is an even bigger problem than in 1977, given the development of exurban sprawl, big box stores, new mall formats, retail consolidation, and (of course) e-commerce. But the teacher’s point still has relevance today.

Some stores continue to have a good chance to expand their physical footprint. (There has been recent comment, here and elsewhere, about chains like Zara and Uniqlo being opportunistic about picking up others’ sites.) But growth for its own sake means nothing without a clear brand identity, coherent merchandising and smart use of technology to drive loyalty and omnichannel initiatives.

In praise of Amazon (again)

As the biggest “disrupter” in retail, Amazon is always a hot topic on RetailWire. Here’s a recent comment:

There may be more innovative retailers who are not as visible as Amazon, but it’s hard to think of a company with such scale that is less willing to rest on its laurels. I know that some panelists view Amazon’s push into new businesses and logistics methods as not much more than a well-oiled PR machine (see yesterday’s discussion of intimate apparel as an example). But it’s hard to deny that the company is anything but complacent when it comes to extending its reach and improving its execution promise.

The real test for Amazon will be its success in rolling out innovative brick-and-mortar retailing models. The bookstore and especially the C-store tests will be telling, because most other stores with “omnichannel” strategies have not succeeded in offering an innovative approach to the business of shopping.

And more thoughts from another post:

Amazon’s competitors have it all wrong if they think it’s all about low prices. (And this is the fundamental error behind Walmart’s “brand promise” over the years.) Amazon has always been focused on breadth of assortment and great execution. As the company has entered more categories (starting all the way back when when they were in the business of shipping books), it has never lost sight of these key competitive advantages. Customers’ expectations have been scrambled as a result, and everybody else (whether pure play e-commerce or omnichannel) is just trying to keep up.