March 20, 2013, 12:21 PM

The Flaw in Omnichannel Retailing

(Page 2 of 2)

Saks is not alone here. Macy’s, America’s largest traditional department store chain, no longer breaks out web numbers from stores sales, possibly because Macy’s' store vs. web growth rates are not all that different from Saks'. Macy’s increased total revenue last year 7% to $9.35 billion, but its web site grew an estimated 41% to $3.17 billion, according to the upcoming edition of the Top 500 Guide. In fact, a growing number of chains no longer break out their separate web and store numbers, telling their investors essentially what Sadove did—that all their sales come from the same inventory pool and how they are sold makes no difference.

A more believable reason for omnichannel chains refusing to break out web vs. store sales is because store sales are anemic, and by juicing up the overall revenue number with web sales the chain CEOs have a better growth story to tell investors. Clearly, Wall Street isn’t all that enthused about the omnichannel strategy followed by either Saks or Macy’s. In the last year their share prices have grown 1% and 5% respectively, meager compared to the Dow, which gained 10% in that time.

My advice to the retail chain bosses is this: Compete with Amazon and the other web-only retailers head-on by wooing web-centric consumers instead of overlooking them. Use your stores as cash cows and brand anchors and invest heavily in stand-alone e-retailing businesses that emulate the best practices of the new generation of merchants who—like their customers—eat, live and sleep online. And stop listening to consultants who are peddling new name for a failed strategy.

comments powered by Disqus

Advertisement

Recent Posts from this Blog

FPO

Will Devlin / E-Commerce

Three simple steps to reducing shopping cart abandonment

Payment options, a shopping cart that holds a customer’s items while she ponders the purchase ...

FPO

Adrien Henni / E-Commerce

eBay and Russian Post accelerate cross-border deliveriies

EBay and Russian Post have signed a memorandum of cooperation aimed at reducing the time ...

FPO

Ernie Diaz / E-Commerce

Can Tencent win the mobile commerce battle with Alibaba?

The two Chinese Internet giants are increasingly encroaching on each other’s territories. A Beijing-based marketing ...

FPO

Matt Swan / E-Commerce

Do cash-back sites really drive incremental sales?

Yes, suggest data from Affiliate Window, an affiliate marketing network. And consumers spend more when ...

Advertisement

Advertisement