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….


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.

An end to omni-channel?

I have a little confession to make.

Despite my including “omni-channel” liberally in speeches I give, in the hashtags of my tweets and in my often shameless self-promotion of my alleged retail strategy and marketing expertise, I kind of hate the term. Here’s why.

First, it’s hardly a new concept or a revelatory insight. I was leading the “anytime, anywhere, anyway” initiative at Sears in 2001 (not a typo). Companies like Nordstrom, Williams-Sonoma, REI and Neiman Marcus, among others, have been working in earnest on the essence of cross-channel integration and customer-centricity for more than a decade. If a brand has started throwing out the term in their annual priority statements and investor presentations more recently–or injecting it into the titles of staff members–it only means that company was late to the realization that it mattered, not that they are some kind of innovator or industry savant.

Second, it’s vague. As it’s applied relentlessly in retail do we ever actually mean “all”? Home shopping? Cruise ships? Military bases? University book stores? Of course not. Good strategy is rooted in choice, not trying to do it all. It’s not enough to say we’ve embraced all things omni-channel. In fact that’s quite sloppy and unhelpful. We need to lay out the customer relationships that are essential to our brand, the channels that matter for them and what we are doing specifically to eliminate the friction–and amplify the intensely relevant and remarkable–in their experience.

Third, it’s over-used. At conferences, in white papers and among industry observers it’s a virtual hype-fest. It often seems as if certain brands think that if they say “omni-channel” enough their needed (or hoped for) capabilities will magically appear. In my experience if a company is throwing around jargon a lot there is a pretty good chance it’s to obfuscate their lack of strategic clarity and/or executional progress.

Lastly, and most importantly, by itself becoming “omni-channel” is simply not good enough. Regardless of exactly what a brand means when they extol their omni-channel strategy, capabilities like cross-channel inventory availability, order-online-pick-up-in-store, and a host of other functionality that add up to the much vaunted “seamlessly integrated” experience, are rapidly becoming table-stakes, not differentiators.

Certainly retailers must root out the friction in their customer-facing processes and strive for a one brand, many channels experience. But they also need to accept that the power has shifted to the consumer and it’s become much harder to get a brand’s signal to command attention amidst all the noise. The reality is that in a slow growth world, more and more, sales increases must come from stealing share from the competition and mass, one-size-fits-all strategies are rapidly dying. Without making customer insight a core capability–and adopting a treat different customers differently commitment–market share losses and shrinking margins are almost certain.

Ultimately, I don’t care if you use the term “omni-channel” so long as you are clear about exactly what you are doing, how it benefits your efforts to retain, grow and acquire your core customers and why, when successful, it will be truly remarkable. But I’d also like to hear an acknowledgement that those efforts are simply necessary, not sufficient, to win in an ever noisier, customer empowered, slow growth world.

Sears: The World’s Slowest Liquidation Sale (Redux)

Today Sears Holdings reported comparable store sales decreases of 10.9% and its twelfth straight quarterly operating loss. And when we are reminded that despite a decade of Eddie Lampert’s leadership there is still no articulated–much less viable–strategy to turn the retailer around, another cash raising tactic is highlighted to distract from the brutal reality of the approaching cliff.

Long time readers of my blog know that I’ve taken Sears leadership to task multiple times over the past several years. And I will readily admit that I am guilty of piling on. But should you be desperate for entertainment, here are a few of my diatribes:

The original: Sears: The World’s Slowest Liquidation Sale

The deliberately provocative: 5 reasons why Sears should liquidate ASAP

And my increasingly prescient: Sears: It’s even worse than you think.

By now, it’s hard to imagine that anyone buys the notion that the growing percentage of Sears Shop Your Way customers has anything to do with the retailer becoming more customer relevant–much less profitable. By now, I would hope it’s obvious that Sears cannot possibly cost cut its way to prosperity. By now, everyone should see that without unprofitable discounts, Sears is unable to even maintain market share.

Most critically, Sears is quickly falling–or has fallen–below a critical mass on a number of dimensions:

  • Number of stores to remain a viable national omnichannel retailer
  • Production volume and outlet distribution for its key proprietary brands (Kenmore, Craftsman, DieHard)
  • Selling space and differentiated product offering needed in most categories to remain competitive.

To maximize the prices he can fetch through an orderly liquidation, I suppose Mr. Lampert has to maintain the illusion that Sears can remain a going-concern national retailer. Let’s just not forget, that it is only an illusion. And he had better hurry.

Dead brand walking.

The problem with saying “no”

During the past 25 years Sears had at least three opportunities to transform itself by entering the home improvement warehouse business (I worked on two of them). This was probably the only way Sears was going to ultimately survive and unlock the value of its franchise Kenmore and Craftsman brands. Each time the answer was “no.”

When I headed up strategy at the Neiman Marcus Group (2004-08), we evaluated building a leadership position in omni-channel by consolidating our disparate inventory systems, we recommended moving from a channel centric marketing organization to a customer and brand focused one, we proposed aggressively expanding our off-price format and, having understood the share lost to competitors like Nordstrom, we analyzed improvements to our merchandising and service models to become a bit more accessible. Ultimately we said “no” to moving ahead on all of these. Years later, these strategies were ultimately resurrected. But the opportunity to establish and extend a leadership position may have been lost.

