Retail CEOs: Before You Close Stores, Give This A Try

If you are a retail CEO, you're probably feeling the pressure to close stores right about now.

Some of the trade journal articles and blog posts suggest that e-commerce may be able to pick up the slack for retail --- in other words, if Ann Taylor closes 100 stores, the Ann Taylor website will be able to pick up some of the orders that disappear when the store is no longer operational.

Tread carefully, folks!

Retail, e-commerce, and catalog ecosystems are fundamentally different, based on the Multichannel Forensics projects I've analyzed over the years. Over and over again, I see the following:

• Catalog customers in Exurban/Suburban areas willingly transition to E-Commerce.
• E-Commerce customers in Suburban/Urban areas willing transition to Retail.
• Catalog customers in Suburban areas willingly transition to Retail.
• Retail customers (especially urban folks) are unwilling to transition to E-Commerce, but are very willing to use websites to research merchandise.
  

The retail CEO can use Multichannel Forensics to understand how customers interact with stores. In fact, this is one of the most powerful uses of Multichannel Forensics --- identifying unprofitable stores that have customers willing to shop at other stores in your franchise.

Simply run a Migration Probability Table against each store, and identify the stores that are in equilibrium/transfer mode with neighboring stores. Here's an example --- this brand has three stores in the market, and has an e-commerce website.

		Store 001	Store 002	Store 003	Online
Rebuy Rate	Company	46.3%	41.9%	40.3%	33.7%
	Store 001	42.3%	13.9%	15.7%	10.4%
	Store 002	4.9%	25.3%	2.2%	6.5%
	Store 003	3.6%	14.3%	28.7%	11.3%
	Online	4.5%	4.0%	8.7%	14.7%
Rebuy Index	Store 001	91.4%	33.2%	39.0%	30.9%
	Store 002	10.6%	60.4%	5.5%	19.3%
	Store 003	7.8%	34.1%	71.2%	33.5%
	Online	9.7%	9.5%	21.6%	43.6%

What does the table tell us?

• Store 001 customers are unwilling to shop anywhere else. Close this store, and you'll lose the vast majority of the business generated at Store 001.

• Store 002 customers are very willing to shop at Store 001 and Store 003. Store 002 customers are not very willing to shop online. If you close this store, you'll likely recoup some of the sales in Store 001 and Store 003.

• Store 003 customers are willing to shop at Store 001, and to some extent, online. If you close this store, you may get some of the sales back online, but are more likely to get sales in Store 001.

• Online customers are likely to shop anywhere --- in any store or online. Strategically, you can use the online channel to acquire customers, because stores benefit from the customer acquisition strategy in future years.

Retail CEOs --- you may be going through retail closure pain in future months. Before you make the decision to close stores, run the Migration Probability Table to understand if you can re-capture lost sales in other stores, or online.