December 25, 2014

Boxing Day: A Letter From Roger Morgan About Omnichannel Strategy

In honor of Boxing Day, I am turning my blog over to Roger Morgan, the Chief Operating Officer at Gliebers Dresses. Mr. Morgan would like the opportunity to chat a bit about the omnichannel movement that is sweeping the marketing landscape.

Dear Marketers:

My name is Roger Morgan. You probably already know that I am the Chief Operating Officer at Gliebers Dresses, most likely from the numerous thought leadership white papers I've written during my tenure at New Hampshire's 44th largest Catalog company.

Mr. Hillstrom was kind enough to give me an opportunity to share my thoughts with you on the burgeoning movement known as "omnichannel". We've had a long and productive relationship with Mr. Hillstrom. Like many industry resources, we've paid Mr. Hillstrom a lot of money over the years, but never really got around to implementing his findings. I guess our circumstances are just fundamentally different than those experienced by other companies. You have to understand, our business model is unique, and the way we do things makes us different. You can't just plug a "strategy" into our business model and expect it to work.

But omnichannel is different. You can plug omnichannel into a business like ours, and you can expect it to work. Simply put, according to a $1,795 thought leadership essay my company purchased from Woodside Research (a report commissioned by the Global Retail Federation, no less), omnichannel is defined as an "Everywhere Experience", or "EE". Omnichannel means that brands (like Gliebers Dresses) must provide a uniform experience everywhere, in order to meet consumer demand. 

I know Mr. Hillstrom is very tough on omnichannel. He is wrong. Is it wrong to only sell, say, online? Should you limit the number of marketing channels you utilize? Stop using retargeting? Stop using email marketing? Stop using affiliates? Stop using comparison shopping engines? Should a retailer ignore online channels and only sell in stores? And what about mobile? Should we all just ignore it because Mr. Hillstrom says your sales will simply cannibalize themselves? Ask Apple. It's better to cannibalize yourself than to be cannibalized by the marketplace.

Mr. Hillstrom is wrong. No offense to him and his blog, of course, I'm grateful for this opportunity. But he is wrong. And I, through everything I've learned from Woodside Research and a handful of trade journalists, am likely to be right.

Think about Barnes & Noble, for instance. Their "bricks 'n clicks" strategy allows the customer to browse a book while sipping a double tall mocha at the Starbucks store within a Barnes & Noble store. That's "bricks and bricks and clicks"!!  Or, if the customer is so inclined, the customer can purchase the book digitally on a Nook device, and have the book delivered instantly. Why would a customer ever buy from Amazon once they're locked into a sound omnichannel bricks 'n clicks strategy like the one offered by Barnes & Noble? Am I right? Of course I am right.

Heck, the customer could buy the book online, and then drive to a store and pick the book up. Or if the book was not available in the Manchester store, the customer could reserve the book in the Manchester store, drive to Nashua, and pick up the book in Nashua, and then drive home happy. Who doesn't like chasing from store to store to find a book, even though the competition could send a book instantly and groceries the same day? 

Having a seamless inventory system is critical to omnichannel success.

And we know that omnichannel works, because everybody is doing it.

Pioneers like Circuit City created the "buy online, pickup in store" model that is so critical to the development of the omnichannel thesis. Of course, capitalism is ruthless, so much in the same way that MySpace paved the way for Facebook, Circuit City paved the way for brands to, as I like to say, "reap the rewards" of a solid omnichannel foundation. First movers do not always experience the upside they generate for those who follow.

We're at a point now where brands must follow the omnichannel thesis, or brands are dead.

Yes, dead. There. I said it.

I like to point to Coldwater Creek as an example of omnichannel strategy. See, Coldwater Creek was an early mover in the omnichannel frontier. They went public, they built stores, the shifted catalog marketing dollars into retail marketing. But that's not enough. Coldwater Creek failed to go "all-in". They needed to move all of their chips into the middle of the table. Had they done that, Coldwater Creek would still be here today, and Sand Point might well be the omnichannel commerce capital of Northern Idaho.

