May 08, 2022

Collecting Broken Brands

Over the past fifteen years, catalog brands buckled under the stress of competition from pure e-commerce brands. You'd think the vaunted omnichannel thesis would have saved the catalog brands, because we were all told that omnichannel shoppers were worth 8x as much as single channel shoppers, but the thesis never verified. Broken catalog brands were collected, merged, with the customer who remained harvested for every last penny of profit. It's the way the world works.

In retail, the process continues. Broken retail brands are in the process of being collected (click here), with Kohl's as the latest example. Healthy retail brands do not sell themselves to mall operators. Mall operators don't purchase healthy retail brands, they cannot afford healthy retail brands, now can they?

In a perfect world, the resulting conglomeration of broken brands leads to all sorts of Customer Development opportunities. Catalogers learned this quickly, they cross-shopped customers from one brand to another, greatly reducing customer acquisition costs. Catalogers knew that if the customer bought from 2+ brands within the portfolio, profit increased significantly, helping grow the financial health of the overall portfolio. Long-term the strategy is not sustainable, of course, because you still need a constant supply of new customers entering the portfolio. But short-term, yeah, have at it.

So yes, you can buy Kohl's. But how exactly do you Develop the Kohl's customer to cross-shop JCP (and vice versa)? Trust your instincts if you don't feel comfortable with a mall operator having the myriad skills necessary to build the profitability of different customer audiences via Customer Development tactics.

It's one thing to collect broken brands and then merge operational divisions in a manner that reduces expenses.

It's another thing to properly Develop Customers. Very few people have the chops to do the proper work here, especially in an environment where unknowledgeable naysayers can block good ideas at the snap of a finger.

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