Omni-channel’s migration dilemma: Holiday edition

Last year I wrote a post about what I called retail’s “omni-channel migration dilemma” wherein I observed that while the deployment of so-called omni-channel strategies–i.e. making it easier for consumers to shop anytime, anywhere, anyway–improves the customer experience immensely, the outcomes for most retailers were, thus far, not quite so wonderful.

At the heart of this argument were three core points:

  • With few exceptions, omni-channel retailers’ total revenues remain essentially flat, meaning that robust growth online is mostly cannabilizing brick & mortar sales;
  • In many cases, the profitability of e-commerce is actually worse than a physical store sale. This is particularly true for lower transaction value players like Walmart and Target.
  • In their quest to become “all things omni-channel”, retailers are investing enormous sums–and in some cases–getting distracted from arguably higher value-added activities.

You don’t have to be a math whiz to understand that spending a lot of money to end up–if you’re lucky–with basically the same total revenue at a lower margin is not exactly a genius strategy. But this is where we find Macy’s and many other retailers right now.

The omni-channel frenzy around the holiday shopping season only shines a harsher light on the issue. By launching sales earlier and earlier, by pushing deep discount events like Cyber Monday and by offering free shipping pretty much throughout the season, the tilt toward online sales is exacerbated and margins continue to shrink. Consumers win through great deals. And retailers lose, as overall sales are likely to go absolutely nowhere.

Now some have argued that omni-channel is ruining retail. They are wrong. They’re wrong not only because it is pointless to fight reality, but also because efforts that are fundamentally rooted in the desire to improve the customer experience are rarely misguided. The key is not to confuse necessary with sufficient, nor “the what” with “the how.”

So we should not get distracted by analysts who try to extrapolate one or two days of sales as part of some trend.

And we should bear in mind that online sales for most omni-channel retailers remain far less than 10% of their total business. So even healthy e-commerce growth is not likely to offset seemingly small declines in physical stores sales. You don’t have to trust me on this. Do the math.

But mostly we should remember that the story is not about all things omni-channel, nor what happens on Black Friday, Cyber Monday or the few weeks that comprise the holiday shopping season.

It IS about which retailers are breaking through the sea of sameness with remarkable product AND a remarkable experience. It is about which retailers are eliminating friction for the consumers that matter the most in the places that matter most. It is about which retailers are eschewing one-size-fits-all strategies in favor of a “treat different customers differently” philosophy. It is about retailers that know where to focus and how to properly sequence their omni-channel initiatives, not blindly chase everything some consultant has pitched them.

Clearly, the future of omni-channel will not be evenly distributed.

Don’t be blinded by the hype.

A force for gratitude

I didn’t come up with this. But I’m sure grateful that Seth did.

It’s called the Thanksgiving Reader and I hope you will check it out and share it with family, friends and colleagues.

But mostly I hope you will download the pdf and begin this new tradition along with me and so many others.

If you are anything like me, perhaps you’ve learned that gratitude is the best defense against the negative thoughts and feelings that creep into our consciousness and undermine our serenity.

Maybe you’ve seen that when we lean into gratitude somehow things start to go our way.

Possibly you’ve come to appreciate how gratitude often serves as the kindling for more meaningful connection.

So I wonder what would happen if we all became an intentional force for gratitude?

It seems to me that it might be worth a try.

Thanks for being part of my journey.


Bleak Friday

Get ready. The stories about Black Friday will start ramping up today. And by the time you awaken from a tryptophan induced haze on Friday morning,  you can expect your TV to be chock-a-block with shots of reporters standing outside Walmarts and Best Buys and Apple stores and within some big fancy mall opining on what it all means.

Spoiler alert: it means nothing. Absolutely nothing.

As the hype grows I thought I’d weigh in with a few facts.

Black Friday is not the biggest shopping day of the year. In recent history the Saturday before Christmas and the day after are the biggest. In fact, several other days right before Christmas will likely rival Black Friday’s sales volume this year.

It’s declining in importance. As online sales continue to grow, while brick & mortar sales are at best flat, the relative share of total holiday sales done in stores on Black Friday is decreasing. When you marry that with a trend toward early release of Black Friday deals, Thanksgiving Day store openings and growing terrorism fears, more and more Black Friday matters less and less.

Black Friday success (or failure) is mostly meaningless. Many folks have tried to determine the correlation between the industry–and individual retailer performance–on Black Friday and how the total holiday season will turn out. There is none. So move along. Nothing to see here.

For consumers, it’s mostly a con. Study after study shows that, with few exceptions–mostly the heavily promoted, limited quantity “door busters”–the savings just aren’t that good. In fact, prices tend to be better in December. With many retailers sitting on higher than anticipated inventory levels going into the holiday, I’d predict the best deals will come late in the season, including during the week after Christmas.

The customer experience is terrible. With over-flowing parking lots, teeming throngs, long checkout lines and, in some cases, a need to camp out hours before the doors open to have a chance of scoring an actual great deal, shopping on Black Friday is the ultimate  soul-crushing hassle. Apparently some people thrive on this sort of thing. I hope they get the help they need.

Now about Cyber Monday….


I’ll see it when I believe it

If we start with the premise that we are a failure, it’s easy enough to notice all the supporting evidence.

If we reflexively lean toward the narrative that a group of people is to be feared, than everyone who resembles them–or who has a “funny name”– starts to look like the enemy.

