Macy’s can take on Amazon

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How does a traditional department store retailer like Macy’s take on and compete with the tech titan Amazon? It’s not by trying to catch-up to Amazon’s technology, distribution, and logistics. That would be futile. It is, of course, by creating a compelling experience so consumers want to spend time in stores. But that’s obvious; that’s not a strategy, it’s a requirement.

So what is it that department stores can do to gain some grip again with consumers and stakeholders? It’s not what most would find natural, and it would certainly involve a radical change in mindset.

Department stores rely on brands. Brands rely on department stores. Together they can be very good partners, but for the most part they haven’t been. Many brands, including major ones like Coach, Ralph Lauren, and Michael Kors have gravitated away from and out of the department store channel. That’s entirely due to too much promotional activity driven by the department stores that destroys a brand’s clout and kills its profitability. No consumer covets a brand that’s on sale all the time, and no brand wants to work with a retail partner that loses their money all the time.

So let’s fix that.

Retailers, and especially department stores, would benefit immensely if they focused on building healthy, fast-turning, high margin businesses for the brands they sell. As much as many brands don’t like selling to department stores, they are equally uncertain of working with and selling through Amazon. So use that. Department stores should focus on nurturing brands, not killing them and pushing them away. High-impact retailers should look to turn their consumers AND their brands into raving, raging fans.

Granted this may seem simple, but it’s quite the opposite. One of the hardest things for any legacy business or operator to do is to change mindset. It’s not easy to change teams of buyers at department stores from thinking about how to drive sales regardless of the cost to thinking about how to build high-margin, full-impact businesses that drive raving fans and brands. It’s not easy to convert consumers from “seeking discounts” to “wanting brands”. And it’s not easy to say “let me help you build your business” when you’re used to asking “what margin can you guarantee me”.

Likewise its not easy for wholesale teams and leadership to change their mindset from driving bookings with little regard for what can be consumed to focusing on building upon high-margin net sales that pay the bills and enables investment to grow and innovate. It’s not easy for them to think about their businesses at the consumer level as opposed to the account level. And it’s not easy for wholesalers to strategically plan focused, fast-turning businesses as opposed to jamming in broad assortments of stuff that stunts demand, enables markdowns, and baffles consumers.

Regardless of how difficult all this may be, it is absolutely critical for any retailer or wholesaler looking to keep itself from falling further and further down the slippery slope that’s being created by Amazon. Doing this is absolutely worth the effort. And let’s be clear, wholesale isn’t going away; that’s what doing business with Amazon is. So at the end of the day, the only thing that is truly difficult is continuing to do that which does not work.

Let’s fix this now.

 

Photo by Macy’s Backstage/facebook

 

Omni-channel conundrum

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One of the key priorities I hear when talking to or advising brands and retailers is what to consider and how to approach building an omni-channel strategy. It’s a telling sign that many are struggling to connect with modern consumers.

Inventory is an expensive investment and it’s incredibly challenging to know what to produce and where to put that inventory. If a brand does that right, sales and margins are strong. If a brand or retailer does that wrong, sales suffer and margins tank.

I’ll go out on a limb and say that virtually no brand or retailer is getting this right in the fashion apparel and footwear industry right now. Let’s face it–everyone is suffering, and this always leads into a conversation about what is omni-channel? How is it different from Direct-To-Consumer (DTC)? What is DTC? Is it retail stores and online? What about mobile? Social media? And what do we do with the wholesale channel? How do we exit it or manage it since in many cases it was or could be a significant contributor of sales and profits?

Why are so many brands and retailers struggling with these efforts and business in general? Maybe none of the above questions really matter. After all if you’re the leader of a brand or retailer, your main concern is likely “why am I having such a hard time driving growth?” Typically the answer lies in that fact that you cannot have growth without innovation–they go hand in hand. A CEO’s chief priority is focusing on growth and innovation. After all, if you want to be better than everyone else, you have to do things everyone else is not already doing.

So how should brands and retailers be approaching strategies to improve business through omni-channel efforts? Often the best advice is to look at a brand that has done an excellent job. A brand that is the best-in-class. Naturally the brand that comes to mind instantly is Apple. They’ve done an excellent job to date. Apple has had great products and amazing execution all around.

But let’s think about what Apple has really done. In my opinion, I think that what they’ve done really well is to figure out the complete life-cycle of its consumer. Apple understands that a consumer’s journey starts with buzz. They want to know what’s going on. From there Apple does amazing little things to begin crowd-sourcing new products. Months before the delivery of the Apple Watch, iPhone users got an app on their phones for the Apple Watch. That was a form of crowd-sourcing. On that app, Apple could tag and track everything its early adopters looked at, spent time on, and shared with peers. That insight is tremendous. It’s a powerful tool for a brand to have when deciding how much, when, and where products should go.

Think of it like this: buzz generates conversation, conversation creates products, products engage consumers, consumers give insights, insights deliver success. Apple used buzz and engagement with fans to execute one of the greatest product launches ever. The Apple Watch didn’t just show up in stores one day. It was in the making for years and part of the consumer’s journey for many, many months.

From the early insights gained, the teams at Apple could effectively market, produce, distribute, plan, place, support, and reinforce repurchase throughout the entire consumer journey. Fashion businesses have a much higher SKU count than Apple does, but that journey to purchase still holds true. A brand’s success is completely dependent upon how well it executes along the entire consumer path to purchase. Miss one step, and you’re stunting your potential and frustrating your audience.

My suggestion to brands and retailers struggling to find footing with the modern consumers is to ask themselves if they’ve innovated into the consumer’s journey. It’s important to think about what “could” be done rather than what “should” be done. No omni-channel strategy will work if you can’t connect with your audience much earlier in the process. We built PreeLine to be that little tool at the beginning of the journey, like the Apple Watch app, to let fans engage with products before they are bought, produced, shipped, and sold.

Innovative brands will do innovative things. A sense of curiosity and desire to experiment are critical to building any great business. Ultimately, without engagement and insight from your consumers, there is no omni-channel strategy. No growth with no innovation.

Like Apple did with the Apple Watch, the answer to finding your omni-channel path is engaging much earlier with your fans and building longer-lasting relationships that resonate with modern consumers. The current process many brands and retailers use is essentially this: design it, produce it, deliver it, and then pray that it sells. Think about that. Is that what your brand is essentially doing? Best to get out of that box if it is.

We know that this process of “make and pray” doesn’t work. There’s much better technology available. We should be using data to inform our decisions. And most importantly, modern consumers are smart and they want to be engaged in the experience.

So let’s get innovative and think about how to engage with consumers. And yes you should be using PreeLine, but if not, go build your own crowd-engagement platform. Just do it and do it well. It’s a big step towards driving growth and innovation.

Image from TotalRetail