Spinnin' 'em Off

You've likely read about Saks spinning off their e-commerce division in an effort to increase shareholder value. You're likely read about Macy's saying "gimme some of that" after hiring the same firm Saks used to explore options. You've likely read about Nordstrom thinking about spinning off their Rack division after a decade when, without Rack, Nordstrom would have had to spend more time answering why Full Line Stores weren't performing well.

Needless to say, the omnichannel punditocracy has little patience for this. "The customer wants a seamless, frictionless omnichannel experience and you can't have that if your e-commerce division isn't integrated with your stores. This is nothing more than greed and stupidity." That's a paraphrase of a quote I read last week. No need to out the author.

You either spin something off because it is a drag on the core business, or because the core business is dying and you want to allow the positive side of the business to generate more value for shareholders.

If the fabled omnichannel thesis actually worked, nobody would be talking about spinning anything off ... you'd see investors clamoring for more integration.

Right?

Investors aren't doing that, are they?

Fifteen years from now college students will spend $400,000 a year on tuition to question why retail brands obsessed about integrating everything between 2001 - 2021. They'll ask interesting questions like "why did a retail executive want a customer to visit a website five times, place merchandise in a shopping cart, abandon the cart, then get hounded while traversing the internet to go back to the cart, then get several emails telling the customer to take an additional 20% off to buy the stuff left in the cart - so the customer bought the merchandise and then asked to have the merchandise available at the store for pickup later that day, obtain the merchandise after taking a 20 minute drive, take the merchandise home, try on the merchandise, find out there is a problem and then be forced to go online and fill out a returns authorization form, package the item with the form, and then drive to a UPS store to drop off the item for a return ... they'll ask why this process was called 'frictionless commerce'?".

There's a reason the financial folks are demanding that retailers go in a different direction than we've been taught for the past twenty years. The thesis we've been told to adhere to for two decades did not deliver the financial goodness promised to us. So the financial folks are pushing retailers in another direction.

What should you do? You should do whatever is right for your business ... don't do what somebody else tells you to do.