Being Remarkable · Innovation · Inspiration · Leadership

The next hill

How many times have we said that we want innovation, change, growth, maybe even a revolution?

Sometimes we express these hopes and desires for our organization or society writ large. Sometimes our intention is directed squarely at ourselves. Whatever the case, too often we talk a good game but actually do very little.

Fear is one problem. Anything truly worth doing involves risks. And putting ourselves out there, sharing our ideas, committing to make a real difference, doing the hard, uncomfortable work, can be scary. Of course much of this is pure imagination. As Mark Twain reminds us: “I’ve lived through some terrible things in my life, some of which actually happened.”

The other problem is we greatly overestimate our ability to understand the future. And too often we think that our actions will lead to an easily predictable outcome. Too often we believe that with enough planning and analysis we can control the way forward. Too often without a clear view of all the steps to success we don’t even take the first one. Our illusion of control and our flawed gift of prophecy all contribute to our stuck-ness.

Having a precise map for our next road trip is a solid idea. But being attached to that notion for journeys of innovation and profound change is worthless. The way forward for personal and organizational transformation is fraught with twists and turns, ebbs and flows, peaks and valleys. The moment we believe that before we can begin we need to be able to see our way clear to the end is the moment paralysis starts to set in.

Along our path, personal or otherwise, we will be climbing a series of hills. When we reach the top of each hill more will be revealed. What we couldn’t see from the base will now lay before us. We will have the lessons from our trek. We will have a clearer view of the landscape ahead. We will have the confidence gained from having successfully completed our hike.

It’s only complicated if we make it so.

Get pointed in the right direction.

Start moving.

Just make it to the next hill.

Recalibrate.

Rinse and repeat.

Agility · Customer Insight · Digital · e-commerce · Innovation · Store closings

Retail’s next punch in the face

Five years ago I wrote a post entitled: “The next punch in the face”, which you can read here.  I began by quoting noted retail legend Mike Tyson who allegedly said “everybody has a plan until they get punched in the face.” My point, more or less, was that in the world we live in, we’re going to get punched. Sometimes we’ll see it coming, sometimes we won’t. But we must be prepared and we must get our organizations to be more agile.

A few years later, after a successful trip to the Metaphor Store, I decided I needed a less violent but still powerful message to underscore how innovation and transformation were rippling through the industry, sometimes casting brands against the rocks like boats in the tempest.

So it seemed easy to borrow from Jack Kornfield, one of my favorite spirituality teachers. My updated message, dripping with stolen metaphor, was to point out that once we wade into the ocean, waves are inevitable and that to cope with that reality we are all going to have to learn to surf.

So what does any of this have to do with thriving in today’s environment? Well, if one looks at what’s happening to retail today that is highly disruptive, much of it may feel like a punch when it fully hits. The waves may seem unending and often violent. But here’s where the metaphors lose power and relevance.

We SHOULD have seen it coming. At least, most of it. Instead what we have is more slow motion car crash than retail apocalypse–despite what the pundits say.

A brand that’s been in business over 100 years suddenly has 20% or more of its total store base it needs to close immediately? That didn’t happen overnight.

A retailer that has tons of customer data and dozens, if not hundreds, of marketers wakes up one morning and discovers they are not ready for Millennials?

A retailer with masses of merchants, sophisticated planning software, consultants galore, misses sales and margin plans quarter after quarter? I guess they suddenly got a whole bunch of new customers they didn’t notice and know nothing about?

A CEO goes to a conference (or on CNBC) and “enlightens” the audience about how most in-store purchases are driven by digital and how a consumer that shops in multiple channels is most profitable and shopping needs to be seamless and blah, blah, blah. Sir, anyone who’s been paying attention at all has known this for years (too bad I didn’t save my presentation to the Neiman Marcus Board from 2007 to show you),

Most of the troubles afflicting major retailers, wholesale brands and the commercial real estate market have been obvious for years and their impact highly predictable. You can go look it up. I’ll wait.

If we were paying attention, if we were doing the hard, necessary work, if we were innovating, rather than just talking about innovation, if we accepted the inevitable realities of the marketplace, how could we not have acted?

Awareness.

Acceptance.

Action.

Accountability.

Rinse and Repeat.

The only real surprise is how some of these leaders still have their jobs given what lousy surfers they’ve turned out to be or how awful they were at seeing the punch coming.

