November 08, 2007

The End ... And The Beginning

The sour performance of many retailers during October signals the end of an era, in this author's humble opinion.

After recovering from 9/11, retailing (stores, catalogs, websites) experienced (overall) growth fueled not by real gains in employee wages, but instead fueled by banks offering cheap money to homeowners looking to augment stagnant wages.

Throughout the past year, the dominoes have been falling, one by one. I see it across many of the Multichannel Forensics projects I work on, I consistently see certain customer segments that have run out of momentum. In many cases, segments running out of gas are being "masked" by other segments that are still gaining, year-over-year.

Without an influx of cheap money, families will need to address staggering debt levels. We'll see fewer banks making $300 iPods and $600 handbags and $2,200 LCD monitor purchases possible.

In the short term, this will be good news for marketers who attract an audience via free shipping, %-off offers, or other games that manipulate consumer demand. Consumers will look for deals to get through this year's Christmas shopping season.

The real fun begins next year, especially next March. Once we get through the post-Christmas sale period, we'll see how consumers respond to a spring assortment of full-priced merchandise. I'm not optimistic that the response will be great --- my opinion is that the overall economic climate will suppress demand for spring merchandise.

This is where a "new beginning" occurs. This "new beginning" is healthy for our industry.

We won't grow sales via "gimmicks" or "best practices" in a less-than-robust economy. We won't turn around sour sales by having compelling subject lines in e-mail campaigns, or by using a different trim size in catalogs, or by offering free shipping with no hurdle online.

We will grow sales by offering compelling products and services, by offering consistently outstanding customer service, by meeting or exceeding the needs of a debt-strapped family.

Catalogers and retailers have been through this song and dance every few years, for a century or longer.

For e-mail marketers and online marketers, this downturn offers the potential to be "the beginning" of something special. All of the things you've learned, to-date, have been learned while the online economy pointed due north. It's easy to appear to do a good job when sales organically increase 20% or 40% or 100%, year-over-year, every year.

The truly gifted e-mail marketers and online marketers will emerge from the next few years with strategies that worked in a sour economy, not "best practices" that appear to work in an economic updraft.

These gifted e-mail and online marketers will become the future leaders of our retail, catalog and online businesses.

Personally, I am looking forward to seeing who emerges from this period of economic funk. Who do you think our future leaders will be, and what will be the DNA that identifies these individuals?