This Can’t Be Happening- An Online Shopping Experience

/0 Comments/in , /by

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.

Whose Customer Am I Anyway?  Amazon is a Utility- Not a Retailer

/7 Comments/in , , /by

I bought something from a brand. I bought it on their Amazon store. Amazon shipped it to me. I decided not to keep it. I returned it to a Kohl’s.  I don’t remember who actually delivered it.

When I returned it, I didn’t buy anything at Kohl’s. But I had to walk through the store and down the aisles and through various products to get to the Amazon return counter. I’m sure nobody set it up like that on purpose.

The return receipt I got from Kohl’s offered me a 25% discount on anything I bought at the store.  Kohl’s hopes that I’ll become a customer because I’m in the store doing an Amazon return.

Read more

Recession as Part of Your Strategy: Zumiez’s Results for the Year Ended February 2nd

/0 Comments/in , , /by

Let’s go right to something Zumiez CEO Rick Brooks says at the end of the conference call on their results.

“…our goals [is to] continue to grow the profitability of the business from [an] operating profit perspective.  Now of course if we have recession we’ll go backwards and we’ll see competitors go away across the globe and we expect coming out of the recession we’re going to emerge even stronger with a stronger share position in the marketplace which will allow us to drive operating margin higher again in that case.”

Rick is careful not to predict a recession, though I’ll bet he believes we will have one eventually.  That’s what I believe.  I’m pretty sure that’s what other executives at various companies believe.  Executives who share that belief are building their balance sheets, strengthening their brands, controlling distribution, and positioning themselves to manage expenses.  Like Rick, they expect a recession will hurt, but they expect it to hurt other more- to their benefit.

Read more

What Caused Shopko to File for Bankruptcy? Two Parts to the Puzzle.

/2 Comments/in , /by

Last Wednesday Shopko, a general merchandise retailer with 333 stores, filed for chapter 11 bankruptcy.  On January 17th, SGB Media published an article on Shopko and the filing by Thomas J. Ryan with the title, “Shopko Becomes Latest Casualty Of Online Disruption.”

I took umbrage at the suggestion that online disruption was the primary cause of the filing.  It’s not that there wasn’t any online disruption.  Every retailer is dealing with some online disruption and how they manage it will determine if they survive.

Read more

What Happens When the Apparel You Buy Fits Perfectly Every Time?

/2 Comments/in , /by

Technology that has value tends to get better and cheaper.  I can’t think of a reason that won’t be true for the Zozosuit.

“Japanese retailer Zozo, which operates Zozotown, the country’s largest online fashion marketplace, has developed a figure-hugging bodysuit featuring lots of uniquely patterned dots.”

“As you turn slowly round, your smartphone takes photos, building up a 360-degree image of your body shape. Then you can order clothes that really fit.”

There’s one problem with this new technology.  As you’ll hear when you watch this short explanatory video, it doesn’t quite work.

Read more

Lessons from the Not Entirely Unexpected Sears Bankruptcy Filing

/0 Comments/in , /by

Serendipitously, I hear this is also the last season of the TV show “The Walking Dead.”  But while I expect that TV franchise to continue in some form, the same can’t be said for Sears.  I know it’s supposed to be a restructuring, but no amount of financial engineering can compensate for Sears’ lack of customers and a defendable and identifiable market position- especially after the most valuable assets have been stripped.

You might read this excellent article on Wolf Street to understand how Sears got to where it is- at least from a financial perspective- and why it’s prospects are grim.

What could have Sears have done differently?  Human behavior being what it is, probably nothing.  In a perfect world, management would have recognized 20 years ago some of the changes that were coming.  That’s expecting too much.

By the time they figured out where things were heading, it might have been too late.  And as you will recognize if you read the article linked to above, the interests of the CEO and hedge fund owner who controls some of Sears’ prime assets and is a secured creditor were not exactly aligned.

In our industry we’ve watched some public companies get into trouble, I’ve argued, specifically because they were public and simply could not do, as public companies, what they needed to do.  Neither Quiksilver or Skullcandy, to use a couple of examples, had a strategy that was consistent with building their brands in the changing retail market and meeting the requirements of being public.  They ended up in private hands- exactly what should have happened and where the brands have the best chance to succeed.

There’s no public data, of course, on how Skullcandy, Quiksilver, Roxy or DC Shoes are doing.  But at least now they can focus on branding and distribution in a way appropriate to how they need to compete.  They couldn’t (didn’t) do that when Wall Street was requiring regular, significant revenue growth.

