This Can’t Be Happening- An Online Shopping Experience

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It was not supposed to be 14 degrees in Seattle. But it was and we needed an extra space heater to try and keep the pipes from freezing. Diane (my wife- 37 years. Starting to look like it might work out) ordered one from Target and had a coupon for same day delivery (the Target store is two plus miles away). It was dropped off at three that afternoon and was just what we needed.

Impressed, Diane went online to buy something else from Target. She was met with a screen that asked her to review the home delivery.

There was no way to bypass that screen to just shop. And, she later learned, she would also have been required to tip or not tip the driver. But the cherry on the turd, as you will see from the chat summarized below, was that she was informed she would face that impenetrable screen for thirteen days.

It turned out the chat was wrong, and it was only three days or something. But still, I am sure that denying a customer the ability to shop for any amount of time is a poor approach to customer retention (Spoiler alter- Diane got what she needed from a different retailer that’s pretty good at delivering- especially if you live in Seattle-that doesn’t require rating or a tip choice).

Below, in summarized form, is the chat. I have left things out but everything from the chat is a direct quote. You may or may not want to read the whole thing. First, let’s talk about why and how this happens.

I refuse to believe Target wants it to happen. It could be that Shipt, the local fulfillment company Target uses, requires it. They hire the delivery people and certainly hiring is easier if their hires have the opportunity for tips. The review is for the person who did the delivery, not the Target people Diane interfaced with. Did Target just miss this in the contract?

We all know that companies use rating their customer service reps to manage and evaluate them. I think it’s why those reps stick to their long, inane, time-wasting scripts no matter what and remind us to give them a five.

As a customer, I recognize the problem I’m contacting them about is not the fault of the person I’m talking with. I really want to give them fives. But when I’ve been on hold for however long, been transferred to three different people, can hardly understand the person due to background noise, been hung up on (not on purpose I hope) or given inaccurate or incomplete information, I find myself gunning for the “1” button. But often there’s no way to describe the overall poor experience over much time and multiple calls and rather than hit five or one, I hang up in frustration and move on.

Blocking somebody’s path to giving feedback is guaranteed to get you negative feedback- if you get any at all.

There are two conflicting purposes to these “customer satisfaction” surveys. First, they want to keep the person you interact with on the straight and narrow. Okay, makes sense. Most times it feels like it drags the support process out but perhaps overall it’s more cost effective and efficient when tightly scripted. But second, they want to get information from the customer on the overall interaction with the company. In a chat/phone conversation with a survey, you can do one but not the other.

I’d do two things. Maybe companies already are. First, my message after the call would be something like, “Press one to rate the person you spoke with. Press two to provide a comment on the overall interaction with the company.” I’d separate the two goals. Second, I wouldn’t ask everybody to complete the survey (my experience makes me think most companies ask everybody). Given the response rate, how many do you need to accomplish your goals? Okay, sometimes I get the “you have been selected” message, but I never quite believe they think I’m special.

It can’t be that hard to change the recorded message. I wonder why I’m never asked about a specific issue or area of interest the company has.

Wow, retail is tough these days. Everybody is just trying to figure it out as demographics, economics, attitudes, and expectations change around them.

Diane’s chat is below.

Diane: Hey Target, I had an item delivered to my home. Now my browser experience and app are both frozen unless I review the home delivery, which I choose not to do. There is no way to exit the review screen. Which means I can’t place another other. This is a bad experience. Please tell me there is an easy fix for this. Otherwise, I am off to Amazon or Walmart.

Target: We apologize for the technical issue you are having with your browser and app. We would recommend clearing your cache/cookies or uninstall/reinstall the app for a better experience. If you are still having technical issues, please reach out to Shipt [independent company for local delivery] for further assistance.

So, Diane started a chat with Shipt:

Shipt: We apologize for the inconvenience this has caused! Unfortunately, we are not able to assist with Target.com or Target app issues. However, we do highly recommend rating your Shopper according to your experience, as it helps us with recognizing our Shopper’s performance.

