Growing share is retail’s new black

Nearly two years ago I wrote about what I saw as Retail’s zero-sum game.

My hypothesis was that, for the foreseeable future, top-line growth across most retail sectors was likely to be tepid at best. I also hinted at an upcoming slowdown in the once resilient luxury segment. Looks like I was being optimistic.

Today’s dismal earnings announcement from Macy’s featured a quarterly sales decline of more than 7%. It’s yet another in a series of lackluster–and often frightening–reports from established retailers across just about every segment of the market. It certainly won’t be the last. Fasten your seat belts, it’s going to be a bumpy ride.

The reality is that there are profound shifts in consumer behavior and the underlying economics of omni-channel retail that go way beyond Amazon’s impact or what’s rapidly becoming a digital-first retail world.

In case you haven’t noticed your customers now have the upper hand. More and more, consumers are valuing experiences over products, renting over buying, trading down instead of trading up, holding out for the best price and on and on. None of this bodes well for an expanding pie or a rising tide that raises all ships.

Your job then–plain and simple–is to gain share; to get more out of the same sized (or even shrinking) pie. And thus there are two things you need to be really, really good at: acquiring (and then retaining) customers at a disproportionate rate from your competitors and growing share of wallet among those existing customers that have the best potential for long-term profitability.

You can go on and on about bold omni-channel plans, your seamless shopping experience and your really cool Instagram strategy. But if you can’t articulate how you are going to be remarkable and relevant for your best customers and prospects at the point of acquisition and customer growth chances are you are focused on the wrong things.

And if you aren’t busting your hump to get those ideas into action, you had better step on the gas.

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One thought on “Growing share is retail’s new black

  1. kddomingue

    I enjoy reading your articles dealing with retail. As I read your opening paragraph, I was formulating a question about the affects of the burgeoning movement towards a more minimal lifestyle, how large an impact it will have on retail sales and how retailers will respond to it. And, lo and behold, you touched on that very point! I would love to read a more in depth article on that particular point.

    The husband and I are in our 50’s. We’re not well off but we’re comfortable. We’ve got money to spend…….thing is, we go into retail stores and look around and, basically, see a bunch of dross. Meh. All of the stores carry the same things just with different names on the labels and different prices on the tags. Very few things seem to be well made. Most are made with shoddy construction and cheap materials. I’d happily pay $75 for a well made t-shirt that used quality fabric. But the $75 t-shirts that I’ve found aren’t much better than a $10 t-shirt. Furniture stores are a joke. Most lumber yards are selling inferior products for building. Most major appliances can’t be counted on to last more than a handful of years and require repairs more often than in years past.

    The husband and I are edging into a minimalist mindset, not so much because we wouldn’t like to buy things, but because we’re tired of throwing away hard earned money on shoddy, poorly made, short lived merchandise. We’d rather not support industries that seem determined to create crap.

    Like

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