Even the largest traditional retailers are running scared these days because of the Amazonation of their business, the hollowing out of American shopping malls, and overall trepidation, even in the midst of a strong U.S. economy and burgeoning consumer confidence. One CEO who’s trying to help retail chiefs become winners rather than losers in this decisive environment is Frank Poore.
Poore is the CEO of CommerceHub, a publicly-held, New York City-based company which helps brick-and-mortar retailers with their online product assortments. He says that store chains can still succeed despite all these trends, as long as they effectively adapt to them with unique solutions that fit their strengths and their brands.
“Those retailers who are differentiating are winning and will continue to win,” said Poore, who recently headed the sale of the company he founded to GTCR and Sycamore Partners, two private-equity firms, for $1.1 billion. “Those with big balance sheets that are committed to investment and can compete on logistics and selection will stay in the fight.”
“If retailers aren’t leveraging their omnichannel footprint, they’ll have a slow death spiral,” Poore told Chief Executive.
Carnage is mounting among traditional retailers, ranging from defunct outfits such as Toys R Us to moribund, if proud, chains such as Sears. At the same time, some big retailers that were taking a pounding for a few years—notably Target, Kohl’s and Macy’s—have rebounded lately to some extent on the strength of a successful 2017 Christmas season, rising employment and incomes, and the effectiveness of their own strategies to counter Amazon’s existential threat.
“If retailers aren’t leveraging their omnichannel footprint, they’ll have a slow death spiral.”
Many are turning to outfits such as CommerceHub, which provides a seamless extension of a client’s online product selection that can keep these traditional retailers in the mix when consumers conduct digital searches.
“Amazon has more than 300 million SKUs,” Poore noted. “A few years ago, Walmart had only one or two million SKUs. Google is a big driver of traffic. People will search for products on Amazon, or Google, or if they have a favorite store. And stores have got to have the products they’re looking for. It’s like tickets in a raffle: If you search Google and, say, Walmart doesn’t have a green coffee pot you want, it won’t get your traffic to its web site.”
“In the old days, retailers were highly curative: They’d decide which three dresses to carry. Now, they’ve go to move to a more categorical strategy where they fill out meaningful categories with everything that consumers are looking for.”
In addition to being strategic with online selection, Poore urged retailers to focus on creating experiential differentiation with the real estate they own. One approach involves using the space for more effective merchandising, in effect embracing the “showrooming” function that stores used to fear and using their physical space as staging areas for showing off and demonstrating products—then making it as easy as possible for customers to order those things online, in the store or at home.
“That’s sort of the future,” Poore said. “You put one of everything on display and consumers can touch it and feel it and play it and scan it, and then it shows up at their house an hour later.”
Another tactic is to use some of the space to expand what the retail brand means to new services. “Some stores now have yoga classes,” Poore said. “Everyone needs to be rethinking.”