What do you think of Sears’ Amazon-like strategy for Sears.com?

As I wrote a year ago, Sears is going to make up for lost time in its efforts to become a fully integrated multi-channel retailer, and it’s about time. There are many strategic, operational and competitive reasons for doing so: growth, profitability, market share, customer service, efficiency, share of customer — as you know, I could go on.

When they are talking in terms of a seamless customer experience, and buy-online-pick-up-in-store, etc., I pronounce myself impressed. Sears may have lost some relevance over time, but the company has set out in a new direction to regain some of the great market share it used to command. The store has a long retail history. They are now recognizing the new multi-channel environment, taking a new approach, and reinvigorating a brand that so many people still trust.

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Filed Under Business Strategies

Do you agree that weaker business conditions are exposing flawed business models primarily resulting from the arrival of the Internet? What do you think are some common themes behind the bankruptcies and store closings taking place?

Of course the successful retail model has changed: 7 out of the top 10 retailers last year were multi-channel. They combine and integrate in-store, online and catalog components to complement each other and to grow traffic, sales, profits, market share, share of customer — in all channels.80% of retail winners (those that outperform peers in comparable store sales growth) operate in multiple channels versus only 50% of retailers who perform worse than average. It is amazing to me that so many retailers still do not realize the necessity of making the most of multiple channels.

Driven by the continued immersion of the Internet into our daily lives, Americans have dramatically changed the way they research purchases, shop and buy. And research continues to show online activity drives offline sales. Yet of the retailers with web sites, 40% still don’t have any integration between store and online operations. It is not enough to offer customers multiple channels; they expect to be able to move seamlessly between and among them.

As I have telling my retail clients and audiences for years, multi-channel (I should say merged channel) integration is the strategy being pursued by retail winners of today and tomorrow.

http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12965

Filed Under Business Strategies

What is the nature of the relationship between catalogs and websites in direct-to-consumer operations? Is Bloomingdale’s making the right decision by dropping its catalog and focusing entirely on its website operations?

Catalogs’ share of multi-channel spending is declining, but they are still playing a crucial, if changing role: driving traffic to web sites and to physical stores.That’s why such multi-channel leaders as Victoria’s Secret, Smith & Hawken, Talbot’s, L.L.Bean, Saks Fifth Avenue, Williams-Sonoma and Neiman Marcus are increasing the number of catalogs they send out in the mail. According to the Direct Marketing Associ­ation, there were over 20 billion catalogs mailed last year, the second consecutive year-over-year increase of more than 5%.

Victoria’s Secret ships 400 million catalogs a year, or 1.33 for every American. Last year its catalog and online orders accounted for nearly 28% of its overall revenues of $4.4 billion. That represented growth of 10%, more than double the 4% increase from its stores.

Now that catalogs have a new mission as brand-building devices, companies are making fundamental changes in their design. Because catalogs are meant to give consumers ideas instead of listing every item in the product line, marketers can make them smaller, more interesting, more enticing, and more personal. Indeed, by sending out different versions of catalogs to different consumers, savvy retailers can test which ones work best for which market segments.

And of course, inducements to visit the retailers’ web site are sprinkled everywhere in today’s (and tomorrow’s) catalogs.

http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/12955

Do you think tough times drive the entrepreneurial or creative spirit? Why or why not?

Confirming what we have been forecasting in our CDI reports throughout 2007, the US economy has not been in recession. It is weak–economic growth in 1Q2008 was 0.6%–but not collapsing. Same is true of workers’ compensation and consumer spending: up only slightly, but at least not down. In my view the worst is over; the economy and consumer spending will turn around, perhaps dramatically, by the third and fourth quarters.Of course there is uncertainty among consumers, and that is reflected in our survey of household buying intentions. Again, most telling is the large percentage of households (54%) sitting on the fence, not committing to any major purchases in the next three months, a real wait-and-see posture. (This is actually down slightly from last month, and we will allow ourselves to take that as a positive sign.)

In our view consumers are waiting for any positive sign to start greater spending again, such as a stronger stock market, or a stronger housing market. Both are indeed in the cards: there is currently $3.5 trillion sitting in money market funds and with a lot of businesses showing profits, that money will not stay on the sidelines. As for how much further housing prices can fall, consider that the US population of over 300 million will surpass 400 million within 35 years, and it becomes clear that the real question is when the next housing boom starts.

[The Consumer Demand Index (CDI) is a nationally representative monthly survey of 1,000 or more US private households that measures consumer purchasing intentions across the range of durable and non-durable goods. I’ll send a free sample issue upon request.]

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Filed Under Consumer Behavior