Apparel Sourcing Intelligence - Worldwide

How a retailer can go bust 2: integrating the Web with shops

There’s an article being syndicated around the web which is close to a guaranteed recipe for clothing retailers to go out of business instantly.
We dealt with the first yesterday: here’s the next bit of advice that’s guaranteed to get you into Chapter 11 faster than you can say “Pre-pack administration”*

2. “Shift from channel-centric to customer-centric mindset”
No, I don’t either. It’s something to do with using the Web more, and integrating Web retailing, old-fashioned bricks and mortar retailing and paper-based catalogue retailing. And it’s also about how wonderful the Web is to advertise retail chains.

Both views are intellectually sloppy and deeply dangerous.

For integration: there are good reasons for integrating every aspect of a retailer’s operations (essentially efficiency). And excellent reasons for keeping them separate.
The best reason for separation is that you’ve got no way of knowing whether the three channels are used by the same consumers. You get completely different demographic data about each channel (which, for most bricks and mortar businesses means none), and no way of comparing them. You get completely different kinds of behavioural feedback: compare the rich information about how customers react to new styles that Inditex managers feed back to La Corunna all the time – or the Marks and Spencer culture of suppliers walking round the main branches on Saturday afternoons – with the completely different data you get from webstats. All valuable: all different – and impossible to know whether what’s true of web customers is true of shop customers.

Because retailers can treat the two groups differently. There’s no need to put a sample of every Web product in every shop, so there’s a valuable business in very short runs on the Web – and that translates into garments sourced locally, while 65-70% of most European and North American retailers’ purchases come from Asia. Though the Web’s taking off rapidly, it still hasn’t got the buzz of a TopShop on a Saturday afternoon – but it’s a perfect way for us oldsters to reassure ourselves about fit without thinking we’re being sniggered at by lissome shop staff. All my evidence is that in clothing, Web customers differ – in demographics, product requirements and behaviour – from those in a shop.

And the relationship between the two channels is changing all the time. While paper catalogues still have a following, with their own specific needs (for example, in call centre staffing, briefing and training) that differ from both shops and the Web. Integrating the three MIGHT be the right thing to do: but blindly assuming you have to is making up your mind before reviewing the facts. Which, of course, is what consultants specialise in.

As for advertising: apparently JCPenney are hot on promoting themselves on the Web. They made a video you could access via Bewareofthedoghouse.com, Facebook or YouTube that was watched 1.5 mn times over Christmas. This, we’re told, constitutes a successful campaign. The fact that Penney had a ghastly Christmas, while boring old Luddites like Wal-Mart, Fast Retailing and New Look did terrifically without You Tube seems irrelevant.

So far, in fact, not only is the Web a pretty insignificant way of promoting mainstream clothing retailers: so is any kind of advertising. With a few specific exceptions (like M&S in the first year after Stuart Rose took over, or Uniqlo this winter) any kind of media advertising (including the web) for clothes shops is of marginal use compared to understanding and exploiting the natural flow of customers past and through a clothing retailer’s premises. Most clothes shops pay through the nose for good locations – and those locations mean more people pass branches than ever see a Web commercial: more people walked through or past Marks and Spencer’s Marble Arch branch in December than ever saw the JC Penney ad that’s supposed to have been “a success”.

There’s just one definition of successful advertising: does it create more profit from the sales it generates than it costs?. Thinking an ad’s audience matters squiggly doodle isn’t just uncommercial: it puts self-aggrandisement ahead of the shareholders who pay for these indulgences. And why did New Look, Fast Retailing and WAl-Mart do better over Christmas than JC Penney? Because they put their energy into getting the right product. At the right price, into stores where people would find it.

And probably wouldn’t recognise a “customer-centric mindset” if it hit them in the face. Or – what’s more likely – they hit the jargon-generating consultant coming out with such claptrap squarely in the jaw

If you weren’t following, yesterday we reviewed the first infallible recipe for going out of business: Increased focus on customer loyalty and gross margin are key From tomorrow, we’ll carry on looking at the other seven.