Then, inevitably, Shipt asks Diane to complete “…a short, three-question survey…” about her interaction with Shipt.

Not sure Diane’s response is printable in a family publication like this.

Okay, now back to our story. Diane reengages in her chat with Target.

Diane: I uninstalled/reinstalled the app, which seemed to fix the issue [turns out it didn’t]. I have deleted my cache, but the browser issue persists. Shipt said it’s not their problem and referred me back to you. Ideas? Or do I shop elsewhere?

Target: Our apologies for the experience, this certainly shouldn’t be happening. We’ll be happy to document the experience. Please provide your full name and email. Also is this happening from the browser and the app?

Diane: Please see the thread above for the answers to your questions.

The time of Diane’s response is 7:15 AM. Diane gets no response, goes about her day and at 4:04 PM, goes back to the chat.

Diane: Hey any response? The app is not fixed as it turns out- I am still stuck with the requirement to rate the delivery. I do not want to do so I will permanently delete the app if you folks don’t have a solve.

Target responds at 4:19 PM.

Target: We understand you would rather not review or tip for your order. It’s part of the order process to complete the rating/tipping the shopper before moving on to the Target.com experience. Tips are greatly appreciated but not required. However, you have 13 days to rate and tip the shopper or it will be removed. We hope this information is helpful.

Diane: Thank you for the straight information. I get that companies want performance data but if I am blocked from using Target.com for 13 days so you can get it—well, that just seems counterintuitive for a for-profit enterprise. As for tipping- sorry, that didn’t even occur to me as part of this experience. Should I expect to tip the cashiers at Target too? I’ll stick with Amazon. Thank you.

The End.

It is a microcosm of the challenges of the whole retail environment. So much has changed that managers aren’t quite sure what to do. But that’s a topic for another article. I hope you enjoyed this story and I hope Target cleans this up.

MooseMart- the Moosejaw Store on Walmart

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Moosejaw, Wikipedia tells us, “…is an online and brick and mortar retailer specializing in outdoor recreation apparel and gear for snowboarding, rock climbing, hiking, and camping. The company was founded in 1992 by Robert Wolfe and David Jaffe, two longtime friends who chose to sell camping equipment instead of becoming wilderness guides. [3] Moosejaw is known for its nonsensical marketing called “Moosejaw Madness”.”

It’s got ten retail stores, most of which are in Michigan.  It was acquired by Walmart for $51 million in February 2017.  Previous investments had been made by some private equity firms.

Things got interesting about two weeks ago when Walmart opened a Moosejaw premium outdoor store on its website.  When I first went to Walmart.com to check it out, it was prominently featured on the home page.  Now, it’s gone though the Moosejaw web site can still be accessed from the bottom of Walmart’s home page along with the other brands it owns.

That’s not a complete surprise given the brouhaha that was stirred up when outdoor industry specialty brands that were being comfortably sold through Moosejaw found themselves featured on a Walmart related site and some of their specialty retail customers went through the roof and told Walmart and Moosejaw in no uncertain term that they didn’t want to carry brands that were part of it.  That happened even though the products on the Walmart/Moosejaw site weren’t discounted.

Gee whiz, it turns out that some people think that distribution matters even when the profit margin remains the same.  I think they’re right.  That’s particularly true when your product can be easily replaced by a bunch of other branded product with generally equivalent features and pricing.

The perceived quality of your brand matters and some of the perception comes from scarcity, which is not exactly how you think about something that can bought through Walmart.

Moosejaw CEO Eoin Comerford published an open letter to the outdoor industry defending the decision to open the store on Walmart.  You can read it here.

He said he had been surprised at the vehemence of the attack from certain retailers and said that, “…the industry remains predominantly male and remarkably white. If we’re going to grow this industry beyond its exclusionary, historical norms, we need to reach new audiences … younger, more female, more diverse.”

