Multichannel Retailing Week: Merchandising And Creative

I chose to align merchandise and creative together in this post, for good reason.

Say you want to purchase a dress. There are a veritable plethora of multichannel 'brands' that will sell you a dress, similarly styled, similarly priced. A quick Google search for "women's dresses" yielded dozens of paid search results including Become.com, AmericanApparel.net, Avenue.com, BostonProper.com, AnnTaylor.com, OneStopPlus.com, JessicaLondon.com, ArdenB.com, and Bloomingdales.com in the top ten. Natural search results included Macys.com, JCPenney.com, Chadwicks.com, Amazon.com, and SierraTradingPost.com. Toss in two or three dozen retailers not making the front page of Google, and it becomes obvious that dresses are a commodity item.

Given all of this competition, the multichannel merchant has a challenge. The merchant must know nine to twelve months ahead of time what is 'going to sell' in the future. Some businesses partner with great brands to acquire great dress styles. Other businesses design their own merchandise. Either way, the merchant has to have a keen instinct to know that a dress is going to be 'cute'.

Merchants who take bold risks that pay off are considered geniuses. Merchants who take bold risks that fail are fired. Very few employees in multichannel retail have the kind of pressure that a merchant faces.

When many businesses sell very similar or identical items, there are very few things that set the multichannel merchant apart from others. Companies try to differentiate themselves in unique ways. Nordstrom, for instance, focuses on trendy brands sold with great customer service.

Creative presentation can be an important differentiator. Lands' End combines great quality with great copy and virtual model technology. Coldwater Creek presents merchandise online and in catalogs without models. Eddie Bauer aids your purchase process by illustrating which of three possible fits --- shaped, classic or easy --- a dress falls into. J. Crew uses copy to differentiate themselves, saying "every dress has a story", shirtdress, halter, strapless, tank or knit. Click on any of those links, and a story is told to the customer. Chadwicks and Jessica London use a fashion glossary to explain key terms. Ann Taylor allows the shopper to e-mail an item to a friend from the item page, or locate the item in a store. Monterey Bay Clothing Company leverages a clean presentation and a large item image.

One of the bigger frustrations I've heard from merchants is the creative presentation of merchandise in the online environment. It is comparatively easy to present merchandise in retail. It is a time-honored art form to creatively present merchandise in a catalog environment --- merchants can instantly look at a spread, and determine with some confidence if the spread and copy will work or not.

But in a template-based online environment, the vast majority of creative presentation is compromised, creating a similar and somewhat generic feel across different online brands. The differences I outlined above may mean very little to a customer.

Cataloging and retailing give the human being creatively presenting the merchandise all of the power. Online retailing results in a "cookie cutter" approach --- most items have to be presented in a similar manner, so that the website can operate efficiently. In other words, in the online environment, the information technology expert plays as big a role in the selling process as do the creative team.

Take Costco, for instance. In a retail environment, Costco's visual merchandisers create the feeling that you are walking through a huge warehouse. In a catalog environment, Costco uses imagery and stories, page after page, to attempt to replicate that feeling. Online, what tools does Costco have to create the huge warehouse feeling?

This is a source of frustration for both merchants and creative staff.

Over the next decade, the multichannel merchants who give online creative presentation power to the creative staff and merchants through innovative technology will have a competitive edge over those merchants who rely heavily upon the information technology staff for creative presentation. Combine an empowering creative environment with great merchants who design or source excellent merchandise, and you end up with a thriving multichannel merchandising experience.

CEO Concerns About Reducing Catalog Marketing

Lots of phone calls with business leaders over the past month. All ask me essentially the same question.

Question: "Postage is about to put a squeeze on my expense structure. Should I begin transitioning out of catalog marketing?"

Strategically, there are a lot of things to think about. Listed below are a sampling of the issues CEOs need to consider.

• How old is your average catalog customer? If your catalog customer is 55 or older, you need to embrace your catalog marketing efforts.

• What percentage of your direct-to-consumer net sales come from the telephone? If this percentage is more than fifty percent, you need to embrace your catalog marketing efforts.

• What percentage of your direct-to-consumer advertising budget is in search, affiliates, portals and e-mail marketing? If you aren't already spending at least twenty percent of your direct-to-consumer advertising budget online, you need to embrace your catalog marketing efforts for awhile, until you learn all the ins and outs of online marketing.

• Multichannel Forensics: If prior catalog buyers are in isolation mode (meaning they do not at least try out ordering online), you need to embrace your catalog marketing efforts.

• Testing: This is as good a time as any to hold out catalog mailings to a group of loyal catalog customers for a period of at least six months. When you do this, what happens to online spend? Does it increase, decrease, or stay the same? If it decreases or stays the same, you need to embrace your catalog marketing efforts.

• E-Mail Marketing: A colleague forwarded me an e-mail marketing campaign. The e-mail did not sell merchandise --- rather, it told the customer to look for their catalog in the mail. If your e-mail marketing strategy is to market your catalog, you need to embrace your catalog marketing efforts.

• Customer Acquisition: What happens to new customers if you stop traditional catalog prospecting activities? The future of your business is new customers --- if you don't acquire new customers via the online channel, you need to embrace your catalog marketing efforts.

• Paid Search: When you analyze paid search performance, do you find that customers ordering via paid search also received a catalog? If so, you need to embrace your catalog marketing efforts.

• Online Marketing Budget: What happens if you double your online marketing budget? What is the impact on online sales? If you don't know the answer to this question, you need to embrace your catalog marketing efforts until you can answer this question.

• Staffing: Do you have a transition plan for all of the folks who have served your catalog efforts for the past two decades? Contact center and distribution center considerations are not trivial.

• Merchandise Strategy: Can you appropriately forecast sku-level sales if you don't have a catalog driving customers to the online channel? Does the mix of merchandise purchased change between online-only customers, verses online customers fueled by catalog marketing?
  

• Customer File Management: Have you run a five-year simulation of the expected change in your customer file? In other words, will you have enough customers, repurchasing at high-enough rates, spending enough money per repurchaser, to fuel the future of your online business? If you don't know the answer to this question, you need to embrace your catalog marketing efforts until you complete your Multichannel Forensics analysis.