The pundits really, really didn't like that decision.
Trade journalists called me - I recall being heckled on the phone by folks who hated the decision but loved the page views it would generate ... "you're so stupid, catalogs are part of a multichannel strategy, you'll be back in catalogs in twelve months, you have to have catalogs, don't you know that?".
Nordstrom never looked back. For the past decade, they've printed money. And don't call what they do now "catalogs". Those are magazines. Be honest. A catalog business model includes catalogs as the primary marketing vehicle on an every-three-week basis paid for by company money (not co-op dollars), along with the buying and selling of names/addresses. That business model left the building in 2005, and never came back.
Channels are not channels. Channels are the manifestation of changes in customer behavior.
Want proof? Take a look at this table, for a cataloger:
Yes, I plugged results for 2019 (in green).
What do you see, when you look at total demand, adjusted for inflation?
You see that total demand is unchanged, over time. Customers slowly move from mail to phone to online to mobile over time (and will move to what comes after mobile ... what I call "Hologram Marketing"). The underlying behavior isn't fundamentally different.
However, the marketing used to drive the behavior changes, significantly. In the 1990s, you had no choice but to market to customers to get them to do stuff (in the direct channel). Starting around 2005, customer behavior in the online world solidified enough so that purchases happened without the need for marketing - much as has been the case in retail since the dawn of time.
When customers purchased online, without needing catalogs, the profitability of the catalog declined - significantly. Each square inch continued to increase in cost, but the ability of each square inch to produce sales declined. That's a recipe for disaster. Since 2007, catalog circulation is down 40%. I'd bet pages circulated are down even more, as catalog page counts continue to decrease.
This brings me to retail.
In retail, each square foot has the same impact on sales that each square inch has in a catalog.
In catalog, when customers became trained to shop online, catalog square inches (circulation * size of catalog) declined, dramatically.
In retail, it is alleged that foot traffic is down 50% in the past three years during the Christmas season (click here).
I want you to spend a few minutes thinking about the repercussions of that concept.
Go ahead ... I'll wait for you.
Ok, welcome back. Your first question is, of course, "why haven't sales declined by 50%?" Well, either the study is flawed, or foot traffic is not highly correlated with net sales. Both are likely to be true.
There are customers who go to the store to buy stuff, period. Their traffic is unaffected.
There are customers who go to the store for entertainment, or to do research. Their traffic is likely to be highly impacted.
E-commerce ate catalogs.
E-commerce impacted retail.
Mobile is going to eat retail.
Mobile is going to eat e-commerce.
All will be impacted by Hologram Marketing.
The challenge, of course, is "what do we do with this information"?
We can say, with reasonable confidence, that omnichannel strategies won't work. Their predecessor, called "multi-channel", didn't work for Borders, or Circuit City, or CompUSA, or JCP, or Sears, or Coldwater Creek, and it certainly didn't work for catalogers. Heck, go look at Gap's comp store sales trend over the past decade --- they're down something like 20% over that time, a time when inflation is +30%. Was Gap not "multi-channel", and are they not heading toward being "omnichannel" today? How did multichannel work for them?
No, you don't fix a structural change in retail by turning a store into a digital distribution center. When is the last time you heard a customer get excited about going to J. Crew because the customer might be able to get something shipped to her home from a nearby store? When is the last time you heard a customer get excited about J. Crew's merchandising and creative strategies? Hint - the latter comes up more often.
Retail is all about experiences. The more we digitize it, the more we facilitate the very channel shift that buries the existing retail channel.
More thoughts tomorrow.