December 09, 2013

Lands' End Financials

I have a soft spot for Lands' End. A major soft spot. I worked there from 1990 - 1995, first as a statistical analyst, later as Manager of Analytical Services. I participated in #bigdata two decades before being a "Data Scientist" was cool.

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:
  1. What do we do as the core Baby Boomer shopper approaches retirement age?
  2. 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.

Profit per New Customer

It's common for folks to measure cost per new customer. Total Marketing Cost = $10,000. Total New Customers = 130. Cost per New C...