Maybe they over-looked the really hard part of surfing?

Or maybe they just don’t know how to take a punch?

Either way, the next time someone says “wow, nobody saw this coming” chances are they were looking the wrong way all along or too busy riding the brake when they need to step on the gas.

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Being Remarkable · Innovation · Retail

Macy’s: After Big Earnings Whiff, Here’s What It Needs To Do

Last week Macy’s missed its revenue and earnings forecast for the first quarter, sending its shares tumbling.

While the talk of a retail apocalypse is just so much hype, the intense waves of digital disruption and shifting consumer preferences assure that the future of retail–and the impact on many large and lumbering players like Macy’s–will not be evenly distributed.

We now live in a digital-first world where the line between brick & mortar sales and e-commerce is mostly a distinction without a difference. Fellow retail analyst Doug Stephens describes this new landscape as “phygital.” But whatever you label it, the consumer’s path to purchase has changed substantially–and with it the role of the store. And, increasingly, same-store sales are a largely irrelevant metric.

Nevertheless, the continuing overall poor performance of Macy’s is concerning and underscores the problems faced by many legacy brands. To get back on track, Macy’s needs to aggressively address several fundamental problems.

  • Eschew the sea of sameness. Macy’s, like so many other retailers, picked a really bad time to be so boring. Redundant, repetitive and fundamentally uninteresting product has become the norm. If customers don’t have a compelling reason (other than price) to traffic either their website or store, Macy’s will continue to hemorrhage market share.
  • It’s the experience stupid! Having remarkable and relevant products is critically important and a necessary foundation, but it’s hardly sufficient. If Macy’s continues to provide me-too visual presentation, marketing that is indistinguishable from every other department store and lackluster customer service they will continue to make price the deciding factor for most consumers.
  • Omni-channel is dead, at least in the way many have been pursuing it. Macy’s spent a lot of time and money trying to be all things to all people. Channel ubiquity with continued mediocrity is pointless. All retailers need to think about how to best harmonize and simplify the shopping across the moments of truth that matter the most for customers. Otherwise we’re just spending a lot of money to move customers between channels, not gaining relevance, share of wallet and profits.
  • Strategically re-imagine the store and the store footprint. Analysts are going to keep pushing Macy’s to close stores. And to be sure, shrinking of both store counts and store size is probably required. But the reason this is even a talking point has much more to do with the weakness of Macy’s value proposition, not their sheer number of stores. Online helps stores and stores help online. Period. Mediocre retailers that close a lot of stores are likely starting a downward spiral from which they will never return. The key is to understand the store as the hub of an ecosystem for the brand, not an asset to be merely fine-tuned for productivity. Focus on being remarkable instead of mediocre and focus on how stores strategically drive online (and vice versa) and the store closing discussion recedes into the background.
  • Don’t start a price war. With pricing pressures from Amazon, outlet stores and all the off-price players there might be a tendency to get overly focused on pricing. But don’t forget, the problem with a price war is you might win.
  • Become a testing machine. It’s easy to blame Amazon for the troubles facing the industry. But by far the biggest reason retailers are in trouble is their abject failure to innovate. Every retailer needs an R&D budget and every retailer needs to test, fail and test again. Retailers were too scared to fail and now their failing because of it. As Seth reminds us “if failure is not an option, than neither is success.”

Of course all of this is more easily said than done, particularly as Wall Street pushes for short-term fixes and Amazon continues to lower its thin margin hammer on most sectors of retail. Yet it’s hard to escape the fact that more of the same at Macy’s will only yield more of the same.

What Macy’s needs is a lot more innovation.

What investors need is just a bit more patience.

A version of this story recently appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.  

Being Remarkable · Innovation · Retail

Retailers picked a really bad time to be so boring

Perhaps you’ve noticed that things are pretty tough across the retail industry these days?

Competition has never been more fierce. Average unit retail prices are getting compressed, putting ever greater downward pressure on margins. Retailers and developers that overbuilt for years are at long last facing a reckoning. Radical transparency and ease of anytime, anywhere, anyway shopping are hammering those that have failed to innovate and differentiate.

Of course, not so long ago retail brands could get away peddling average products for average people. There was a time when retailers and the brands they sold held most of the cards. There was a time when rapid industry growth could smooth over patches of mediocrity. There was a time when being just a little bit interesting could win the customer’s attention and give retailers a good shot at making the sale.

That time is over. Forever.

