As the channels evaporate . . .

By now, it should be readily apparent that a very large–and growing–percentage of customers bounce back and forth between digital and physical channels when shopping.

By now, it’s obvious that the exploding usage of mobile devices is blurring the distinction between e-commerce and bricks & mortar.

By now, we should understand that, in fact, it’s only retailers that talk about channels. You never hear customers speak in that way.

And yet…

And yet, we obsess over same-same stores sales, rather than same-market or same-customer segment performance.

We close under-performing stores in a quest to boost profitability, only to discover that we’ve often made matters worse.

We organize our teams, metrics and incentives around sales channels instead of customers, and wonder why we struggle with consumer relevance and engagement.

As the channels evaporate in the minds of our customers, the only two questions for us are: do we accept this reality and are we ready to act accordingly?

Oh, and one more: just what the heck are we waiting for?



Zombie retailers

As we enter the home-stretch of the holiday shopping season, the winners and losers grow more obvious by the day.

Also increasingly obvious is a sub-category of retail brands that can best be labeled “zombies.”  This sad lot includes brands that may appear to be alive, but for all intents and purposes are already dead. Radio Shack and Sears find themselves at the top of this list, but they are hardly alone.

The retail graveyard is filled with well-known and formerly sizable brands that once had customers beating a path to their doors. Borders, Linens & Things, Blockbuster, CompUSA, just to name a few, have all disappeared in recent years. Coldwater Creek and Delia’s are two once successful companies that have initiated liquidation procedures just in the last six months. The new year will surely bring a raft of store closings and bankruptcy filings.

Much more recently founded pure-play e-commerce sites aren’t immune from this phenomenon either. Many once seemingly promising ventures have gone under or seen their valuations pummeled (I’m looking at you and Ideel). Many more are struggling mightily to find a pathway to profitability and are starting to see their venture capital sugar daddies lose patience. As it turns out, selling at a loss and trying to make it up on volume doesn’t work on the internet either. Their “zombie-ness” may not yet be apparent, but it’s there.

The seismic changes affecting the entire retail world are so profound and, in many cases, have come on so quickly, that it has been impossible for even the leaders to respond effectively. Yet, the brands that have gone under, and those that are not far behind, have all made a few common mistakes:

  • They either lacked deep customer insight or were unwilling to act on what that insight told them
  • They were afraid to compete with themselves by aggressively embracing (organically or through acquisitions) new formats and concepts that were gobbling up market share
  • They became overly focused on cost-cutting and store closings as the path to prosperity rather than doubling-down on customer engagement and growth
  • They protected their older, core customers while failing to acquire a sufficient number of new customers
  • They often chased revenue without an eye on profitability
  • They didn’t realize that customers buy experiences and solutions, not just the products that comprise them.

I suspect that when the post-mortem is done on next year’s zombies that transcend to the great beyond our autopsy will reveal similar patterns.

Clearly–and sadly–many retail brands are now beyond repair. For those that are struggling but still have hope, the real question is how many of these very familiar mistakes they will keep making.




“I could tell he was weird”

Earlier this Fall I attended my younger daughter’s “Meet the Teachers Night.” To illustrate for the parents the nature of the students’ work, her English teacher handed out examples of the poetry they would be analyzing this year. One of the poets whose work she shared was E.E. Cummings.

The teacher explained that one of the reasons they would be studying Cummings was for his unconventional use of punctuation, grammar, linguistics and presentation. At that point one of the parents made a face and then stated loudly “As soon as I saw this I could tell he was weird.”

I found this proclamation quite interesting. Well, to be completely honest, in the moment, I found it to be a really ignorant thing to say. Of course all that proves is that I still possess an unflattering capacity to be rather judgmental.

Yet once I got past my own reactivity, I started to see a broader point. And I started to question my own biases.

When faced with the new, the unusual, the unfamiliar, how often is it our default position to declare that person or thing as scary, bad or just plain strange?

If we don’t understand it, is our tendency to label it wrong or inappropriate?

If you don’t look like me, vote for the same candidates or worship the same Higher Power, do I reflexively invalidate your beliefs and push you away or, worse, go on the offensive?

It’s not the least bit difficult to come up with examples of things that started out as weird, but are now taken for granted. I’d imagine that whoever decided to drink cow’s milk for the first time wasn’t seen as mainstream or completely normal. The greatest artists have all defied convention. Picasso, Monet, Hendrix, Dylan. and scores more, were all initially seen as weird when they first put their art out into the world. By definition, innovative thinking and products aren’t what we are used to and are often initially dismissed as “too out there” or impractical.

Merely being different or shattering the conventional wisdom for no particular purpose, doesn’t automatically make something valuable or especially interesting. By the same token, just because I don’t understand it–or it initially makes me uncomfortable–doesn’t undermine its validity, inherent worth or ultimate impact.

