December 18, 2014

2014 Year In Review: Criticism of Omnichannel Strategy

This question came from an industry consultant.

Question: Your criticism of omnichannel strategy is naive and misplaced. Omnichannel is the future. You have to do it just to maintain sales. If you don't do it, your sales will decline, there's no question about that. So for you to sit there and criticize a movement is nothing short of irresponsible. You're only hurting our clients. Our clients need to move forward, right now, or be left behind. And to be honest, they're being left behind.

It's hard to predict the future. When Don Libey called retail malls "... those Cities of the Dead" back in 2006, folks laughed it off, because comps had been increasing for three consecutive years. It took 1-3 years before The Great Recession gutted businesses ... and it took 8 years before a strategy of "bricks and clicks" trained customers to only click and to stop visiting the bricks.

Fifteen years ago, nobody could have envisioned that a hundred thousand future messages demanding that customers click instead of drive to a store would result in a customer being conditioned to click and not drive to a store. But that's where we are in 2014. Mall traffic is in serious decline, down by more than 50% in just five years according to some estimates ... down 10% or more vs. just last year according to other estimates.

The story turned out opposite of what we thought. Opposite. We thought that we could mix all tactics together and grow sales. Instead, we trained the customer to click.

For me, these questions are frustrating, because the individual asking the question is making an assumption ... the assumption is that by becoming more "digital", the customer will click more, and we'll magically turn those clicks into in-store visits. We assume that the customer at Alderwood Mall will click on a phone and then visit Macy's.

There's a small problem with the assumption ... how in the heck are we going to get the customer to drive to Alderwood Mall to get the customer to click through a message on a smart phone while in the mall to visit Macy's in the first place?

Omnichannel, or as I might call it "Deep Digitization" is just as likely to encourage customers to click and click and not act as it is to cause a customer to visit a store. If the former keeps happening, deep digitization will bankrupt us, because there won't be enough retail business to cover the debt most retailers have piled upon the balance sheet.

We don't know how the future will turn out. No one does - especially those who advocate that you must be omnichannel. No doubt, your mobile device will interact with physical stores, that's already happening. What can be argued, however, is whether deep digitization can cause a customer to leave home, get in a car, and drive to a store. There is increasing evidence (in my retail projects, by analyzing actual customer data, not analyzing survey data) that deep digitization causes customers to increasingly not interact with physical stores, and that's a serious problem that nobody seems to want to address.

Ask the experts what, specifically, the appropriate tactic is that will cause a customer to ignore fifteen years of digital messaging telling the customer to stay away from the store to then shift behavior and instead drive to the store? That's the test, folks. Buy online, pickup in store is not a strong enough answer, or Circuit City would still be in business.