So this article (click here) struck a nerve with me.
A few facts for you:
- 1993 = $1,000,000,000 sales, $100,000,000 profit ... profit = 10% of sales, +/-, no discounting.
- 2008 = $1,700,000,000 sales, $135,000,000 profit ... profit = 8% of sales.
- 2013 = $1,600,000,000 sales, $50,000,000 profit ... profit = 3% of sales, rampant discounting.
- 18% of sales happen in Sears stores.
The data clearly demonstrate that discounts and promotions are a response to a business that now lacks merchandise productivity. The discounts transformed the profit and loss statement.
The data clearly demonstrate that multi-channel / omnichannel frameworks are hopelessly flawed. Ignoring your bias against Sears, wouldn't a catalog business with a strong e-commerce presence and a store-in-a-store concept within a mega-brand coupled with enormous discounts/promotions greatly outperform the competition? That's what we've been lead to believe.
We're facing a much bigger challenge, one we are choosing to ignore:
- What do we do as the core Baby Boomer shopper approaches retirement age?
- While appealing to a core Baby Boomer audience, how do we pivot to a Jennifer/Jasmine audience?
We cannot financially manufacture an answer to the two questions above. We need a combination of demographic strategy and merchandise productivity. My former company appears to lack both.