See, the omnichannel thesis can't be wrong. Only brands lacking vision implement inferior omnichannel strategies. If a brand was willing to simply implement an omnichannel strategy, as outlined by research brands, consultants, trade journalists, and conference organizers, the brand would experience an outsized return on investment. It's guaranteed. But brands don't listen. Brands have siloed reporting relationships that limit their ability to execute as the experts tell them to execute. You cannot have siloed reporting relationships. The information technology team must work closely with marketing. Marketing must work closely with inventory management. Inventory management must work closely with creative. Creative must work closely with finance. In fact, all of these functional areas should be in the same silo, all executing the wishes of the Executive Vice President of Omnichannel Strategy, or in my case at Gliebers Dresses, the Chief Operations Officer. All departments, in fact, should report to this individual. In some ways, the CEO should report to this individual. It's just that important. Omnichannel turns the whole organizational structure upside down.

Some days, I look at Mr. Glieber, and I tell him the following ... "Mr. Glieber, TEAR DOWN THAT SILO". Then I'll tell him that omnichannel strategy is a lot like free marketing. Mr. Glieber loves free marketing.

But my company, like most others, is held back by Luddite thinking. We have a Marketing Executive who wants control over the integration of catalog and online marketing. She won't allow an Operations executive with considerable experience to even recommend an idea, much less an idea guaranteed to work. She'd rather sit in her silo and deal with her area of accountability. We have a Chief Financial Officer who counts beans all day - she's thoroughly unwilling to make the enormous and disproportionate financial commitment required to meet the omnichannel desires of the vendor community (and the customer). She's completely unwilling to borrow money to bet on a sure thing. We have a Chief Merchandising Officer who cannot understand that if we only sold in an infinite number of channels, our sales could potentially be infinite. It's simple logic, folks.

We must look to Macy's, known only as "America's Omnichannel Store", as a shining beacon in an otherwise tepid bath of omnichannel failure. They are laying down the Oregon Trail of the 21st century. Ignore the naysayers who point out that Macy's posted negative comps in November. Omnichannel works. Without Omnichannel, Macy's might be posting -40% comps. Point a finger at their merchandising team, and demand that the merchandising team pick up their game, if you want to blame somebody for negative comp store sales in November.

Mobile is the next biggest frontier in the Omnichannel forest. Remember, almost all brands failed to implement social media properly. Some people, including the host of this blog, suggest that if you are not marketing to a customer under the age of 30, you will not generate more than 1% of your sales from social media. That's just wrong. It's lizard logic. The reality is that almost all brands fail miserably to capitalize on the pot of gold known as social media. Brands are wrong, the omnichannel thesis is right. But I digress. Brands need to be first-movers in the mobile sphere, or risk tasting the rusty obsolescence that brands like Coldwater Creek choked on. I don't care if your customer is 87 years old and is looking to purchase a walker, that customer is looking to purchase a walker on a five inch screen while using 4G connections at 20mbps. And then the 87 year old is checking in on Foresquare after following GPS directions on his smart phone. That's how "the customer" behaves. Mobile is the next frontier, and an appropriate omnichannel strategy includes a strong social media presence fueled by real-time mobile customer interaction and an expanded use of Big Data. More on that subject another time.

Does Gliebers Dresses deliver on the omnichannel promise? Absolutely not. We have too many old-school thought deniers to make the progress we need to make. If we do not make progress, we, too, will be out of business. I'd hate to be my co-workers on the Executive Team I am part of - they won't be able to get another job if we go out of business. I, however, will be just fine, having been on the forefront of the omnichannel movement.

Readers, I am literally begging you to get on the omnichannel bandwagon. Won't you join me on this thrilling ride through the landscape of the omnichannel movement?

Thank You,
Roger Morgan
Chief Operating Officer
Gliebers Dresses

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