Now the customer is very much in charge. Now largely stagnant markets require brands to steal share to have any chance of material top line growth. Now much of retail is drowning in a sea of sameness. Now the consumer is overwhelmed by choices and the battle for share of attention is only won by the weird, the intensely relevant, the remarkable.

And yet….

And yet when entrepreneurs chased force multiplication effectiveness, many legacy brands chose to focus on incremental efficiency gains. While innovative start-ups took risks, the big retailers mostly hunkered down. As a wave of profound change was rippling through the industry, many just decided to watch and study and analyze. But mostly watch. When venture capital was piling into the bold and interesting, much of mainstream retail remained decidedly dull.

There is no shortage of unique, impactful and useful innovations that have emerged from the new age of digital disruption. It’s just that so little of it has come from traditional retailers. At precisely the time that so many retailers desperately need innovation, their cupboards are woefully bare. Confronted by me-too marketing, look-a-like stores, repetitive products and shoddy customer experiences, so many once-proud brands still have next to nothing new, differentiated and exciting to offer.

Today you can take the name off the door and Staples, Office Depot and Office Max are virtually indistinguishable. Same for Macy’s and Dillard’s, Lowe’s and Home Depot. And on and on.

The danger of death by years of inaction, thousands of tiny compromises and clinging to the false notion that a company can shrink to prosperity is now very real. Half measures have availed them nothing. Taking so few risks has turned out to be the riskiest thing retailers could have possibly chosen.

In fact, it’s hard to imagine a worse time to be so boring.

And, ironically, many of these retailers are about to experience a lot of excitement. Just not the fun kind.

Now isn’t that special?

A version of this story recently appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.  

Innovation

The future of retail will not be evenly distributed

If you follow retail at all you’ve no doubt read multiple recent stories claiming that we are in the midst of a “retail apocalypse.” Like Chicken Little, these journalists and pundits see the sky falling on physical stores and a veritable tsunami of store closings, mall foreclosures and bankruptcies. I imagine they also expect a plague of locusts to descend upon us at any minute, as darkness covers the land.

Of course, this is all nonsense. The reports of traditional retail’s death are, to paraphrase Mark Twain, “greatly exaggerated”–as several of my esteemed colleagues have rightly pointed out. Barring an asteroid hitting Earth, the vast majority of retail will still be done in brick & mortar stores for a long, long time. Most of the major retail brands we know and love will remain household names. Hundred of regional malls will not only survive but continue to do quite well, thank you.

While the disaster scenarios are fake news, one can’t be too sanguine either. Yet, at the other end of the spectrum, we now have an emerging cadre of apocalypse deniers, who counter the claims of the alarmists with their own equally false narrative. Let’s take a look at their most common arguments.

Retail is still growing. This is true, but very misleading. First, the tepid growth in physical retail is not keeping pace with inflation, contributing to a profit squeeze for most players. Second, the main thing that nudges the number into the positive is the concentrated out-sized growth in a few categories, most notably off-price and dollar stores. So the growth in retail is good for a few–and pretty much sucks for everyone else.

Overbuilding of stores is causing a one-time correction. I’d rate this one “true-ish.” The US has been over-stored and over-malled for more than a decade and eventually, the bubble had to burst. But the rationalization and consolidation of commercial real estate go beyond a mere correction, however deep. We are witnessing a fundamental re-structuring of both the number of retail locations and the size and configuration of those boxes. Certainly, a big whack to the stores counts of flagging retailers was (and remains) overdue. And I do expect that the pace of store closings will subside substantially after the first quarter of next year. But anyone who doesn’t see the profound shift is missing the big picture.

Besides lots of new stores are opening. Yes, and this is one of the reasons that physical retail is far from extinct. But–and it’s a big but–while thousands of new stores are opening, they are, almost across the board, much smaller footprints than the stores being shuttered AND they are typically located in very different types of real estate. Hundreds of TJ Maxx and Dollar General stores don’t come close to offsetting the impact of hundreds of Sears, J.C. Penney and Macy’s closings. And while the store openings of  “disruptors” like Bonobos and Warby Parker get a lot of press, not only are their stores tiny, they are very likely to slow their pace substantially unless they can begin to demonstrate profitability.