Sears should have gone private too.  Not in the form of hundreds of big stores in malls selling everything.  That ship has probably sailed due to online/Amazon/millennial habits/demographics/etc.

What would have happened if somebody at Sears had had the vision to say, “We need to do something risky, dramatic and different if we’re going to be a viable business?

JC Penney tried that.  They brought in Ron Johnson from Apple to completely remake the brand.  As you may recall, that didn’t work.  Neither Mr. Johnson or the Board of Directors or Penney’s balance sheet had the patience or the ability to withstand the pressure his aggressive new strategy generated.  I’d argue that it would not have worked even if they’d had the patience, as JC Penney has the same problem Sears has; too many stores that are too big selling too much commodity like stuff.

Sears had some valuable brands.  These include Diehard, Lands End, Kenmore, Craftsman.  Am I forgetting any?

Anyway, most of these have been sold.  But what if, years ago, somebody way smarter than I am had the foresight to say, “In its present form, Sears doesn’t have much of a long-term future.”

Yeah, I know.  If that person is out there, you’d like to meet them, hire them, work for them.  Me too.

That visionary might have suggested that each of Diehard (a battery brand but let’s think of it as auto repair), Lands End, Kenmore, Craftsman, perhaps others each had potential to find life as companies/brands independent of the Sears name.  The challenges of the new consumer and retail market would still have existed but starting with a strong brand is a leg up.  Vans comes to mind.  It was a $400 million public company in trouble when VF bought it.

Let’s say that with the full support of the board of directors and the stock market, Sears spins off these brands and closes the rest of Sears.

Didn’t I just make that sound easy?  Here in the highly inconvenient real world there would be shareholders, a board of directors, all the real estate people who have long term leases with Sears, debtholders who have some of those assets as collateral- well, you get the picture.  The bottom line is it can only happen though a bankruptcy filing where shareholders lose everything, unsecured creditors lose most of what they are owed, store leases can be rejected, and a deal can be made with the secured creditors.  Basically, bankruptcy is a legal process for allocating losses when the assets are no longer worth what people paid for them.

You also must hope that the brands being spun off, either as separate public companies or sold to private equity, haven’t been so damaged by corporate attempts to generate cash flow at any cost that they have lost their cache.  Can you think of any brands in our industry that applies to?

The lesson here is about the dynamics of change.  You need to act sooner rather than later but the realization of the need to do something different often doesn’t happen soon enough and the resistance to doing it is extreme until outside stakeholders force action.

How Brick and Mortar Retail Has to Change

/12 Comments/in , , /by

I don’t think brick and mortar is going away.  I doubt many of you think it is either.  I do believe that consolidation and transformation of the space has a way to go and I further believe it will reach its climax when (not if) the next recession hits.  I know this sounds kind of unfeeling, but I’d sort of like to get that recession going and out of the way.  The longer it’s delayed the worse it will be.

It won’t be just a recession that leads to this continuing transformation and consolidation.  The continued growth of ecommerce, retailers resisting change, and slower long-term GDP growth will also play their parts.

But you, as a retailer, don’t want to be consolidated (well, maybe at the right price) and you don’t want to go out of business.  Knowing that, I’ve been evaluating the role of a brick and mortar store these days compared to what it used to be.

What Stores Are Not Doing as Much Of

Let’s remind ourselves of the traditional functions stores helped customers perform.

  1. Finding the product
  2. Discovering the price
  3. Understanding the features
  4. Learning how it performs
  5. Figuring out if others like it and why
  6. Buying the product

That’s quite a list.  Some of your customers will continue to need (or want) your store(s) to perform some of these six functions some of the time.  But not most of your customers all of the time as used to be the case.

If that isn’t a kick in the pants alerting you to the need to change your business (and financial!) model, I don’t know what is.  What changes?

What You Have to Do More Of

In the last few months, I’ve developed in my head a model of what I think retail is evolving to.  I’m certain it’s incomplete and wrong in some way given the continuous change.  I’m laying it out here anyway because (1) Even though some of it is known, I want to draw it together, (2) writing about it helps me think deeper, (3) I’d like you to tell me where you think I’m wrong and (4) there is urgency for every retailer to have a vision and act on it regardless of the uncertainty.

I think most of this applies to brands as well, as retailers are brands and brands are retailers.  Anyway, here’s my shot at it.  There is a certain advantage to being a large retailer right now, but this all generally applies to one store or one thousand.

