The Pocket CGO
You cannot help but notice that times are tough in the retailing business. The Sports Authority and Aeropostale filed for bankruptcy following the same path of Pac Sun and American Apparel. The Gap, Macy’s, Kohl’s and Nordstrom just announced starkly negative quarterly sales results. Yet, the Commerce Department just reported that overall retail sales grew at the fastest pace in more than a year last month. Clearly, the growth issue is not a universal one but more of a sector/brand specific issue. So what is going on?
How valuable? I recently heard Jim Cramer mention on CNBC that the millennial generation’s top three expenses are Uber, smartphones and makeup. When I reflect on this list, I think about expenses that have become “fixed” or “indispensable” to a consumer. The median annual income of millennials today is around $35,000, so after paying for all of the “indispensable” expenses, there is not much left for discretionary spending that most retailers count on. (I think the same logic holds for the total population base.)
The problem that has been raised in the media is that there are just too many retailers chasing the same business. Personally, I see the list of retailers above and I feel no excitement….they all blend in. Recently, our college-aged niece was in town, so we took her shopping at the mall where all the aforementioned retailers are present. She made a beeline to Forever21. I can understand why. The store was busy and the “energy” level in the store was palpable.
I have always believed that brands have to evolve to find that path to make consumers passionately value what it offers and stand for. This requires much more than delivering a utilitarian solution but also understanding the emotional payoff that today’s experiential driven economy requires.
The digital revolution has made us all into a much better-informed and educated consumer. We have a much better appreciation of what value a product offers, and if the price is right for what value it offers. We have access to unending commentary and feedback from people that share our same values. The Internet has opened the door to purveyors of products that truly meets our needs and desires, no matter how unique, hard-to-find or never-knew-it-existed.
I am sure most of you have heard the three pillars for business – Product, Price and Service – and the convention that you have to excel in two of the three to succeed. It is my opinion that for a business to succeed today, you have to nail all three.
Consider Warby Parker. Warby Parker is revolutionizing the eye wear market by offering a complete set of high quality frames and Rx lens for a fraction of what one pays at traditional optical stores. Not only are they delivering on the product and price value, they have developed a truly unique D2C service model (home trial) which has extended into “brick and mortar” trial stores offering one of the best omni-channel experiences today.
The big question for brands today is how do you find that path that offers today’s consumers product, price value and service that can compete with innovators like Warby Parker.
Do you have a clear path to growth?