Now more than ever, I think the world could use a little less judgment. I think we all would benefit from dialing down the dismissing of–and outright hostility towards–people and ideas that are different from our own.

Maybe we could understand that different isn’t always bad and that our job is not to shun the unfamiliar but to work to overcome our ignorance.

Maybe sometimes “weird” is actually a compliment.


But it works . . .

Challenge some seemingly dubious strategy and you’re likely to get this sort of response: “Yeah, I know, but it works….”

Of course we send a lot of email, but every time we increase the frequency we see higher marginal sales.

I know charging for internet access seems crazy, but have you seen the growth in our ancillary revenue?

Raising late fees seems annoying, but our “other income” line is our biggest growth area.

Sure “enhanced interrogation techniques” don’t seem right, but just look at all the actionable intelligence we’ve gained. 

Often times the problem with the “but it works” answer is that it’s defined from a single, short-term point of view.

The person charged with email campaign effectiveness doesn’t notice that Net Promoter Scores are declining and opt-out rates are increasing among critically important customer segments.

The manager tasked with growing revenue per room, isn’t the same one paying attention to repeat booking rates.

The VP charged with driving credit card fee income isn’t responsible for customer retention and cardholder satisfaction.

Those with the singular purpose of stopping the next terrorist attack can’t fathom the broad-ranging impact of trashing our values and many other unintended consequences.

If you’re going to default to the “but it works” defense, it’s important to define your terms and take a holistic view. Plenty of things appear effective when seen from a single perspective.

And just because it’s effective doesn’t make it right.



Innovating to parity

Let’s face it, most traditional retailers aren’t very good at innovation. There is no such thing as an R&D budget at most of them. Many barely even have any real process or tangible goals centered on bringing new things to market. Labeling your typical large retailer “reactive” when it comes to innovation is being generous and polite.  Not surprisingly, most of the useful disruption in the retail space has come from outsiders and start-ups.

Recently we have seen a number of sleeping giants begin to awaken to the need to raise their game and pick up the pace. The digital transformation that has swept through retail, and the resulting blurring of the channels, makes it impossible for even the most conservative of brands to sit idle.

Yet, here’s the problem. Most of these retailers are merely focused on closing the gap between them and the obvious or emerging leaders. Once some new technology or marketing technique or experiential dimension begins to prove itself out, then these companies kick into action. Apple starts doing untethered checkout, a couple of  years later mobile POS starts springing up nearly everywhere. A few brands have success with order online, pick up in store, and soon that is on everyone’s list of 2015 projects.

There’s nothing inherently wrong with being mindful of which new strategies are gaining consumer and economic traction and positioning yourself to be a fast follower. And to be sure, if a company finds itself in trouble, it is completely sensible to find the areas of innovation that can quickly deliver the greatest near-term leverage.

But most of these brands are really just innovating to parity. By the time their innovation efforts get to scale, the next big thing is beginning to emerge and once again they themselves behind. It’s the proverbial difference between skating to where the puck is, rather than skating to where it’s going to be.

It’s great that more companies are embracing innovation. But it’s not enough to merely step on the innovation treadmill.

Winning in today’s environment requires a commitment to anticipate, to leap, to experiment, to fail, to refine and get up and try again.

Leading from behind has never worked.

And hoping to lead from parity probably won’t cut it either.





Going out on a limb

I don’t normally promote things on my blog, but I feel compelled to call your attention to Seth Godin’s new project “What To Do When It’s Your Turn (And It’s Always Your Turn).”   With any luck you’ve been exposed to Seth’s innovative work in the past. But if not, here’s a fantastic opportunity to dive in and get inspired.

Now in the spirit of full disclosure I should mention that I’ve known Seth for more than 30 years. He was my first business partner. He was Best Man at my wedding. So I’m hardly unbiased. However, if you feel the need to be challenged, prodded, cajoled or motivated to leap into the unknown or risky, you will not be disappointed.

See you out on the limb.


What are we waiting for?

Are we waiting for the conditions to be just right, for the stars to perfectly align?

Are we waiting to complete our research, to get our tools lined up, to have our mise en place just so?

Are we waiting to have a crystal clear picture of our end-point, our destination, our desired outcome?

Are we waiting for the fear to die down, for that nagging voice that tells us ‘that this might not work’ to go away?

Are we waiting for someone to choose us?

Are we waiting for the right time?

I have some news for you.

The conditions will never be perfect.

You have everything you need to get started. You can always fill in the details and add the polish later.

Starting with the end in mind is a good idea, but the finished product is going to look quite different from anything you can predict or imagine. Enough with the planning.

That voice that keeps us stuck isn’t going away. We must fight it and push through the fear.

And sure, somebody might come along to anoint you or pluck you from obscurity, but I sure as hell wouldn’t count on it. Chances are you’re going to have to choose yourself. 

We have to start before we’re ready. What better time than right now?


HT to Beth Dana at First Unitarian Church of Dallas for the inspiration and title for this post.