I think we may be into the third decade where I’ve pointed out that, “Every company will do what it perceives to be in its own best interest.”  CEO Comerford probably won’t get a lot of push back from suggesting that we’d like/need a more diverse customer base.  But I think he’s wrong to suggest that, as a result, “the industry” should support the Moosejaw store on Walmart.

“The industry” doesn’t make those kinds of decisions.  Brands do.

Perhaps some brands can do well there.  But others-not so much.  It’s up to each brand to decide which side of that divide they fall on based on their competitive positioning and customer characteristics.

It sounds like brands were caught by surprise.  I called up a friend after I saw his brand on the Moosejaw site on Walmart and he didn’t know anything about it.  I’m wondering if Mr. Comerford, or at least somebody in his organization, didn’t reach out to at least some of the brands to find out what they thought about it before the site went live.  I suspect they would have gotten an earful.

But Moosejaw, remember, is owned by Walmart.  And for all the fatuous blather we get in press releases when one company buys another one about how the acquired company is going to be left alone to do what it does so well, etc., etc., etc., when you’re bought, you’re bought.  I’m not completely sure Mr. Comerford had a lot of choice.

I see a number of pages of Moosejaw branded products on the Walmart web site.  I wonder if that’s good for the brand.  I’d also love to know just how much of which purchased brand was sold at the store on Walmart while it was open.

Moosejaw is barely a flea on the Walmart brontosaurus.  But I hope Mr. Comerford drags some senior Walmart executives to some meetings with some of the retailers/brands who objected to the store.  Everybody might learn some good stuff.

Uh, can I come to the meetings?

Damn- Turns Out the Customer Is Always Right- More Than Ever Before

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Running an active outdoor business right now feels like a game of Whack-a-Mole.

  • There’s too much retail- right size yours. Whack!
  • Create product that can be meaningfully differentiated from competitors. Whack!
  • Careful on that distribution. Whack!
  • Manage your inventory and expenses cautiously. Whack!
  • Figure out e-commerce without cannibalizing brick and mortar. Whack!
  • Lower growth economy. Whack!
  • Find and keep enough quality employees. Whack!
  • Most children living with their parents since 1940 (World War II fixed that). Whack!
  • Slow to non-existent wage growth among our customers. What will they/can they buy?  Whack!
  • Close to 10 million American men not in the work force and not trying to get in it. What do we sell them?  Whack!

Whack!  Whack! Whack!  Whack!

I hope to get your attention by saying that these things are pretty much tactical- or in some cases issues you just can’t influence.  What in the hell would I consider strategic then?

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What Is the Value of Advertising?

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I read with some amusement as well as concern this article about an apparently still ongoing and massive online advertising fraud.  I imagine you’re all aware of it.  Meanwhile, back in this article, I mentioned the increasing use of ad blockers, especially by millennials.  And within the last week or so, I questioned, as I pointed you to four article on changes in retail, how TV advertising was being received.  What I said was, “Perhaps it explains some of the advertising I see on TV these days where a brand tries so hard to find a compromise message that reaches the sensibilities of more than one group that you walk away not sure what product you just saw advertised or why you should care.”

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Internet Related Issues for Retailers and Brands to Think About

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I wouldn’t quite characterize this as an article as much as random musing about some internet experiences I’ve had.  I can’t wait to see what I write.

My microwave broke.  Not so much broke.  The door wouldn’t latch so I couldn’t use it unless I stood there and held the door closed.  Not particularly practical.  I thought to myself, “Damn, it’s either a $150 service call or a new microwave.”

But for some reason, I went to YouTube and searched under “microwave door won’t close.”  And the very first video that popped up was exactly that for my model.  Literally 15 minutes later, I’d taken out a screw, popped part of the door away from the gasket, reinserted the stupid spring that had come lose (probably from the kid slamming the door too hard- unless it was his father who was doing it) and it was fixed.