If we begin with the fundamental notion that we live in an world of scarcity, than we can only see that our gain comes at someone else’s expense.

And, to paraphrase the old saying, if we believe that we have the right hammer–and it’s our only tool–than all we see is a lot of nails that need pounding.

Of course we can choose to believe that we are enough, that we have enough, that we do enough. And then we start to see someone who makes mistakes, not is a mistake.

We can decide to believe that all human beings are born good and inherently worthy of dignity and respect. And then we bear witness to our common humanity and find ourselves standing on the side of love more often than the side of hate and judgment.

We can believe in a world of abundance. And slowly, but surely, potential reveals itself and myriad possibilities emerge–none of which require us to beat out anyone else.

The stories we tell ourselves matter.

Believing is seeing, not always the other way around.

What we believe, we become.


H/T to Brene Brown and the late Forrest Church

Ouvre la porte

One of the more beautiful and inspiring moments amidst the horrific tragedy of the Paris attacks was the spontaneous willingness of the city’s people to open their doors to anyone who could not get home–or who simply needed refuge–during a night of unimaginable terror and chaos. This movement was captured by the Twitter hashtag #ouvrelaporte. “Open the door.”

To stand on the side of love, to trust, to open the door to a complete stranger when the world is literally blowing up around you, takes tremendous courage. Yet, at the same time, it is also the most basic, the most simple, the most human thing we can do.

So, for me, it’s terribly sad to see how often, when we are confronted by hate, so many of us reactively move to close our doors, our hearts and, it would seem quite literally, our borders.

And it’s unconscionable that overwhelmed by our simple mindedness and fear we would paint those who are different from us with a broad-brush and seek to condemn and isolate them.

As we enter a season that, for many, celebrates the story of two Middle Eastern refugees who get turned away by the heartless, it’s hard not to see the irony.


H/T to Oliver Willis.







The fault in our stores

As more and more retailers report strong growth online while their brick & mortar sales wane, it’s easy to conclude that physical retail is going the way of the horse-drawn carriage. In fact, plenty of pundits bang that particular drum every day.

But let’s not lose perspective.

Actual stores still account for about 94% of all retail sales. While this will continue to shrink, revenues from physical locations will garner the majority share for most retail categories for many years to come. Lest we forget, actual stores provide tangible customer value that is all but impossible to duplicate digitally. And plenty of research supports the notion that most consumers still prefer to shop in a physical store including…wait for it…Millennials. It shouldn’t surprise us that many of the fastest growing, most successful retail brands are investing in stores, not closing them.

Yet, there is plenty of fault in our stores.

Too many stores are drowning in a sea of sameness–in product, presentation and experience.

Too many stores still operate as independent entities, rather than an integral piece of a one brand, many channels customer strategy.

Too many stores remain laden with friction throughout the shopping experience.

Too many stores take a one-size-fits-all approach, rather than striving to treat different customers differently.

Too many stores are seen as liabilities to be optimized, leaving them as boring warehouses of only the best-selling, most average product.

Yes, there will be fewer stores in the future. Yes, the vast majority of stores will be smaller. Yes, it’s hard to paint any sort of growth scenario for all but a handful of retailers. But the reflexive answer cannot be to throw up our hands and automatically decide to disinvest in physical retail.

Brick & mortar retail is different, but not dead.

When we adopt an attitude that our stores are problems to be fixed–or eliminated–rather than assets to be leveraged, our fate is already sealed.

When cheap rules

In case you haven’t noticed, the retail apparel market is kind of a hot mess. Sales are going nowhere. Profits are waning. Many store closings have occurred, with more on the horizon. And for two basic reasons.

First, we aren’t buying as many items. It turns out that we actually don’t need so much stuff. It also turns out that, more and more, we are starting to value experiences over things. As Millennials become more important contributors to the market–which, after all, is merely the passage of time–this likely only gets worse.

Second, the average unit price of what customers are buying is declining. Some of this is due to the frenzy of discounting that most retailers can’t seem to break out of. But mostly it’s a substitution effect: people trading down from Neiman Marcus to Nordstrom, or from department stores to off-price stores, or from specialty stores to places like H&M, Zara and Primark.

In many cases, the consumer is saying “no” to excess, unwilling to pay a lot merely for status. Still others are reticent to support a high markup that goes to what they have come to see as needless frills and overhead.

As leaders of brands we are powerless over the first factor. But when it comes to the second we have choices. Many of us are trying to solve for this market shift by cutting expenses and closing stores. Others have launched discount versions of their core brand and are aggressively investing behind this cheaper version of themselves. Some of us are doing a combination of both.

When cheap rules it’s certainly fair game (and simply good management) to look at our cost structure, to consider rebalancing our assortments, to seek ways to become more effective and efficient.

But as leaders–as a matter of strategy–we face the proverbial fork in the road. Do we chase cheap or do we seek reasons other than price for consumers to choose us over the competition? Do we risk entering a race to the bottom or do we choose to become more personal, more relevant, more remarkable? Do we go with the flow (and what Wall St. seems to demand) or do we confidently embrace a stance of “yeah, we’re more expensive, here’s why and we’re worth it.”

Every brand is different, so the right answer must be situation specific. But we shouldn’t lose sight of the fact that it is a choice. We shouldn’t forget that once a brand trades-down there is usually no turning back. And we should always remember that the biggest problem with a race to the bottom is that we might win.