March 11, 2015

My Omnichannel Thesis Evolves

There's what you read - designed to sell page views for trade journalists - designed to sell research, consulting projects, and products/services for vendors, consultants, and researchers.

Then there's reality.
  1. Baby Boomer retailers are being cut-off from younger generations. We've observed this trend over and over and over again (Kresges, Gimbels, Montgomery Wards back in the day). The trend is repeating today.
  2. A modest amount of sales are moving out of stores, into the online channel.
  3. Albeit modest, those sales moving online from in-store render the bottom third of the retail portfolio unprofitable among Baby-Boomer-centric retailers.
  4. Meanwhile, startups use mobile/social to cheaply grow, to build a "proof of concept". Those who shop at these businesses are much younger, of course, and tend to touch dozens of digital channels before doing anything, not because touching channels makes a customer more valuable, but simply because that's how a non-Baby Boomer / non-Gen-X customer behaves. S/he doesn't behave this way when you sell stuff that s/he doesn't want - s/he just quits.
  5. When the "proof of concept" is validated, venture funding enables the business to invest heavily in traditional e-commerce, growing to a healthy size.
  6. A third trend is taking shape ... Baby-Boomer-centric and Gen-X e-commerce/catalog businesses are running out of growth opportunities. You will see these folks move into retail as well, because online growth (unless you are Amazon) always seems to reach an asymptote. Click here for an example.
  7. As the bottom third of the retail portfolio becomes unprofitable among Baby-Boomer-centric retailers, stores will be closed. Go read the financial documents from large retailers ... they are readying the purge. When stores close, sales are not recaptured online. Omnichannel, for existing Baby-Boomer-centric retailers, is going to yield sales declines.
  8. As Baby-Boomer-centric locations are purged, the "proof of concept" e-commerce businesses catering to younger customers step in to gobble up the real estate.
  9. As locations are purged, technology is seen as a cost-effective way to digitize remaining stores while saving expense that must be saved due to declining sales. Scores of $60,000/year jobs are purged, replaced by warehouse-centric pick/pack/shippers earning $25,000/year. Sales decline, and wages decline. Tech vendors get paid.
That's my thesis, folks. There are three very different movements happening. Vendors, trade journalists, consultants, and researchers tend to average these trends, to create a theme that they can sell in to.

The average of all the trends would, in theory, require a business to embrace "omnichannel or die".

But you aren't an average of the three trends, are you?

So your solution is unique and different, based on the situation you are in.

And that's the problem with the omnichannel movement, as outlined by researchers, trade journalists, consultants, and vendors.

Anyway, that's my thesis. There is every possibility that I am wrong. Regardless, this is my thesis.

What do you think?