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Amazon, the Omnichannel, and the Impact of Retailers’ Brick and Mortar Legacy

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On April 24th, the Seattle Times ran an article called “Amazon’s Imitation Game.”  It starts by describing how Amazon has knocked off an aluminum laptop stand by Rain Design that had been selling on Amazon for 10 years at a price of $43.00.  Amazon started selling a similar product last July for around half that price.

On Amazon, you can see various Rain Design products including a number of laptop stands and you can see the Amazon knock off at around half price.  Amazon Basics, the article tells us, includes low price copies of a number of an increasing number of products (900 right now including 284 added in 2015).

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Fulfilling the Omnichannel Imperative

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On December 28th, Zumiez filed an 8-K with the SEC. I don’t think they were required to file it because the amount of money involved ($1.3 million in the 4th quarter) wasn’t really “significant” as defined by the SEC for a company the size of Zumiez. But they filed it anyway. How come?

I’m sure their lawyers said something like, “Well, okay, we guess you don’t really need to file it but, you know, just to be on the safe side, why don’t you?” That’s what lawyers do. But I’m guessing that the management team looked at what Zumiez was doing and decided that it was such a fundamental change in their business model and potentially so impactful on how they run things that an 8-K was appropriate. I agree with that.

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An Artificially Intelligent Digital Commerce Platform

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You’re probably going to read this if only to find out what that title means. We’re all going to find out together as the online shopping experience continues to evolve.

The North Face has worked with a company called Fluid to develop an online shopping assistant powered by IBM’s Watson Cognitive Computing Technology (I say again, whatever that means).

It’s in beta right now and has just been released for use by the public. Apparently, it’s only for jackets so far. Go here to give it a try. What I found was that it was still a little clunky to use, but that’s why they call it a beta and I imagine it will only get better. Anyway, go play with it yourself.  I can’t see why it won’t ultimately be utilized in brick and mortar as well.

I’m waiting for the online shopping assistant that takes a picture of me through the camera on my digital device, asks me a few sizing and preference questions, saves those, and shows me what’s new that I might want whenever I log on. It’s probably already out there and certainly we already see shopping suggestions (way too much if you ask me) based on what we’ve purchased before. Imagine what that’s like when VF shares the data among all its brands. I am thinking such a system, if it does nothing else, might cut down on returns- brands are spending a lot of money on returns from online sales.

I’ve got one suggestions for The North Face. This is going to sound a little weird, but once in a while the digital assistant (you guys need to name this thing) should recommend a product from another brand when it’s appropriate. I don’t know when, how or what’s involved in programming that, but think of the credibility it would generate. And better they buy another brand’s product that is right for them than one of yours that’s not.  The North Face wouldn’t be the first to do that.  What’s the name of the insurance company that checks its competitors for the best deal?

Here’s the link to the article.  It’s intriguing and exciting to imagine where all this is going, but then I don’t have to run a retailer.

Et Tu, Nordstrom?

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Okay, I don’t precisely feel like Julius Caesar when he was stabbed by Brutus (Hey, at least his problems were over!). But I was initially kind of surprised by what my ever vigilant research department fed me from Nordstrom’s web site.

I’ve written about the tough retail environment. Among the topics I’ve highlighted are how over retailed the country is, the difficulty in getting sales growth, how hard it is for independent specialty retailers to compete, that consumers are increasingly in control, the impact of online and mobile and probably other stuff I just don’t remember.

I’ve never claimed to have “the answer.” But I’ve suggested that part of the response of brands and retailers has to be to manage distribution, control inventory and have systems such that you can hope to improve your bottom line even when sales aren’t growing as quickly as they used to. And know your customer and market position. Yeah, easy for me to say in two sentences. Not so easy to do. I know.

So when my wife- uh, I mean my research department- showed me this link from Nordstrom’s web site, I glanced at it but didn’t think much about it.

My wife likes Eileen Fisher, but this was available only in plus sizes so it was no sale. I couldn’t figure out why you’d want to boil perfectly good wool. Fermenting hops and barley I understand, but boiling wool?