First, your brick and mortar and online has to be completed integrated.  You have to see your business as having one customer, no matter how they buy, and one revenue stream.  The customer has to be able to view and buy the same product at the same price in the store or online on any device.  You should be agnostic in terms of where and how a product is sold and delivered.

You do that by making your stores as responsible as they can be for handling the online, as well as the in store, customer relationship.  Which, and I hope I don’t have to point this out, is really one relationship.  Don’t argue with me about that- argue with your customer.

If you’re one store, that’s not as much of an issue.  As the number of stores grow, the opportunity to move ecommerce expenses into the stores can result in saving a bunch of money.  The more stores, the more money you can save.

The savings happen for two reasons.  First, you’re going to cut some expenses.  Maybe in labor or facilities.  You are going to use the assets you have more efficiently.  The public retailers call this “leveraging” their fixed costs- spreading the same costs over a larger revenue base.

Second, you’re going to cut off any dysfunctional competition between ecommerce and brick and mortar.  Why might that competition exist in the first place? What, for example, if you have people who receive a bonus based, in one case, on brick and mortar sales and, on the other, on ecommerce sales?  I can pretty much guarantee they won’t be focused on maximizing companywide revenue.

The next thing you have to do more of, based on the integration of brick and mortar and ecommerce, is evolve your stores.  This is an example of where we find ourselves in the uncomfortable place of needing to change, not quite knowing how, but having to start anyway.  The integration of brick and mortar and ecommerce I’m describing means the role, functionality, and layout of stores will change.  As you work to minimize your inventory (I’ll get to that) and give store personnel the overall customer relationship, how big do stores have to be?  What inventory will they carry (as you can seamlessly draw on inventory across your whole system and probably on what your non-owned brands have in inventory as well)?

If you have a lot of stores, how might the role of your district managers change?  Will the growth of ecommerce mean you can get by with fewer stores in a given region?  What will a store’s layout and space requirements look like if it’s carrying some of the inventory that was previously held in some distribution center?  Will you need less square feet as customers order t-shirts online and they are automatically printed in the back room?

Would that t-shirt sale be a store or an ecommerce sale?  Doesn’t matter does it.  That’s why you have to see your stores as having just one revenue stream.

Okay, I said something about minimizing inventory.  The quality and immediacy of your data has to get better.  There are so many reasons that’s important, but right now I want to focus on its inventory impact.

Snowboarding used to be the industry poster child for inventory disasters.  One season and snow dependent.  It used to be common to end a season with enough close out product to wipe out the profit for the whole season.  Most of you have figured that out and adjusted your buys accordingly.  Better to mourn lost sales than product you have to slash the price on.

My suggestion is that you treat all your inventory like it was snowboarding product.

You’re in (and will continue to be) a market where product life cycles and trends don’t seem to last long.  We’re an industry where product is differentiated mostly by marketing and community judgment rather than features and new brands come (and go) with the speed of light.  Time to embrace that- since your customers are.

It’s been years since I started advocating for retailers to take risks with new brands.  It’s not now just urgent- it’s unavoidable.  It’s also been years-more than 10-since I suggested being prepared to give up some revenue, or at least some revenue growth, in favor of higher margins and lower operating expenses for a better bottom line.

Both are related to the quality of data and inventory.  Your plan for identifying new brands/product may be disciplined and rigorous or, for smaller retailers and brand, just a matter of keeping your ear to the ground and developing a culture where employees are aware of products and trends.

If new brands are important (both bringing them in and knowing when to dump them), if product differentiation is tough and based to some extent on scarcity/distribution, if trends are short and dynamic,  if you think getting stuck with merchandise you have to mark down sucks, if something not selling in one place might sell in another, and if you have another use for cash besides sitting in inventory then knowing exactly what is selling where, to whom and  how quickly matters a lot.

Yeah, I know- you already have inventory reports and gross margin reports and various other reports.  How often do you get them?  Do they provide the data you need to address the issues I’ve raised in the paragraph directly above?  Is the level of detail adequate?  Set goals you can measure that improve on the issues listed above.  Some retailers are installing systems with algorithms that are parsing customer as well as inventory and sales data to gain new insights.  What new insights? They don’t quite know yet.

Over the next couple of years this software will become available to everybody at a reasonable cost.

Let’s take a short break while I point you to a couple of related articles.  I haven’t used the term “social media” yet but obviously it’s impact on the changes in retail is important.  Here’s a link to an article from my research department on a social media influencer with 1.2 million followers.  “She” is a bot.  I have no idea where to go with that.  It’s just another example of the complexity we’re dealing with.