Malls and retailers are re-inventing themselves with an emphasis on experience. Without question, the most successful malls are reformatting, adding restaurants, theaters, hot specialty formats and other experiential elements to differentiate themselves and drive foot traffic. The problem is bulldozing a mall anchor and/or replacing failed retail tenants with a steak house, juice bar or art show may be smart business for the developer, but it doesn’t necessarily help the retailers that are struggling. As far as retailers themselves, yes, a few are investing in experiential improvements, but for every cool Nike or Apple store there are dozens of retailers that haven’t invested a bit in innovation (or have limited themselves to some gimmicky shiny object that has an immaterial impact on customer relevancy).

The issue is that the future of retail will not be evenly distributed. Far from it.

Even a small shift of spending online (or failure to maintain real growth) can cause a great deleveraging of physical store economics. The closing (or massive re-purposing) of lower quality malls will be highly disruptive to particular major tenants. Online is growing disproportionately, affecting certain categories far more than others. Customers’ continued willingness to trade down and shop for discounts puts greater pressure on retailers with weaker value propositions and poor cost positions. And on and on.

Apocalypse? No.

But the suggestion that most retailers are not seeing their world’s rocked mightily is both misguided and dangerous. Similarly, the blanket notion that the sky is falling on everyone is equally wrong-headed.

Yet the harsh reality is that few retailers will escape unscathed from the seismic changes affecting the industry. Indeed we stand at a precipice. Without radical change and heretofore unseen levels of innovation, many major players are in for a world of hurt.

The clock is ticking. I’d hurry if I were you.

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A version of this story recently appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.  

Innovation · Leadership

The crushing force of retail insularity

Urban Outfitters is the latest retailer to be called out for the insularity of its board leadership. And rightly so. The lack of diversity, measured on just about every relevant dimension, has been a persistent and intractable issue for many large company boards.

It’s hard to imagine an industry that is more in need of outside, diverse and challenging perspectives than retail. New technology, shifting consumer desires and disruptive business models have been wracking the industry for more than a decade, with the pace of change only seeming to accelerate. We now face profit squeezes, layoffs, store closings and bankruptcies at unprecedented rates.

Yet few of the legacy retail brands being hammered (some to the point of extinction) by these seismic changes have done much, if anything, to bring in Directors with deep knowledge of the changing technology, business model and consumer landscape. I warned about this five years ago, spurred on mostly by noting the appalling lack of relevant expertise on the J.C. Penney board to effectively challenge the reckless “hail Mary” strategy being promulgated by then CEO Ron Johnson. While clearly Penney’s needed to do something bold to get back on track, it should have been obvious how wrong-headed many of the ideas were. A stock that traded around $40 per share when Johnson started now trades at under $6.

The insularity on the part of corporate boards is but one issue plaguing traditional retail. The last two retailers I worked for as a senior executive, as well as many of the consulting clients I have advised, suffer mightily from a culture of insularity that extends beyond board composition. Show me an organization that is losing customer relevance (and resultant market share) and chances are you’ve shown me a company that is inwardly focused on process, budget allocations, cost reduction and intramural warfare between rival internal factions. These brands know appallingly little about the competition and potentially game-changing technology. They lack deep and actionable customer insight. Mostly, they are paralyzed by analysis and unwilling to take the risks that today’s fast-moving retail industry demands.

Extreme insularity within retail organizations is, arguably, the single biggest barrier to a brand making the changes necessary to thrive, must less survive, in what some call the “retail apocalypse.” Providing leadership opportunities (board or otherwise) to folks with diverse backgrounds is, in my mind, a moral imperative. But more than that, it is just smart business. Action must be taken, not just lip service. As Jack Kornfield reminds us: “The trouble is you think you have time.”

urbanoutfitters-storefront

A version of this story recently appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.  

Innovation · Leadership

Premature celebration

Imagine the lead runner in a marathon stopping at Mile 6, throwing his arms up in the air, engaging in a series of high fives and a receiving a dousing of champagne.

Imagine your Captain coming over the loudspeaker to welcome you to London while your plane is still over the middle of the Atlantic.

Imagine spiking the football a yard before you’re actually in the end zone.

Imagine a bunch of legislators taking a victory lap for transforming one sixth of the US economy without any impact data and well before a law has actually been passed. Well, I guess that’s not so hard to imagine.

But I digress.

Your cool entrepreneurial concept is not the same as an actual viable business.

My idea for a book is far from a published manuscript. And all those blog drafts I have saved? So what, who cares?

Unless it ships, it might as well not exist.

