August 24, 2014

Is My Store Losing Sales To My Website?

This one is fairly easy to answer.

Here's what you do. Run a comp-segment analysis on retail-only customers from last year. In other words, identify customers who, from 8/26/2012 to 8/25/2013 purchased exactly two times from retail and exactly zero times via e-commerce. Then measure how much these customers spent in e-commerce and in stores between 8/26/2013 and 8/25/2014.

Then slide your dates back one year, and repeat.

Then slide your dates back yet another year, and repeat.

One more time!

Take a look at this table.

What do you observe? Remember, these customers only purchased from retail stores in the past year.

Clearly, customers are shifting online (slooooooowwwwwwwly). Total demand is flat. This tells you that customers are leaving the in-store experience, and prefer to shop online. This should cause you to think carefully about the omnichannel strategies that the experts are telling you to implement.
  1. If your customer increasingly prefers the website, what does it mean to the future of your in-store experience if you consistently have fewer and fewer people in the store?
  2. How many square feet do you truly need, if you increasingly have fewer and fewer people in your store because your website is increasingly preferred by your customer base?
  3. Why are you trying digital strategies to get customers back into your stores when your customers are leveraging your most important digital strategy (your website and/or phone) to increasingly avoid your store?
  4. What is the merchandise assortment purchased online? What is the merchandise assortment purchased in-store? Are they different (the answer is almost always yes)? If the assortments are different, how does this conflict with the thought leadership community's demand that you do everything the same in every channel?