August 06, 2013

2005: The End

Five popular songs from 2005:
  • "We Belong Together" - Mariah Carey
  • "Hollaback Girl" - Gwen Stefani
  • "Let Me Love You" - Mario
  • "Since U Been Gone" - Kelly Clarkson
  • "One, Two Step" - Ciarra featuring Missy Elliott
Maybe you remember the movie "The End", starring Burt Reynolds (click here).  Wendell wants to end it all ... and then, at the last second, he decides he wants to live ... except Marlon (Dom DeLouise) keeps trying to eliminate Wendell (Burt Reynolds).

Well, the catalog-centric folks wanted the catalog to live ... but the decision had already been made.

I recall getting calls from the trade journalists ... "are you a moron, Kevin?"  They sat up on their perch, overlooking a pool of ad dollars generated by vendors, needing to generate page views to keep the ad dollars flowing.  Yes, they ripped us.  Those smart trade journalists who know so much more than people who actually run businesses, ripping us, telling their readers just how stupid Nordstrom was.

The catalog-centric folks knew better, too.  You could almost see the glee on their faces as July 2005 approached.  They thought they were about to witness an execution .. the execution of a profitable Direct channel.

Then a funny thing happened.

Within a few months of the termination of the catalog, sales INCREASED.  Across the board increases, folks.  Retail comps didn't suffer.  Online sales did not suffer, in fact, they more than compensated for sales lost at the call center.  Our reallocation of ad dollars from catalogs to search appeared prescient - we actually (coincidentally) timed a shift in customer behavior perfectly.

We experienced a dramatic reduction in ad dollars, an increase in demand in the online channel that more than offset the demand lost at the call center, and a dramatic increase in retail sales.  

The net of this relationship was an embarrassing increase in profit.

The catalog-centric folks had a very hard time with this.  Then they left the company.  And as always happens, a strategic change in direction resulted in a new Management team in the online division - one tasked with growing a pure online business in a retail environment.

My team went from 24 individuals to 16 individuals.  Yes, my team was gutted, and I had to perform the gutting myself.  We still had email, we still had 1,100 retail pieces to push out the door, annually.  But 8 members of my team were downsized, they left to work for the online channel, or they left the company, or I eliminated their jobs.  

It's not a fun process to go through, folks.

Not coincidentally, a new Research Executive was hired, tasked to do much of the same kind of work I had always done.  Remember, changes in strategic direction lead to the need for a new breed of Executives to manage the business.

How does something that happened way back in 2005 still be relevant today?

For many businesses, a combination of mobile/social will rout e-commerce.  No, this won't happen in 2013.  But it may happen in 2018.  Or 2020.  And when it does, a generation of e-commerce leaders will be faced with the same eventuality that catalog leaders at Nordstrom faced.

This is how life works.

It would be a good idea to start thinking ahead.  What does your job, or your department look like when a combination of mobile/social eventually and finally routs e-commerce?

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