Structural Change in Retail

Have you read Mr. Walker's recent essay (click here)? 

Mr. Walker speaks to a structural issue that cannot be avoided. His quote:

• "During the 2013 holiday shopping season, U.S. retailers received approximately half the holiday foot traffic they experienced just three years ago, according to ShopperTrak."

Structural issues cannot be fixed by omnichannel solutions - in my opinion (you and almost every other soul on the planet probably disagrees with me - go ahead - but please bring facts to the table when you argue your hypothesis, including facts that show that customers love turning mall-based stores into digital distribution centers more than they love merchandise presented creatively). When I look at the future, I see omnichannel as a tool that delays the inevitable, just like multichannel delayed the inevitable in catalog marketing.

Use Barnes and Noble as an omichannel example. This is a business that did largely what omnichannel advocates demand - stores as fulfillment centers and a better in-store experience with coffee shops and what not - offering a digital solution integrated across channels (Nook - and website). How did that work for Barnes and Noble? And yes, I get it, the omnichannel experts are going to send me email messages suggesting that Barnes and Noble "did it the wrong way" - they'll blame the victim. 

These folks seldom work at actual retail brands, where they are hired/fired for their success in the real world. Why aren't omnichannel experts ever fully employed at real, live, retail brands? Why are they usually sitting on the sidelines?

Barnes and Noble had the benefit of having the biggest in-store based competitor go out of business (Borders) ... and did not get a sustained sales increase from that. How is that possible? 

Well, it's possible when you're in an era of structural change.

It happened to catalogers from 2003 - 2013. The utility of shopping via paper was replaced with the utility of shopping online.

It will happen to retailers from 2015 - 2025. The utility of shopping in person is being replaced by the utility of shopping anywhere (mobile).

You simply cannot overcome structural change with omnichannel tactics. Using a mall-based store as a digital distribution center serves only 5% of your customer file - meanwhile, we fail to address the needs of 95% of the customer file while half of our traffic simply disappears.

Give Mr. Walker props - I almost never praise anybody, so I'm holding his identification of a crisis in high esteem. He deserves major props.

The solutions are not going to be omnichannel in nature. We're going to see the death of a significant fraction of the existing retail portfolio, that which caters to baby boomers, likely replaced by new retail entertainment concepts that appeal to customers currently age 8-34. That's what we need to be thinking about - not about fulfilling items between stores/channels.

If a customer is going to get in the car and drive to a retail store, we had better entertain the living daylights out of the customer. Cold, sterile omnichannel strategies are not entertaining, are they?

Tomorrow, I'll show you how, financially, this will probably play out.