June 15, 2015

Gap To Close 175 Stores, Shutter 250 Corporate Positions. #Omnichannel!!!!!

The omnichannel movement is devastating in an environment of declining merchandise productivity. Sales decelerate, commodity item sales move online within the brand, causing stores to be even less productive. Eventually .... you close 25% of the footprint, and you forfeit $300,000,000 in break-even or unprofitable in-store sales that cannot be recouped online. The faster you digitize the business, the faster you move the sale of commodity-based items from in-store to online within a brand, and consequently, the faster you accelerate the closure of stores.

You don't read about this dynamic from vendors, do you?

You don't read about this dynamic from consultants, do you?

You don't read about this dynamic in trade journals, do you?

You don't read about this dynamic from research brands who invented the phrase "omnichannel", do you?

But you've been reading about this dynamic on this blog, for years.

The future is here.

I know, you don't care that I was right. You listened to the wrong people, and now you want advice to fix the problems they created.

If we are going to pursue an omnichannel strategy of bland sameness across all channels, then we must also craft a strategy of uniqueness within the retail channel. Otherwise, why would the customer ever bother to enter a store and be presented with digital wonderment in the first place? Notice that, as of today, Old Navy stores are not closing. Same omnichannel strategy ... one brand is imploding, the other succeeding. It tells you how irrelevant omnichannel strategy is. It also communicates, rather clearly, how important merchandising strategy is.

Merchandising Strategy. It's one of the three mega-trends.

E-commerce is slowly bleeding 2% off of retail comps, every single quarter. This requires exceptional merchandise productivity gains, in-store, to overcome the 2% bleed, and then generate the comp store sales increases necessary to offset inflation. We can only solve this problem with brilliant merchandising strategies that drive customers into stores. We won't accomplish this by demanding that the customer buy from a generic assortment in any channel.

This problem can be solved. Ignore the tactics that make vendors, trade journalists, consultants, and researchers money. Focus on the tactics that make your business profit.

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...