November 16, 2015

Urban Outfitters and Pizza

See this cartoon lady ... she doesn't like it when the industry does things that she thinks are "weird".

"Are they crazy?"

"What does pizza have to do with apparel?"

"How does that fit into a sound omnichannel strategy?"

"They just need to align their channels better, be more relevant, be more engaging, be more personalized, they need to generate a deeper focus on mobile, they need to fuse with social, and the whole thing will work better. They just need to focus on modern marketing, or they are 'dead'."

For me, the most frustrating part of our modern world of marketing are the glib observations and lack of vision that comes from those who hold the megaphone ... specifically, from research brands, trade journalists, consultants, and a small group of thought leaders.

An apparel brand does not purchase a small pizza chain unless every aspect of a modern omnichannel retail strategy approach failed, and failed spectacularly.

Thought leaders told the industry that the customer wanted to research an item online, then get in a car and drive to a store, and then buy an item that was not available in a store (#soldout) but could be shipped from any other store to a home in a day. They told us we wanted this.

Be honest ... who wants to shop that way? Nobody! But vendors make money when the infrastructure to create the vision is built out. Consultants make money by re-wiring the internal dynamics of a business to achieve this vision. Research brands make money by telling vendors that this is the future. And trade journalists couldn't care less - they make money when vendors and research brands pay them for access to the megaphone.

In 2007, retail e-commerce was awful. As a result (and you know this if you actually analyzed actual customer transactions), customers used the website to do nominal research, then continued their habit of driving to a store to purchase something.

From 2007 - 2012 retail e-commerce improved ... dramatically. 

When retail e-commerce improved, the incentive for a customer to visit a store and allow the store to create demand disappeared. It's gone. Research can be performed online, credible research. With 40% of shopping searches beginning on Amazon, the whole discovery process has been reinvented. Worse, the discovery process was reinvented outside of the omnichannel framework. Commodity items rapidly move online. Why does a customer need to visit Office Depot to purchase a printer? The search happens online, price comparisons happen online, and the purchase will happen online (somewhere) unless the in-store entertainment experience is so superior that the customer has no choice but to get in a car and drive twenty minutes to experience the store.

List the conditions where the in-store experience is so superior to the online experience that you eschew online research and instead spend hours visiting a store to buy something. Please. Make your list now. It's a short list, isn't it?

And that's the problem.

Retailers spent the 2007 - 2012 timeframe building out a credible e-commerce experience.

A credible e-commerce experience reduced the need for a customer to visit a store.

When most stores have a credible e-commerce experience, traffic declines. Look at what retailers are saying in press releases and 10K/10Q statements ... they tell you that "traffic" is down. Of course traffic is down. All of that in-store traffic is now online.

When traffic declines at anchor stores, traffic declines at all other 6,000 square foot stores in the mall, hurting all other stores.

When traffic declines at all other 6,000 square foot stores in a mall, anchor stores lose traffic.

When traffic declines, a feedback loop forms, a feedback loop that hurts all retailers.

When retailers are hurt, marginal stores are closed and new store concepts are offered at reduced square footage.

When marginal stores are closed, sales decline, because the sales are not made up online, the sales simply disappear.

When marginal stores are closed, traffic for all stores that remain is reduced, hurting all remaining stores.

When sales decline, new growth ideas are required.

One popular new growth idea is discounting ... either deep discounts/promotions within the existing brand (which erodes long-term business health), or the increasingly popular strategy of building out an off-price channel to capture demand among less-affluent (i.e. you and I) shoppers.

Another growth idea is to expand into other areas.

Have you ever eaten in a Nordstrom restaurant in a Nordstrom store? They've been in the stores for decades, you know. 

Omnichannel strategy is not a visionary strategy. If anything, it's a strategy that cripples the in-store buying experience.

We need ideas that cause a customer to get in a car, drive 20 miles to a store, and spend an hour in the store. Do you know how hard it is to get a modern customer to spend a few hours away from family & friends? It's hard!!!! It's not good enough to visit a store and have your size not be available (or not have your TV with your desired specs available) and then have the inventory system wired properly to get the item shipped to you. That's not entertaining, is it? 

Omnichannel is the opposite of entertainment.

The modern in-store experience has to be entertaining, or there is no reason for it to exist.

Until stores stop closing, and until stores stop contracting their square footage, and until traffic increases, we have to find ways to make the in-store experience an entertaining experience.

So let's hold judgment on retail brands who do things that do not align with the omnichannel playbook, ok?