February 15, 2017

Digital First

None of the responses were positive.

The most common response was this:
  • "If anything, retailers should invest more in digital and simply abandon bad stores - digital is the future and you have to be digital first or you are dead. Your recommendation to focus on improving stores & merchandise is fundamentally flawed. It's all about digital, Kevin."
If you have written computer code to analyze longitudinal customer behavior via in-store retail purchases and online purchases via integrating online advertising strategy and website visitation behavior, you are likely to come to a different conclusion.

Two weeks ago, I analyzed two markets ... one where the brand opened a new store ... one where the brand closed a poorly performing store.

When the brand opened a new store - digital transactions stalled briefly as customers who might have shopped online switched to the store. Then, after about six months, the new store began to thrive - and routinely fed the online/digital channel new customers who had just shopped in the store. Retail (rabbits) fed Online/Digital (foxes).

When the brand closed a store - digital transactions increased briefly as the store was no longer there to generate demand. But then, after about six months, online sales in the market abandoned by retail began to falter. Website visits were down, and online sales declined. Without Retail (rabbits) providing food for Online/Digital (foxes), the digital side of the equation suffered.

I'm not saying you shouldn't focus on being "digital". Please, have at it.

But I am asking you to understand the factors that "feed" digital. Until you understand that a healthy retail environment does as much for digital health as having a strong digital strategy (and a healthy retail strategy yields retail health as well as digital health) you'll close stores and wonder why your online presence isn't performing well.

Please measure how your channels fit together. Analyze customer behavior across 3-4 years. You will observe a story that is different than the industry narrative. Please write the code yourself, and tell me what you observe.

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