Anyway, I said something like, “Nice coat.” She urged me to look again and showed me what had just popped up.

Nordstrompricematch

 

To be clear, she hadn’t found a lower price herself and requested a better deal. Nordstrom found it for her and offered a lower price.

This is Nordstrom. As far as I know, they compete on quality, service and ambiance. You don’t go there for the best price. You go there because it’s Christmas or your wife’s birthday and you want to pick out something nice in clothing, but you know if you do it yourself it won’t be right and at Nordstrom, some nice woman will talk you down and help you figure out what size your wife is and not say you should have checked in her closet before you came and help you pick out something that your wife might actually like and you don’t care what you have to pay for it. At least that’s what I’ve heard.

How does their business and expense model support price matching?

Okay, here’s how it works. This is from their web site.

“Price Matching”

“We are committed to offering you the best possible prices. We will meet similar retailers’ prices if you find an item that we offer available elsewhere. We’ll also be happy to adjust the price of an item you’ve purchased if it goes on sale within two weeks of your order date. Please note that price matching only applies to items of the same size and color. Designer items can only be matched when purchased at regular price.”

“We are unable to match prices from auction and outlet stores or their websites, or other retailers’ discount promotions, shipping offers and gift card offers.”

I feel a little less aggrieved after reading that. This is carefully controlled and managed and focused only on retailers that Nordstrom perceived to be their direct competitors.

This is a tactic by Nordstrom that probably just formalizes what’s going on anyway, so I’m now feeling less flummoxed. Nordstrom controls who they compare prices with. It’s not Kohl’s. It’s only retailers who have what I expect are cost structures similar to Nordstrom. And apparently, they don’t price match if the other retailer has it on sale. Wonder exactly how they program for that? How do you decide how much lower the other store’s price can be before that product is “on sale” and you no longer offer the price match? There are some interesting issues here. All part of figuring out the omnichannel I guess.

Perhaps this discourages some shoppers from doing their own price shopping while at the same time limiting the discount and making the shopper feel that Nordstrom is looking out for them. Maybe price matching only happens if you are slow to put the item in your cart, or leave it and then come back.

And as long as we’re on Nordstrom’s web site looking at women’s coats, check out this page. Look at the list of featured brands part way down on the left. Notice that The North Face is the only brand we’re likely to recognize as part of our industry. They are also the first brand listed even before you click through to see their offerings and their page has 53 coats.

The reason you might reflect on it is that VF owned North Face has somehow navigated the branding and positioning wars so that it’s fine for it to be an outdoor brand and a fashion brand among other fashion brands that are clearly not outdoor brands. My perception is that somehow The North Face’s credibility as both an outdoor and a technical mountain product has been translated so it provides credibility as a fashion brand.

We’ve watched and are watching lots of industry brands struggle with this. What is VF doing with The North Face (and Vans) that other brands don’t seem able to do? No magic wand I’m afraid. It’s VF’s processes, operational discipline, and strong balance sheet that make the difference.

Zumiez’s Quarter and Omnichannel Insights

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Zumiez reported a 12% increase in revenue for the quarter that ended August 2nd to $177 million from $158 million in the same quarter they last year. Their net income was up 57.3% from $4.74 to $7.46 million. Naturally, with that kind of good result, the stock fell 18.8% the next trading day from $32.4 to $26.31.

I don’t think I’d make it as an analyst on Wall Street. It’s not that I’d only focus on the current quarter’s results. The analysts also had some concerns about the rest of the year and those aren’t unreasonable. But if they took any kind of longer term perspective (which I’m beginning to think isn’t allowed if you’re an analyst) they might have focused on Zumiez’s efforts with the omnichannel stuff a bit more. I’ll get back to that, but first let me do what I always do- the numbers.

