Achieving retail success amongst the carnage
Caffeine dehydrates you.
Einstein failed maths.
Goldfish have a 3-sec memory.
Bulls hate red.
The Great Wall of China is visible from ‘space’.
If we were honest with ourselves on these things, I’d guess most of us would have heard and believed those things.
They are myths.
How many of the things we ‘know’ about retail is myth and how many are facts?
We believe retail is doomed, multi-channel is the answer and Amazon will eat the world. The only way to be successful, is to be the ‘Uber-of-something’.
Let’s consider the facts:
You have to be in e-commerce and there are successes across the board. Boohoo is travelling well, and so is the The Honest Company – and countless more.
Multichannel is the way to go: Former online-only retailers such as Warby Parker, Bonobos and Birchbox have rushed to open stores. Apple and Amazon get trotted out as exemplary case studies, and I have no doubt they are.
Bricks-and Mortar is dead. The retail graveyard in the US is a sight to behold: Abercrombie & Fitch (60 stores) Crocs (160 stores), J.C. Penney (30-140 stores) Macy’s(100 stores), Radioshack (552 Stores), Kmart (108 stores), Sears (42 stores), American Apparel (104 Stores) and The Limited closing All 250 stores
Yet there are ‘alternative facts’, to borrow a phrase.
Collapsing valuations of once high-flying brands like Trunk Club and One King’s Lane and a host of others. (Walmart announced it was acquiring ModCloth for a fraction of the VC capital invested to date.) There is plenty of red ink at SurfStitch and Temple & Webster.
Uber is the poster child for the ‘gig economy; but is still losing insane amounts money. In the last three months of 2016 alone, the company lost $991 million and there is no short-term indications that the business model is viable. (Only time will tell whether investors with deep pockets propping it up are proven to be greedy with a herd mentality or perspicacious.)
Amazon is a true Black Swan event and no comparisons can be made to any ‘regular’ business. Amazon is more than a conglomerate, it is a platform making money off a diverse range of products from web hosting and cloud services to retail. It is worth noting that it took them a decade to show their first profits. You need extraordinarily patient and rich investors to keep you afloat for that long and this is hardly normal.
The only reasonable conclusion that one can draw from this is that commerce is a tough gig. There is no single strategy (online, multi-channel or brick-and mortar) that is the ‘right’ strategy.
There is a strategy that is right for your business, your market, your proposition. And if you execute that strategy well, success necessarily follows – barring the uncontrollable externalities.
It therefore seems that the only sensible approach is to stop fretting (even obsessing) about who is doing what (successfully or not) and to focus on what you can control. (I used to teach my MBA students that the ‘competitive analysis’ is the most overrated and probably least necessary part of the business planning process – IF a business plan was required. I wonder how many remember.)
To some it may seem to be a rather simplistic conclusion, but core truths usually appear simplistic; but I am a fan of Occam’s Razor.
Best to chase your own dream.
Dennis Price: Co-founder at www.yearone.solutions