A recent BDO retail research survey highlighted how most retailers are bracing for an economic downturn in 2019 due to several macro factors in the U.S. The reality is that there will be winners and losers, but the players caught in the middle will get squeezed the hardest as competition heats up from high-growth D2C brands. One interesting snippet from the article is that most retail execs surveyed have put investments in the in-store experience towards the bottom of the priority list compared to beefing up ecommerce and marketing efforts. While this may seem intuitive given the growth of digital, it ignores what should be one of the biggest strategic advantages a physical retailer has, its stores. Furthermore, with most D2C brands expecting to open physical stores in 2019, older retailers with stale in-store experiences will seem even more outdated compared to the fresh, clean and newer store models opening up. Cutting out underperforming store locations and investing money in remodeling remaining stores will undoubtedly be a wise investment for retailer’s that generate a majority of their sales offline.
Archive for February 2019
In a recent article on Digiday, Foot Locker plans to invest $100 million in sneaker marketplace GOAT. What’s interesting is that several industry experts break down the news. For instance, I believe the retailer will benefit from this decision. On the other hand, $100 million represents a lot of opportunity cost. They will certainly benefit from the positive brand association with GOAT. Plus, they will capture value along the way as the footwear industry continues to innovate and face disruption.
Announced today in the news, Sears will live to fight another day as the bankruptcy judge approved the only bid that would save 50,000 jobs. Eddie Lampert, the Sears chairman and prior CEO, will be buying all remaining assets of the business for $5.2 billion. I honestly think it’s a steal for that price. The question is whether he can hire qualified retail operators to restructure the business in the necessary ways to ensure future success. Operating the same way as before almost guarantees failure over the next 24-36 months. Can ESL save Sears? Unlikely.
In a recent article, Facebook lost a EU lawsuit surrounding their desire to combine data across all their owned platforms. Privacy experts seem to be drawing a line in the sand with how much data is too much data. While I believe that effort is futile at this juncture, lawyers and courts can make it difficult for Facebook to achieve their version of world domination. However, the best part about the appeal Facebook is making is their headline appeal to judges and to consumers. I’ll paraphrase, but it goes something like this: “We can protect you from terrorism and child abuse if only you give us all your data.” Nobody ever said Facebook wasn’t a savvy marketer. Who doesn’t want to be protected from terrorism and child abuse?!? Question is whether the court of public opinion will be able to influence the judicial proceedings.