February 18, 2016

Nordstrom Earnings

This is a fascinating time to watch what is happening to retailers, to online brands, and to catalogers.

Give this little ditty a read - about Nordstrom treading water (click here) and getting hammered for treading water.

Since a research brand demanded that all businesses become "omnichannel", we've witnessed a series of trends that deliciously (for some) interacted with each other.
  1. Traditional Retailers dove head-first into being "digital".
  2. Traditional Retailers spent endless money integrating online and offline experiences.
  3. Customers overwhelmingly rejected an integrated online/offline experience in favor of an entertaining experience.
  4. While Traditional Retailers focused on channel integration and digital, Upstart Retailers focused instead on Merchandise + Experience.
  5. Younger customers strongly preferred Merchandise + Experience over Channel Experiences.
  6. Traditional Retailers were increasingly cut off from a flow of younger new customers.
  7. Traditional Retailers fought back as only they can - via low cost channels (think Nordstrom Rack), further submarining efforts to grow via Channel Experiences.
  8. Online brands seeking to become Digital Unicorns fully capitalized on the void left by Traditional Retail ... they created experiences that are complemented by offline/television advertising, creating awareness and generating new customers that do not prefer Channel Experiences.
  9. Gas costs half of what it cost two years ago ... think what Traditional Retailer comps would look like with $4.00 gas. #Mercy
Basically, here's what happened.
  • Research Brands, Vendors, and Consultants gave self-serving Channel/Digital advice that ran Traditional Retailers right off a cliff. Online Brands seeking to become Digital Unicorns, Amazon, and Upstart Retailers filled the void. Momentum has been established. It's hard to overcome momentum once it has been established.
Oh, I know, that won't be a popular point of view. But it is hard to read a Woodside Research report or Retail Trade Journal article from the past five years and not see how the advice, advice designed to help Traditional Retailers, instead crippled Traditional Retailers ... accelerating their slump.

Pay close attention to the smartest marketers out there. You won't find their strategies in Research Reports, Trade Journals, or Vendor / Consultant Thought Leadership essays, and for good reason ... those folks cannot make money off of the smartest marketers.

The smartest marketers out there are crafting holistic customer acquisition programs, leveraging merchandise and experiences at a low cost. They don't look where to spend money. They don't seek to integrate channels to create great Channel Experiences. They leverage merchandise and great experiences to create New Customers, New Customers that fuel the future success of a business. They obsess about the traffic they already have. They leverage their own platforms. They don't require help from third parties to be successful.

You are going to see a dramatic shift away from channels/digital ... a shift to merchandise/experiences. This is a place where the Brand Response Marketer thrives.

Do you have a Brand Response Marketing Team? Your answer to that question says a lot about the future.