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Kohl’s, Facebook, And A Sad STORY

On Tuesday, Kohl’s announced a partnership with Facebook to use the social media giant’s consumer information to select a merchandising assortment. The assortment – featuring new or unknown brands – is entitled “Curated by Kohl’s,” and is part of CEO Michelle Gass’s efforts to enhance Kohl’s relevance with younger consumers. Kohl’s plan for its execution – and how it contrasts with Macy’s STORY concept – is another example that the mindset of legacy retail executives may be holding them back in today’s market.

The “Curated by Kohl’s” assortment will launch in-store and digitally in 2020. While marketers have used Facebook’s customer data to reach target consumers for years and actively use the platforms to sell their products today, partnering directly with the platform to identify up-and-coming brands to include in an assortment is new.

The data driving these assortment decisions should be good. Flocks of new direct-to-consumer brands have used the platform as the quickest – although increasingly expensive – path to customer acquisition.

But will it play in Peoria?

Photo courtesy of Getty Images for Macy’s, Inc.

Macy’s STORY, by contrast, builds an assortment around a theme. The latest concept – “Outdoor” – includes a head-scratching Miracle-Gro partnership. A visit to the merchandising pad at the Macy’s at Woodfield Mall this weekend showed evidence that the consumer is puzzled too; despite heavy traffic in both the Chicago suburban mall and at Macy’s, there was no one shopping the pad.

STORY is also exclusively in-stores. Although individual items may be found on Macy’s site, STORY is not available as a shoppable concept online.

Kohl’s approach to creating a new, traffic-driving assortment is stronger. Kohl’s already recognizes that digital traffic is as important as physical traffic; the assortment will be available on both the site and the retailer’s mobile app. And with Facebook’s help, matching a defined target consumer with an assortment should yield more fruitful results than dropping Miracle-Gro in the store.

If executed properly, the move by Kohl’s is a further data point revealing that the mindsets of legacy retail executives must change quickly. A recent study by McMillanDoolittle revealed that only 5% of the leaders of legacy retailers have a career background that started in marketing – a function that may have a better-developed sense of meeting a defined customer’s needs.

Kohl’s Michelle Gass is one of those legacy retailers with a career rooted in marketing. Her strategies of creating traffic by leveraging Amazon’s returns and the Curated concept reveal she is thinking differently about customer acquisition and repeat visits. Acquisition for legacy retailers is no longer about additional advertising or opening new stores. And it definitely isn’t driven through assorting random products that are tailored to a fashionista-ironic mindset in a Macy’s setting – a strategy that bares a whiff of the Ron Johnson experiment at JCPenney. (Disclosure – I was briefly part of the Ron Johnson-era JCP.)

Strong retail leadership will need the foundations of smart merchandising that fits both a digital and physical setting, the know-how to combine the operations of a store and the digital world, and an understanding of how to acquire customers in today’s retail marketplace. Gass may be one of the examples of a retail leader who gets it.

This articles first appeared in Forbes.

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Has Your Store Strategy Kept up with Your Omnichannel Strategy?

We are well into 2016 and the new year has brought a host of highly publicized store closures from Macy’s to Walmart, and there may well be other announcements coming.  The continued demise of Sears, and bankruptcy talk swirling around The Sports Authority which could result in the closure of nearly 200 of it’s 450 stores, only add to the sense of gloom.  Take a look at your retail stock holdings (if you dare!) and you’ll see most of them have lost 30% or greater of their value since the late Fall.  The volatility of the sector is as great as we’ve ever seen.

There are many forces at play that are continuing to drive “seismic shifts” in the retail marketplace, but the greatest continues to be the journey from a traditional brick and mortar retail model, to a seamless omnichannel model.  To this end, we believe many retailers should double down the analysis of one of their largest assets:  the store.  How these assets are used to gain competitive advantage brings to mind a series of strategic questions we believe retailers should be asking:

1.  The store itself.How many stores should we have?  What is the role of the store? Retailers have been painfully reminded that the customer migration to e-commerce quickly exposes poor performing stores, if it wasn’t evident already.  Many retailers simply have overreached and have too many stores, and we expect more closure announcements throughout 2016.  In addition to rationalizing the store base, we also believe the role of the store must be redefined within the context of the brand.  Should the store be simply a showroom with inventory shipped to customers? Check out Argos in the U.K. for a great example.  Or should certain stores within the portfolio be an experiential showplace where customers may want to linger, shop and experience the brand? Check out the Starbucks Roastery in Seattle.  A last point:  remember your not-so-secret weapon, your people.  Amazon is certainly the colossus that is creating pain for all brick and mortar retail.  However even with Amazon Prime free shipping or same day 1-hour delivery, retailers with brick & mortar locations can offer something Amazon can’t, and that is great personalized service.  The well-trained and knowledgeable associate can be the differentiator that keeps your customers engaged and coming back.

2.  Data.  What data do you have, and how are you using it?  How can you gather meaningful data on your customers’ shopping behaviors and turn this into higher conversion rates both online and in store? Some retailers are innovating in this area with RFID and “smart” mirrors and fitting rooms, but the pace of innovation and investment must accelerate.  In-store analytic technologies exist that can provide shopper path, engagement, traffic and conversion data which are very powerful tools in the hands of strong merchant, stores, and e-commerce teams.  This should be a key focus for any retailer attempting to increase the ROI of their store base.

3.  Minding the store itself.  Is your omnichannel experience really seamless?  How well do your stores perform on the basics? We continually see execution failures as one of the greatest problems in retail, and it only gets magnified in an omnichannel environment.  Promises get unfulfilled when customers can’t locate the Buy Online Pick Up in Store desk due to poor or no in store communication, limited staff availability, or merchandise which cannot be located or is out of stock.  Spend a day in your customer’s shoes – you may well be shocked at what you find.

It’s time for retailers to double down for an intense review of their store base to determine how these assets can support their omnichannel strategy, versus simply becoming tomorrow’s store closure headline.

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