It’s Time to Reassess Your Online Strategy

It’s Time to Reassess Your Online Strategy

Big brands come and go, and they always have. What’s happening in retail right now, however, only happens once in a generation. We’ve been saying for a while that, in the online retail space: surviving is the new winning. This is especially true for single-channel retailers, like battered (and once beloved) clothing seller J. Crew.

As Walmart and Amazon continue to make aggressive acquisitions, there may be very little room left for small to mid-sized national retailers. Investor rating service Moody just released its list of distressed retailers, and it’s grown from 15 to 22. (Subscribers can download the Moody’s report here.) Its author, Moody’s lead retail analyst Charlie O’Shea said:

"Almost every sub-segment of retail is feeling the looming shadow of Amazon's ever-increasing presence online.”


The report suggests that retailers, especially single-channel retailers, need to stop thinking of their competition as other similar brands, and focus instead on how to compete with multi-channel stores that sell similar products. O’Shea’s perspective: J. Crew should focus on Target and not another clothing brand. Big box stores, especially Target and Walmart, have been pulling customers away from single-channel retailers for years. The recession made this retail contraction happen even more quickly, but it was inevitable regardless.


We Still Haven’t Hit Bottom

The news on the street, and from Moody’s, is that those big department stores will continue to swallow small competitors, and leave very little wiggle room for everyone else.

It’s true that physical retail is going through one of the more painful transitions in the past 50 years. Many of the stores that are struggling (Sears) or have already closed their doors (The Limited) are examples of old brands that have been surpassed by new ones. Out with the old, and in with the...well, what exactly?

Our suggestion: pay attention to who’s losing but follow the trends of the brands that are innovating. Learn from brands that retarget themselves to align with the new online sales environment. Of course, some simply won’t. However, brands that act now, and aggressively, on owning their online presence is the only way to guarantee survival.


It’s Not All Gloom and Doom

Not every brick and mortar retailer is dying. The Gap (thanks mostly to Old Navy) is making money. Nordstrom learned how to play the online game early and it’s paying off. Nike has made early moves to owning its brand placement on Amazon.

Without question: Amazon is the tiger’s tail everyone is clinging to. It’s a bumpy ride, and no one is questioning that. Retailers like J-Crew need to start thinking less like stores and more like brands. How can you reformulate your products to succeed alongside a mammoth like Amazon, Walmart, and Target?

Sears is trying to answer that question for themselves right now, and has entered into a reciprocal agreement to sell Kenmore appliances on Amazon. In July, the retailer announced a plan to sell their hallmark brand with a direct partnership, hoping to lure online shoppers and retain value from one of its historic brand imprints (it recently sold Craftsman to Stanley Black and Decker to free up $900 million in liquidity). Smartly, Sears is also working with Amazon’s tech: Kenmore tech will sync up with Amazon’s Alexa AI to control smart appliances. Is it a shot in the dark? Maybe, but it sure is a smart one.

It’s natural that the press is telling the stories about the losers. There are winners, too, and we need to spend as much time talking about the smart choices that are responsible for their combined success.

 

Oh, Abercrombie. Is This Too Little, Too Late?

There’s been little good news as of late for mall retailer Abercrombie & Fitch. Critics and analysts have long said that the brand long ago needed to do compete aggressively online and update its uber-sexy marketing image (which feels like an outdated reference to its glory days in the 90s). So far, it has yet to do either.

Now: the retailer is turning its eyes and strategy to China’s youth. It’s given itself a hipster-like facelift with designs that downplay the shirtless models that were its calling card last century. It’s now listed on Alibaba’s price-friendly Tmall in China, moving away from its luxury brand positioning in that region. Note that when the company opened physical stores in China three years ago, it did so with shirtless models and its beefcake-heavy image, a strategy that fell as flat there as it has done in the U.S. for years. So, the brand now is leaning heavily on street-friendly fashions that Chinese teens and 20-somethings may embrace. 

What’s questionable is whether or not this sea change will work and whether or not it will work quickly enough to save them from complete and utter insolvency.

 

 

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