To be fair, we have to start somewhere. And until we’ve started, we remain stuck in intention, wishes, hopes and dreams. So good on you for launching, for taking that first step, for putting yourself out there.

So, sure, let’s feel good about our progress along the way. Appreciating the journey and enjoying the ride is important. But let’s refrain from declaring victory until we’ve made a real difference in the world.

It turns out, if it’s important, people will remember what you did.

And trust is a very hard thing to win back.

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Being Remarkable · Innovation · Leadership

Yeah, but what if we don’t?

All too often we can find ourselves ruled by fear, both subtle and profound. Faced with going out on a limb, being vulnerable, trying something entirely new, it’s easy for The Resistance to take over, for the lizard brain to kick in, for us to tell ourselves the time isn’t right or that we aren’t quite ready.

For many us, it’s not the least bit difficult to imagine the embarrassment, pain or all manner of calamities that might result from exposing our ideas to the world, starting our own new business, choosing to be the one to stand up to injustice, aggressively pushing our organizations to innovate or embarking on just about any endeavor that is fraught with risk.

I’m reminded of what Mark Twain supposedly said: “there has been much tragedy in my life, some of which actually happened.”

It turns out we humans seem to be rather good at naming and feeling the risk of doing something, but maybe not so good at seeing the reward. We ask ourselves the “what if we do?” question and then frequently talk ourselves into stopping, waiting or hoping someone else will act instead.

Yet when it comes to pondering the work that matters perhaps a better question would be “what if we don’t?”

If we don’t innovate, our organization or business might not only stagnate, it might cease to exist entirely.

If we don’t speak up against hate, we enable injustice to spread unchallenged.

If we don’t vote, we get leaders that are at best clueless; at worst dangerous.

If we don’t act to unleash our potential, our desire, our creativity we, to paraphrase Thoreau, can easily fall into the trap of living lives of quiet desperation and go to our graves with the song still in us.

Too often we think the risk is in acting, when it is precisely the opposite.

Too often we believe we have more time, when in fact it’s much later than we think.

Too often we find ourselves asking the wrong question entirely.

 

 

Customer-centric · Digital · Frictionless commerce · Innovation · Omni-channel · Retail · Share of attention · Winning on Experience

My top blog posts of 2016

As has become an annual tradition–and despite my nearly six month hiatus–I present my most popular blog posts from this year.

  1.  I am the captain now
  2.  A few inconvenient truths about e-commerce
  3.  Sears: The one thing that could have saved them
  4.  Quitting is underrated
  5.  Umm, so why aren’t your sales better?
  6.  Pure play e-commerce’s fantastic (and unsustainable) wealth transfer
  7.  The struggles of the flying trapeze artist
  8.  The new retail ecosystem: NRF edition
  9.  Retail’s big reset
  10.  I’m going to build and wall and get Amazon to pay for it

And here are a few more that didn’t put up huge numbers, but are personal favorites.

  1. Just about everything is noise
  2. Retail’s museums of disappointment
  3. Don’t bite the hook
  4. The magical mystery powers of gratitude
  5. Put your ass where your hearts wants to be

As I wrap up my seventh year writing this blog I am incredibly grateful for your attention, support and feedback.

Best wishes for a safe, happy and prosperous New Year!

And if you get a chance check out my other blog “I got here as fast as I could.”

Innovation · Inspiration · Leadership

The exits are clearly marked

Maybe we’re in a relationship, romantic or otherwise, that has become highly dysfunctional but we’re too afraid to leave for fear of being alone or hurting the other person’s feelings.

Maybe we’re in a job where personal growth has long since ceased or our contributions are not well appreciated, yet the thought of making a major career shift virtually paralyzes us.

Maybe we’re a long-time member of a group that has drifted from its original purpose or lost its ability to make things happen, but we feel an obligation to try to fix it even when we know it’s neither possible, nor the best use of our scarce time and energy.

Maybe we get behind a leader “for the good of the cause” but come to see that the behaviors that rub us the wrong way–or we feel compelled to disavow completely–are revealed to be his deeply held beliefs and character defects.

Our heart usually tell us it’s time to get out way before our brain does its more careful and deliberate work.

When we let go of the past, the need to be right, the worry about what others might think and the pathological urge to fix everything, our burden is lightened and our path becomes far more clear.

The exits are clearly marked. The challenge is to muster up the courage to walk out the door.