On the subject of distribution and brand building, read this about specialty brands doing limited edition, lower priced collaborations with Target.  Is this the way to expand your sales and build your brand, or destroy it? I tend towards the later.  What do you think?

Okay, breaks over.

What Retailers are Doing More Of

  1. Customer service
  2. Community building

Neither of those sound particularly new.  But if you’ve read this far, you know I’m suggesting you have to do what you did before in the way of customer service (though less of it for some customers) plus satisfy with new brands, experiences, surprises, and engagement.  And all this for a customer who wants endless newness.  No wonder I’m trying to get you to increase efficiency, improve inventory management, and cut costs.  One issue I need to give some more thought to is how, specifically, the role of a brick and mortar sales person changes given the integration with ecommerce.

Most industry retailers would say they’ve always been community builders.  I think that’s true.  Especially for smaller retailers, that community’s reach was defined by a limited geographic space around stores.  Now your community isn’t so easily defined. Your reach, through the internet, is “everybody.”  One thing hasn’t changed- if you think everybody is your customer, probably nobody is.

The word that’s popping up a lot more in defining your target customer is “culture.” Culture, in the context we’re talking about it, refers to commonalities among your customers.  It’s easy to say, for example, “We’re a skate retailer/brand.”  That’s a fine thing to do as long as you recognize that positioning yourself that way limits your growth because you’ve defined your target market.  I don’t have to remind you of all the companies that started with their roots in an activity, tried to expand outside their solid franchise in that activity, and did themselves a lot of damage.

Trying to figure out the culture of your target customers is a lot harder than saying “We’re a skate company” and defining your universe of potential customers that way.    Fortunately, you’ve got a lot more data on customers than you used to have, and they are busily telling the world what they like and don’t like and why.  That brings us right back to the importance of systems that allow you to parse all this data to provide insights on the culture of your customers.  You can always be a “skate” retailer/brand and perhaps draw comfort with that solid, if maybe over simplified, characterization of your customer and target market.  If you’re culture focused, you have to be plugged in enough to change as that culture changes.

I wish I had the space to be more specific, but this has already run longer than I like and, in any event, generalities are inevitable when I’m discussing industry wide issues.  I’m not asking for much am I?  I just want you to change most aspects of your business, integrate the pieces in a way that didn’t used to be necessary, and do it fast and continually-as your customer is requiring-while what you need to do is changing and isn’t completely obvious in the first place.

It’s not me asking.  It’s your customer requiring.

Retailer Plans to Go Public. Wait…Now?…A Retailer?…Really?

/0 Comments/in , /by

Roots, a Canadian retailer, has filed a prospectus for a public offering.  Here’s the link to their web site.  As usual, the initial prospectus is missing a lot of key numbers, but I’ll do the best I can.

Roots has been around since 1973, so they must be doing something right.  “As of July 29, 2017, our integrated omni-channel footprint included 116 corporate retail stores in Canada, 4 corporate retail stores in the United States, 109 partner-operated stores in Taiwan, 27 partner-operated stores in China and a global e-commerce platform that shipped to 54 countries during our most recently completed fiscal year.”  They had 2,200 full time employees.

Read more

Retailers and Landlords. Can’t Live With Each Other, Can’t Live Without

/0 Comments/in , , /by

At this point, it’s common knowledge that diminishing mall traffic is leading retailers to close stores and/or renegotiate leases with landlords.  There are also some store openings going on as retailers, hopefully, find locations and configurations better suited to the fast changing brick and mortar and e-commerce world.

But relationships between retailers and landlords are not quite as cut and dried as, “Give me a lower rent or I’ll leave.”

Read more

Retail, Technology, Consolidation, and Unintended Consequences

/2 Comments/in , , , /by

This morning, the Seattle Times featured this article telling us that REI wage hikes for store employee announced last summer will be costing the company $24 to $25 million.  The company’s net income for its last complete year was $38.3 million.

Meanwhile, my oldest son sent me this article from Investor’s Business Daily, telling us that fast food purveyor Wendy’s will have self-service ordering kiosks in 6,000 restaurants in the second half of this year due to rising minimum wages and tight labor conditions.

I’ve been writing about the potential impact of 3D printing and other kinds of manufacturing technology for a while.  Here’s my article on the apparel manufacturing system Intel plans to introduce.

Read more