June 13, 2012

Coldwater Creek: An Ominchannel Poster Child

Coldwater Creek is a great omnichannel poster child ... a stock price that dropped from $23 five years ago to $0.65 today ... net sales that are down 35% from five years ago ... headed toward six consecutive years of losses.

Meanwhile, Chicos is posting 6% EBIT, running a similar business model to Coldwater Creek.

Coldwater Creek has done everything the omnichannel pundits told them to do.

  1. They grew via catalog.
  2. The moved into retail, aggressively, taking full advantage of the "bricks 'n clicks" opportunity.
  3. They dove into e-commerce, and have credible email, search, and affiliate programs.
  4. They cut back on catalog circulation as that channel, as the experts say, "died".
  5. They have a mobile platform.
  6. They are active in social media.
  7. They integrate their brand messaging and merchandise across channels, just like the experts told them to do.
And yet, none of the stuff that the omnichannel experts demand of Coldwater Creek works. 

Explain that one, folks.  How is it that Coldwater Creek did everything the experts told them to do, and it worked exactly opposite of what the experts anticipated?

What matters is merchandise.  Product matters.

If this omnichannel nonsense mattered, then the following would hold true:
  • Dell would have doubled sales in a few years because of their laser-like focus on social media (remember, markets are conversations).
  • Amazon would be out of business because they don't have a nationwide store presence.
  • OneKingsLane couldn't possibly grow from $0 to $200,000,000 by merely curating an assortment that is readily available nearly everywhere else on the planet, especially in retail where 85% of sales still happen.
  • Chasing Firefiles wouldn't go from $0 to maybe $40,000,000 in a few years by focusing on a dead channel like catalogs.
  • Best Buy would be thriving because of a brick's 'n clicks presence that is fueled by mobile and by the social media star known as the "Twelpforce" ... showrooming would help them because customers would use their mobile devices in a Wal-Mart or Target store to check prices at Best Buy and then buy via Best Buy's mobile site ... if showrooming works in one direction for Amazon, it has to work in the other direction across retail competitors ... right?
  • There would be thousands of examples of "engagement strategies" that caused businesses to post +15% sales increases over a "pre-engagement" world.
Omnichannel is nothing more than determining the color of the sprinkles on top of the frosting that rests on top of the cake.  It's something that bloggers, vendors, consultants, and trade journalists talk about to generate page views and to sell projects into clients looking for magic.

All magic comes with a price.

What matters is merchandise.  Product matters.