December 29, 2014

Omnichannel = Fewer Stores

Give this article a read ... Walgreens is going to evaluate their store portfolio (click here).

Omnichannel and Deep Digitization is going to crush existing stores. If a store is in the bottom thirty percent of the performance ladder, it's going to be evaluated, and ultimately, closed. Omnichannel is going to skewer fixed costs, folks. 

Measure this dynamic today, immediately - take any market where you closed a store, and look to see what happens to sales in that market. You'll quickly see that online does not make up the sales difference - doesn't even come remotely close.

Logic Chain:

  1. Retail sales don't meet expectations.
  2. Become more omnichannel - digitize everything.
  3. Digital is a variable cost structure - retail is a fixed cost business.
  4. Sales transfer from fixed cost in-store to variable cost online / mobile.
  5. Fixed cost retail underperforms even more.
  6. Lower 30% of store portfolio is axed.
  7. Retail sales partially transfer online, omnichannel does not grow the business, sales shrink.