Archive for the 'Omnichannel' Category

Another post-mortem on Bon Ton Stores

Because Bon Ton Stores (soon to close at this writing) is based here in Milwaukee, I’ve paid close attention to the reasons behind its demise. Here are some thoughts from a recent RetailWire panel discussion:

One key lesson: The merger of two strong players will almost always work better than the combination of weaker stores. The Macy’s-May deal included the market share leader in almost every major city in the country, even though Macy’s was criticized at the time for changing the nameplates of chains like Marshall Field’s and Famous-Barr. Meanwhile, Bon-Ton’s acquisition of stores like Carson’s and Younkers (and then choosing to maintain “local” identities) was saddled by debt and by the lack of national scale or brand equity.

Milwaukee (where I live) is one of Bon-Ton’s two “headquarters” cities, and the home of its Boston Store nameplate. As an observer, I find the CEO revolving door was an issue and the company’s slow pace of e-commerce development (compared to Macy’s and Kohl’s) didn’t help either. And as a shopper, Boston Store’s content seemed overly focused on “career” Boomers who are retiring from the workforce, without a strategy to replace them with goods for younger customers.

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Will an off-price concept fix H&M?

H&M is jumping on the off-price bandwagon with a new concept called Afound, with the objective of liquidating its goods more effectively. (It’s also a hot segment with a lot of new players over the past few years.) Here’s my comment from a recent RetailWire discussion about what really ails the company:

I’m not sure that another off-price brand in an increasingly overcrowded market is a long-term solution to H&M’s problems. They need to address a few core problems in their existing stores first, as the article points out:

1. How does H&M move faster in the product development cycle, to compete more effectively against Zara and even Forever 21?
2. How does the company figure out a more effective liquidation strategy for its existing stores, instead of leaning on a new concept?
3. How does H&M play catch-up on omnichannel, considering it was late to the party?

H&M stores have always avoided the chaotic, “treasure hunt” feel of a typical Forever 21 store — and with a bigger focus on basic, affordable “wear to work” apparel for budget-minded shoppers. But this has come at the cost of becoming boring and predictable, compared to Zara’s unbeatable speed to market.

Online grocery sales gaining share quickly

It should come as no surprise (except, perhaps, to traditional grocery chains) that online sales are the fastest growing segment of the industry. Today’s RetailWire panel reflects on whether the major players are ready for this trend. Here’s my opinion:

The wave of online sales that has swamped general merchandising is now catching up to the grocery industry. This shouldn’t come as a surprise to food retailers after watching other industry segments caught flat-footed. It’s only now that general merchandisers have developed omnichannel strategies that are helping them turn a corner.

The key for grocery retailers is to reach the customer where he or she wants to shop. This may mean home delivery or it may mean BOPIS — and it may also mean a simpler shopping experience in-store with less overassortment to choose from. Rest assured that Amazon is going to deliver a more convenient experience (with higher in-stock levels) while traditional food retailers are still trying to figure out if there is a threat.

Will a “mobile overhaul” fix J. Crew?

I haven’t seen holiday results for J. Crew, so the following RetailWire comment (published in early December) may misread the final outcome. It was apparent from shopping their stores during the holiday season that they continue to have a traffic problem. Here are some thoughts about the underlying issue:

J. Crew is pursuing the path of many other mall-based retailers, both department stores and specialty apparel chains. They are shedding excess square footage in weak locations, and they are developing an “omnichannel” strategy by expanding their digital footprint. These are all necessary steps for almost any retailer you can think of, not just J. Crew.

What’s missing from the discussion of a “mobile overhaul”? Any acknowledgement that the merchandising continues to be the underlying problem at J. Crew. The company is more dependent than most apparel retailers on a product direction that is relevant to its customers and true to its brand. Until J. Crew gets this right, the other pieces of the strategy feel like window-dressing.

Holiday 2017, in several observations

Starting with Black Friday, I’m stringing together a few comments on RetailWire about the holiday 2017 shopping season. By all estimates (and retailers’ reports), sales were better than expected considering the doom-and-gloom early in 2017 about the “death of brick and mortar” at the hands of Amazon. Here’s the thread:

1. Most of the anecdotal evidence and reports from retailers suggests that foot traffic was down, especially on Friday, but overall sales volume was good. This suggests that stores’ omnichannel strategies are working to drive total sales, instead of the “silo” effect of looking at e-commerce and brick-and-mortar as two separate businesses.

There is also a sense of higher discretionary spending, which will tend to benefit department stores along with off-pricers specializing in apparel. Early cold weather doesn’t hurt, either.

2. Several factors came into play, including low unemployment, the “wealth perception” of high stock prices, and a break on the weather that helped drive sales of seasonal goods. But I think there are two other key factors in this holiday season’s apparent success: First, the large number of store closings during the first half “cleared the deck” for those left standing to gain market share. And, even more important, most brick-and-mortar stores finally figured out how to leverage their own e-commerce business into a true “omnichannel” experience for their customers.

Omnichannel: Not just a matter of semantics

As retailers continue to grapple with their own definition of “omnichannel,” I thought this RetailWire comment might offer some clarity:

I ordered razor blades from Amazon a few days ago, and I just ordered some K-cups this morning. (They will be here later today.) Would I describe this as “omnichannel,” because it involves commodity items that I might have found in a physical store? No, I would call this purely an e-commerce transaction.

A true “omnichannel” initiative is one that bridges the divide between e-commerce and brick-and-mortar. If I had bought the K-cups from walmart.com (and picked them up at the store), that would be closer to an omnichannel play. And the more seamless the shopping experience, the better … whether I am buying food, consumables or apparel.

Once we get past the semantic distinctions, there is little doubt that programs like BOPIS, BORIS, ship-from-store and curbside pickup are escalating rapidly. The consumer continues to search for the perfect combination of price and convenience — the “blue-eyed unicorn” of today’s retail.

Applying the “4 P’s” to the Amazon model

One of the oldest tenets of marketing and retailing theory is the importance of the “Four P’s” — product, price, place, and promotion. RetailWire panelists recently discussed how to apply these principles to a game-changing retailer like Amazon. Here’s my take:

The discussion of the “four P’s” makes sense as far as it goes — and it rightly points out that assortment is more important than price to the Amazon customer. But there are other secrets to Amazon’s success that deserve at least as much attention.

First, Amazon’s predictive technology does an industry-best job making purchase recommendations based on shoppers’ past buying and browsing behavior. Second, Amazon has created an Apple-style “ecosystem” (from the Kindle to the Echo) enabling its own hardware to drive e-commerce sales. And, finally, Amazon’s TV advertising does a great job creating an emotional connection between the company and its customers.

All of these points would mean little if Amazon didn’t execute well. The level of trust between Amazon and its customers may be the most important brand-building exercise of all.


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