May 31, 2021

We're Digitally Native, We'll Open Some Stores!

There's nothing the Omnichannel experts love more than a "digitally native" brand opening a store.

  • "It's proof that the Omnichannel approach to sales is the correct approach."
Alright.

None of what the "experts" say matters.

What matters is if you generate incremental sales that cause an increase in profit.

That's all.

If you do that, open as many stores as you like.

If you don't do that, stop opening stores and figure out something else.

Here's some actual data from a brand that decided to open a store within a zip code. Sales within the zip code are depicted here.

Your Customer Development Analyst produces these graphs by Zip Code, right? The green line represents direct-to-consumer channel sales on a rolling twelve-month basis. Look at what happens when the store opens in or around month 31 ... direct-to-consumer sales decrease.

Yes.

When you open a store, some customers who bought from your website switch to the store, and spend less online as a consequence.

In other words, the store you open must generate enough sales to offset the sales cannibalized from your website. If the store can do that in a profitable manner, go open more stores.

When you open a store, you perform your Customer Development Analytics (CDAs) at a Zip Code Level. You want to see if you generate more profit at a Zip Code Level.

You're doing this stuff, right?





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