Macy’s poor performance does not mean the next recession is upon us
[column width=”1/1″ last=”true” title=”” title_type=”single” animation=”none” implicit=”true”]
I ran across an article in today’s WSJ, “Macy’s Reignites Retail Worries”, that sets the reader up for an implication that the poor performance of companies like Macy’s, Aeropostale, Sports Authority over the recent quarters may be a sign that the economy is slowing.
I don’t see it that way. If you have been paying attention the past 10 years, you might have noticed Amazon slowly devouring everything in sight related to retail. They were one of the first to implement immediate comparison shopping over a broad range of similar items. They were one of the first to implement peer review of items on the website. These two key driving forces allow buyers a greater choice, and informs their purchases by supplying peer reviews, which makes the customer more comfortable buying on-line. Amazon’s generous return policy certainly doesn’t hurt.
An article in Fortune predicted this last year – “Amazon to surpass Macy’s as No. 1 U.S. clothing retailer by 2017, analyst says”. So, why is this headline for Macy’s a surprise to anyone this year. I have personally been ordering clothes from Amazon for several months as they have greatly increased the availability of quality (and expensive) brands and it is easy to order your exact size. (Frankly, some fashions that I like are not available in Atlanta because some purchasing agent decided Atlanta wasn’t a good target market.)
There is a great article written by Anthony K. Tjan called The Three-Minute Rule. The very short version is that you should look at what your customers are doing 3 minutes before and 3 minutes after they interact with your product or service.
If we were able to go back in time, we might find very different buyer behaviors, and for a trend such as this, I might expand the time scale to 3 hours before and after. For clothing, especially for most stereotypical men, the shopping experience is to be avoided at all costs. Over the years, I’ve shrunk the time and activities I perform when purchasing to a bare minimum.
Example:
The old days:
Decide I want something -> research catalogues or magazines -> personal travel to the mall or retail outlets -> find my items (after many distractions) -> purchase my items (if they are in stock) -> Travel back home. (Total personal time invested: 1/2 day at a minimum, sometimes a few days)
Now:
Open Amazon app -> research options and reviews -> order item -> item dutifully delivered to my home or business. (Total personal time invested: 3 minutes to a few hours depending on the item and how much I want to agonize over the decision)
Retail is moving on-line. Amazon is the anchor store of choice as the retail aggregator buoyed by the bleeding edge of technology (Internet, Mobile, Big Data, Machine Learning, buyer psychology). Customers want higher quality, more choice, peer review, and they don’t mind chopping out several layers of middlemen to save costs once they find the product’s origin of manufacture.
What about your business? What are customers doing before and after interacting with your product or service? How can technology facilitate delivery of more value to your customers? Can technological trends such as the one I outline above help or hurt your business? Call me to set up a time to discuss.
© Mark Travis – All Rights Reserved http://www.travis-company.com
[/column]