Perhaps Les Wexner, the CEO of L Brands, owner of Victoria’s Secret, is clairvoyant or maybe he’s suffering from the Cassandra syndrome. But he’s convinced the Internet won’t kill-off stores and while we’re at it, he’s convinced consumer’s fascination with Smartphones will fade. You read that right (WSJ article may be behind pay wall). Seriously, Wexner does not believe Amazon has hurt retailers, or that declining mall traffic perpetuated the closing of over 6,000 retail doors over the past year. I am left to conclude either:
- He is fighting for the survival of his physical store empire;
- He is cherry-picking some data and initiatives by others that still involve physical retailing;
- He has lost touch with the demographics of his intended target market;
- Senility is setting in; or
- All of the above.
Wexner believes “it’s about the merchandise”, which must be compelling, and having an enticing store atmosphere. He believes “humans are pack animals” and they crave social interaction (I sense a new trending hash-tag here), and that will continue to drive in-store traffic.
But, as the WSJ article points out, December 2017 store-only sales dropped 6% for Victoria’s Secret.
Interestingly, Wexner points to Apple and Sephora as retailers that have been opening stores, not closing them. Wexner may have a piece of the equation correct – successful retail is catalyzed by the right product, but we also think he (and possibly all of Victoria’s Secret Executive Leadership), may be staring vacuously at their blind spot.
Consumers no longer go online, they live online. However, not all shopping experiences can be completed in a virtual world. In fact, some goods and services have experiential fulfillment requirements that compel an in-store experience to complete. Therefore, we believe the key is to implement a channel-agnostic, brand-centric, multiple channel strategy focused on the complete product and service delivery experience. And do it better than the competition.
Both Sephora and Apple (and many others) understand the yin-yang of physical verses virtual shopping experiences. They make it easy for the consumer to buy online, pick up in store. If you can’t find it in-store, they will find it for you and ship it to your doorstep the next day at no charge. But what draws a consumer into an Apple or Sephora store is not just the products, it’s the service and services. Sephora’s in-store makeovers are not only money-makers; they engender brand loyalty. And most importantly they provide an element of the fulfillment process that (outside of re-orders) cannot be achieved virtually (even in the emergence of augmented reality).
Similarly, Apple’s Genius Bar provides customers with hands-on step-by-step how-to-use it walkthroughs for Apple’s products. They enable a customer to get a personal interaction with another human in order to get the most from their Apple product in a non-threatening hands-on environment. Both of these retailers understand it is mission critical to put the consumer at the center of all decision making, and all product acquisition experiences, in a manner that support the channel of their convenience and choice. And by doing so, and doing so smartly, sales (and margins) will soar.
There are other reasons to mix physical and digital capabilities to create total shopping experiences. Its worth noting that the examples Wexner provides in the WSJ article today, such as Amazon building physical retail facilities, fails to point out that where digital or "e-commerce" retail giants are adding physical presence it is likely to either:
- Augment the fulfillment experience (e.g., centers to pick up packages); or
- Create new, more efficient omni-channel experiences (e.g., the clerk-less zero-checkout grocery experience).
The important watchwords for the consumer-centric experience are "ease" and "convenience." Where digital delivers on those promises, there is nothing "faddish" about it.
At C[IQ] we appreciate Mr. Wexner’s optimism that “shoppers want to visit stores to experience the environment and feel the products,” but a quick scan of Victoria’s Secret reviews on Facebook indicate Victoria’s Secret will most likely continue to experience sales declines until they:
- Take the first step towards customer-centricity by listening to what their shoppers are saying about the shopping experience; and
- Recognize shoppers don’t need to go into a store to purchase, but will go into a store when their shopping experience is enhanced by service and services.
At the end of the day, there is no doubt in our minds that the world of retail will be a combination of multiple channels, physical and virtual. No one will kill the other, but emphasis and roll of each will depend on the nature of the products and services. I think we can also safely say the smartphone isn't a fad, and Victoria's Secret may be, after all these years, that she's technically blind.