Obviously there are plenty of times when either the smart or moral thing to do is to say ‘no.” Obviously it’s easy to look back and say “I told you so.”

Yet systemically, most organizations are set up to reward the status quo (often cost containment and driving incremental improvement) and punish the well intended experiment. So it’s easy to say “yes” to the historically tried and true and “no” to just about everything else.

Of course we don’t have to look very hard to come up with brands that have been struggling for many, many years (Sears, JC Penney, Radio Shack) or have completely imploded (Borders, Blockbuster, etc.). All of these said “no’ to any number of potentially game-changing strategies along the way. Care to hazard a guess at how many long-term Board Members of these perennial laggards and outright losers got pushed out for saying grace over a series of crippling “no’s”? How many CEO’s had their compensation whacked for never missing an opportunity to miss an opportunity?

In a world where change is coming at us faster and faster, we need to be challenged just as much on what we are saying ‘no” to as we are on what gets a “yes.”

And If you think there is always time to fix the wrong “no” decision, you might want to think again.

Small is the new stupid

With e-commerce continuing to grow far faster than brick & mortar sales–and already comprising more than 10% of many brands’ total revenues–the implication seems to be that retailers need far fewer stores and that future locations should be considerably smaller. After all, simple math tells us that with shrinking physical store sales, average productivity will decline, thereby making each remaining store less profitable. Moreover, the logic goes, it is much smarter to offer a wider range of products via the web owing to the efficiencies of centralized inventory and the like.

In fact, the folks on Wall Street seem to think that this is not only obvious, but it is the only way for retailers to be successful in this brave new omni-channel world. Be careful what you wish for.

While it is quite apparent that, in aggregate, most North American and Western European markets are over-stored, it is dangerous for an individual retailer to assume that aggressively shrinking their physical footprint is the pathway to success. For one thing, for most brands, physical stores help drive the web business–and vice versa. Closing stores and editing assortments too ruthlessly can drive down brand preference and market share, which ultimately is likely to reflect negatively on total profitability.

But the biggest challenge for most retailers and their brick & mortar strategy is how to remain relevant and remarkable in a blended channel world and how to create compelling reasons for customers to traffic their stores when so much of everything is readily available on the web, often at a lower price.

The quest to get small through the relentless pursuit of store productivity tends to drive brands to carry only their known best sellers. The victims of this strategy are the new, the interesting, the differentiated. If stores are reduced to selling only the safe bets–only average products for the average customer–then the internet becomes the best way to discover the remarkable. Alternatively, specialty stores may emerge to attack the market opportunity vacated by the bigger chains, who keep planing the edges of what they carry to “optimize the box”.

Either way, a get smaller strategy may only serve to make a brand’s brick & mortar stores all that much less interesting and accelerate an already precarious position into a downward spiral.

Surely, for some retailers, a rationalization of their store portfolio is overdue and a radical re-think of their physical store model is an urgent and important need. Sadly, for others, getting small will only turn out to be incredibly stupid.


Everywhere. And nowhere.

You’ve probably read the admonishments. You must be everywhere your customer is: online, bricks & mortar, mobile, Facebook, Twitter, Pinterest and on and on.

You’re told the future is now and that future is all about allowing the consumer to shop anytime, anywhere, anyway.

You’re urged to create a seamless experience across all channels and touch-points.

And much of this is valid. If you don’t meet your customer where she is (and is headed), you’re very likely to be yesterday’s news (RIP Radio Shack). More and more, the consumer IS everywhere and channel hop is becoming the norm.

But for those who think that all they need is a little omni-channel pixie dust and a side order of frictionless commerce, think again.

In the rush to embrace all things digital, integrated and omni-channel, far too many brands have lost sight of the need to be relevant and remarkable. Most of the capabilities that industry white papers wax eloquent about–and consultants relentlessly peddle–are merely the new table-stakes. And, quite frankly, your mileage will vary. Perhaps a lot.

Sears has made huge investments to create powerful digital and integrated commerce capabilities. In fact, they are regularly recognized for their leadership position in many aspects of what industry pundits describe as the holy grail of everywhere commerce. So how’s that working out? Oh yeah, they forgot to sell stuff people want in the way people want it. This is certain to end badly.

On the other hand, Amazon has managed to become a retail industry behemoth, crushing competitors in its wake and continuing to gobble up market share, all without physical stores and, in many cases, putting forth a pretty lackluster mobile and social presence. Their lack of “omni” doesn’t seem to be slowing them down too much.

As I’ve pointed out before, the future of omni-channel will not be even distributed. For those brands that rush eagerly into the “everywhere retail” world without a clear view of the customers they wish to serve and how they wish to serve them in a relevant and remarkable way, don’t be surprised when you don’t get the ROI you hoped for.

It’s quite possible to be everywhere and nowhere at the same time.