Zumiez ended the quarter with 535 stores in the U.S., 33 in Canada and 14 in Europe. They expect to end the year with 18 European stores. The sales increase was the result of having a net of 53 more stores open in this year’s quarter as well as a 3.4% increase in comparable store sales. Remember they include ecommerce in their comparable store sales (as I think they should). Interestingly, the 3.4% increase includes a 22.2% increase in ecommerce and only a 1.4% increase in comparable brick and mortar sales. Total ecommerce sales were 9.6% of total sales ($17 million) compared to 8.8% in last year’s quarter.

North American sales rose 10.1%. European sales were up 57.6% to $9.5 million and represented 5.4% of total sales.

The gross profit margin fell from 34.9% to 34.5% mostly due to a 0.6% decrease in product margin. SG&A expenses rose from $47.3 to $49.3 million. They fell as a percentage of revenues from 30% to 27.9%. 0.70% of the decline was because Zumiez didn’t need to accrue any additional cost for the Blue Tomato earn out.

The balance sheet is in good shape. I would note that for the six months ended August 2, net cash provided by operating activities was $30.5 million compared to $9.9 million in the same six months last year. I like cash.

Okay, now for the fun part. Here’s the first risk factor Zumiez lists. “Our ability to attract customers to our stores depends heavily on the success of the shopping malls in which many of our stores are located; any decrease in customer traffic in those malls could cause our sales to be less than expected.”

I don’t necessarily take risk factors too seriously, but I don’t ignore them either. This one caught my attention because it was listed first, I didn’t recall seeing it before, I posted something about the future of malls recently, and I think the trends in malls have a strong relationship to the evolution of a retailer’s omnichannel strategy. Or maybe I mean that omnichannel strategies are causing some of those trends.

It’s all kind of a big mish mash of trends, possibilities, experiments, false starts, new ideas, and unexpected relationships. I don’t know the answer. Neither does Zumiez. But they do seem to know they are stuck with it and are working hard to find out what works and what doesn’t.

Let me quote CEO Rick Brooks a few times. Please keep being quotable Rick. I love it when I can write these things by cutting and pasting.

“…we view really what we are doing- the integration of building a channeless retail experience for our customers- as a never ending job because the customers are in charge, they are the ones that have the power in today’s world because of smart technology, we need to go where they want to go, however they want to do it, we’re going to be there to serve them and we don’t know exactly what that’s going to look like again. I tend to think with their early stages of this transition not the latter stages.”

“So we’re going to try all sorts of things, we’re going to measure what happens when we close stores and markets, what happens to the integrated omnichannel business. Well we already know it’s a huge list when we open stores in markets. But so we’re going to continue and to really experiment with these ideas and measure where we’re going to be.”

“As we continue to expand our omnichannel capabilities and bring our highly differentiated and lifestyle relevant product and perspective to the marketplace, we believe that we can maintain strong merchandise margins through full price selling.”

“We also strongly believe that the enhanced connection with our consumers that is enabled by heightened omnichannel presence will be a key point of differentiation in the rapidly evolving retail landscape.”

I’ve written a few times that the biggest risk was taking no risk at all, and I’m guessing Zumiez’s management team would buy into that. They don’t know how this all going to work, but they know it’s happening and if they aren’t part of it, they will not prosper.

I’ve quoted CEO Brooks enough, but also interesting was his discussions about opening (or closing) stores. The goal is not to open stores. It’s to have the right kind and size of stores in the right place supported with the correct omnichannel presence and activities. Whatever you do with stores, you do it to meet a customer requirement. Maybe there are some places where you would have opened stores in the past, but now you won’t and not opening will be net positive for your bottom line.

If I could get Mr. Brooks and members of his team in a bar and get a few drinks into them, I’d love to find out how their organizational structure is evolving in response to the omnichannel and retail evolution. To me, it seems like every function is connected to and influenced by every other function in ways they haven’t been before. At least for me (a closet organizational dynamics junkie) this is going to be fun.

You can see where a strong balance sheet comes in. Whether you’re a brand or a retailer, you need to be paying attention. You’re going to spend some money on things that aren’t going to work, but that has to be okay.