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 Fab.com 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.