Sorry, I don’t ascribe to the theory that “retailers are burdened by their physical stores.” A vast majority of profitable sales are still made in stores. One-third of online purchases are returned. Add in free shipping both ways and it’s hard to say omnichannel is the way forward. With Target, Walmart, Macy’s and Nordstrom trimming back the gusher of money thrown at this idea one has to ask why.

If it weren’t for those physical stores paying the bills, none of the boutique experiences like basketball courts, full immersive video, etc. — for a few people to experience — nor the reams of money in technology to try to beat Amazon would be possible.

Maybe that’s why this was my most shared post last week, How to Find Strength In Being A Brick and Mortar Retail Store. How about embracing the strengths of brick-and-mortar instead of deriding them at every turn?

The modern customer will hoof it to a brick-and-mortar store for one of these four reasons:

• Immediacy: They need the goods right now;
• Information: They want a lesson on how to use the product, or to become better-versed in the product category;
• Upkeep: Their existing product needs to be modified or updated in some way. Retail stores offering add-ons like patches or a new denim wash are happening in a big way right now;
• Experience: There is unique fun to be had in-store.

Are these four things achievable for retailers? Definitely, but it takes a paradigm shift. The biggest obstacle is clinging to old ideas — they’re the anchor that’s sinking our most beloved heritage stores.

The omnichannel dilemma can be summed up in three words: “capacity” and “market share.” Creating more consumer channels doesn’t change that.

GDP is only so big and grows at very modest rates while technology has increased the potential for consumer sales at massive rates. Something has to give. Part of it has been cannibalization of the existing retail market by digital-only upstarts (including you-know-who) and part of it obviously is from cannibalization of a brand’s own physical stores. So if the capacity for consumer purchases is only so big and a brand only has so much market share, increasing purchasing channels can only mean one thing: some channel will suffer and, for traditional retailers, it more and more is their physical stores.

The only two true solutions here are:

1. Scale back on the least profitable channels which, for a growing number, are their physical stores;
2. Do the even harder thing and grow market share to meet the sales capacity of all channels, avoiding cannibalization.

I agree with Ken. There is only one pie and it’s only so big. And what a retailer gains of that pie in one channel that retailer will lose in another channel. In the best of cases, it will eat some other retailer’s slice. We have to be prepared for the fact that the scales are tipping, with more weight going to online and social shopping, resulting in too much square footage that needs to be trimmed, or in to much shelf space that needs to be replaced with other product.

At any given moment there is X amount of demand for a given product or brand. If part of that demand is satisfied through the Internet then there is that much less being satisfied through brick-and-mortar. It’s classic competition, it’s a battle for market share now made all the more complicated with multi-channel battle fronts. Brands don’t cannibalize by performing well in omnichannel. Omnichannel is a simple recognition of a new shopping model in today’s market. It is not cannibalizing. It’s competing. If a brick-and-mortar retailer lost business to another retailer’s website, you wouldn’t call that cannibalizing. You’d call it a failure to recognize a new shopping paradigm.

Mr. Retailer: now hear this. It doesn’t matter what industry you are in. When disruption comes you have a choice. Either cannibalize yourself or let someone else do it. The history of retail gives us great examples of not reacting to disruption.

Omnichannel is about customers, not channels. Retailers need to focus less on cannibalization and more on providing a differential advantage. Yes, there will be some cannibalization. The question is, would you rather eat your own lunch or have someone else eat it for you?

Retailers should not be concerned with omni-channel cannibalization. What is more important is attracting and retaining customers wherever they choose to shop. Total revenue is far more important than individual channel revenues. Since the shopping journey is often cross-channel, it is short-sighted not to consider the indirect influence and impact each channel has on the other channel sales. The consumer purchase decision rarely is isolated to one touch point. According to Nielsen reports, 60% of consumers shop online before buying in the store (webrooming) and more than 50% of consumers browse in a store before making a purchase online (showrooming). Another impact on total sales is catalog shopping or catalogrooming — consumers shopping in a catalog and then purchasing online or in the store. Maybe we shouldn’t be even trying to attribute sales to a specific touch point like the “last-touch” model, as the consumer’s decision process is often impacted by many brand interactions — not just the last one. A better approach is to look at it from a holistic perspective — measuring sales… Read more »

Omnichannel is table stakes for retailers. About cannibalization, it’s the same as it ever was: optimize the basket of offerings for greatest profitability. These are new (forms of) revenue streams, so they need to analyzed for optimal performance.

For stores, the goal is not to understand customer purchase occasions or weather conditions or what day a specific shopper likes to receive an email offer. The goal is to understand the individual customer’s preferences backed by inventory available both online or in-store that matches the individual customer’s preferences.

Just as technologists do not understand retail, retailers do not fully understand technologies as possible business applications and solutions. This retail/technology gap is holding back seamlessly integrating shopping anytime, anywhere, for an individual consumer. 21st Century shopping, not cannibalization.

Retailers hold the key to vast amounts of individual customer preference data. But because of a lack of affinity for technology, retailers have yet to bridge the gap mentally to at least consider technology[s] that provide the “key” to translate retail data sitting in data silos into specific customer preference intelligence. And technologists have yet to understand how to bridge the gap of a linear technical solution to an emotional decision to purchase on behalf of a human.

I found this eMarketer statement a classic statement of tech’s cluelessness about retail: “Despite efforts to increase their online sales and beef up their omnichannel strategy to meet the needs of smartphone-toting and social-media addicted consumers, these retailers are burdened by their physical stores, which still represent a majority of their sales.” Online retail (as a sole focus) is a money loser. What stores need to do is discover inventive ways to leverage online store presence to build brick and mortar profits … and also leverage their brick and mortar presence to drive online sals (which happens — but is under-leveraged). At this point, I don’t see anyone who has cracked the code on that process. Elements are in place. But most online sites are poor places to “pre-shop”, for example, because online sites make it hard for the consumer to know which products they can preview online then expect to be available in stores. This is made worse by the those retailers who put vast numbers of products in their online stores and believe… Read more »