I have a running joke I repeatedly employ on Twitter:
- "The future of retail is one CEO and no other employees. The CEO manages vendors and algorithms, both responsible for running the business."
As Private Equity and Catalog Holding Companies gobble up distressed catalog brands, the future becomes clear ... employees are going to pay the price.
I'm aware of a company that used to have a 25+ person marketing department ... now down to about 10 employees. Everything that can be outsourced is outsourced ... so far.
A Catalog Holding Company with 10 brands will leverage relationships across brands.
- HR: One department with satellite divisions.
- Distribution Center: You only need one and you'll staff it with robots.
- Call Center: Send it overseas.
- IT: Outsource one corporate database to Merkle (or to Google long-term ... think Wal-Mart / Google relationship).
- Creative: One centralized team in the short-term, outsourced to vendors in the long-term.
- Merchandising: One centralized team in the short-term, outsource the math to IBM's Watson long-term.
- Analytics: One centralized team in the short-term, outsource via voice to Google/Adobe/Amazon long-term.
- Finance: Individual teams in the short-term coordinating through a central office. Cloud-based services in the long-term.
- Marketing: One centralized employee pushing buttons in the corporate office - everything outsourced to vendors & algorithms (ultimately, everything is outsourced to Google + Facebook + Amazon + Co-Ops + Search Vendor + Email Vendor + Social Vendor).
- Website Ops:
You'll have specialized jobs ... for instance:
- Chief Vendor Officer (CVO): Since everything is outsourced, you'll have a CVO (likely a Lawyer) who manages all of the relationships ... the CVO will have a small team to help across brands.
- Chief CrossShop Officer (CCO): This person dictates to each individual brand what the brand might do to generate value for all other brands in the portfolio.
If you are a vendor, you'll be thinking five steps ahead and will create an offering that aligns with this worldview.
If you are an employee, it's gonna be hard to get a job at a traditional "brand".
One of the reasons so many people are exiting the catalog industry is because what I've described above has already been happening for more than a decade. Few want to talk about it, because it's painful to think about the repercussions.
Consolidation of the industry will yield consolidation of employees. We're in the process of outsourcing employees. Employees will move to other industries. Think carefully about what happens when an industry is gutted down to algorithms and vendors, and plan accordingly.