Some Major Retailers Really Don’t Get It

The difficulties major brick and mortar retailers are experiencing is not news. The stocks are being hammered, stores are closing, and I suspect it is crunch time in the C-Suites. Yet they still don’t get it. And the “it” is not about e-commerce. It’s about retail.

In a recent Advertising Age article on the topic, a major retail analyst is quoted as follows:

“”The problem with some of these stores is too much sameness — the brands aren’t special enough,” said Oliver Chen, retail analyst at Cowen & Co. “These stores need to reinvent themselves.” He noted more personalized marketing, better products and radical changes to the store experience could help the situation.”

The article focuses on three retailers, Macy’s, Kohl’s, and JC Penny. One of the ironies in the story concerns JC Penny. This retailer realized several years ago that they needed to reinvent themselves. They hired Ron Johnson, former CEO of Apple retail, and then fired him when sales dropped. I wrote about this back then. They rehired a former CEO, went back to their old format and have been sliding even faster.

The second irony in this situation is that each of these retailers excitedly proclaimed what they are going to do to “fix” the situation.

Macy’s is going to stop screaming at their customers about their promotions. (They really don’t get it, as I posted about their root cause problem a while back.)

Kohl’s is going to focus on “personalization, simplification and clarity in our marketing strategy.” They really mean their marketing communications strategy.

Meanwhile JC Penny “is also leveraging the much improved mobile app as a way to drive awareness and retention.”

Putting lipstick on a pig. Their root cause problems are not communications problems, they are customer experience problems. Trying to fix this with a better marketing communications strategy (even if you call the person doing it your CMO, it doesn’t make them a CMO, when in fact they are your CMCO, Chief Marketing Communications Officer), will not work.

These are big retailers, so predicting their demise is probably premature. After all it took GM 60 years of stupid to finally go bankrupt. When you have a lot of glide path, it can take longer to hit the ground.

These retailers, and they are not alone, need to realize that physical locations can be a competitive advantage and a value add. Right now they are just a cost add.

Mitch

And Again with a Title Change for the CMO

Almost 3 years ago I wrote about the Chief Revenue Officer phenomenon. Well seems it is still in style. Coca Cola just “retired” their CMO and will be replacing him with a “Chief Revenue Officer.” Is that a euphemism for head of Marketing and Sales? Or maybe it’s the organizational equivalent of the COO. So does the CEO then have a CRO, COO, CFO and CPO (Chief People Officer) reporting to him/her and maybe a CIO.

If so, I can see that. But that’s not the plan at Coke. In their case the CRO is going to report to the COO and is not responsible for sales anyway. So just like the CMO was not really responsible for Marketing, just the back-end of Marketing, not the more highly leveraged front-end of Marketing. This new CRO is not really responsible for revenue anyway.

Is the goal to fool the Board? Create another expendable position should things go bad or…?

Hard to know for sure since they are shaking up other reports; creating a Chief Innovation Officer and elevating the CIO to report to the CEO. Pretty sure this seems like rearranging the deck chairs on the Titanic, though I doubt Coke is in danger of sinking. Just slowing.

Mitch

Proving My Point About Airlines

The other day I posted about the root cause of the United Airlines disaster. In that post I wrote, “United is, unfortunately, not unique in the airline world with this culture.”

And to prove my point, quickly, Delta (the most admired airline I think they claim), showed why I said it by their action kicking a family off their plane.

Mitch

Make Doing the Wrong Thing Hard … Another Example

I posted on this topic last year for the first time. I found another great example recently. But first a reminder. To help prevent errors, a construct translated as “make doing  the wrong thing hard” has been around informally for many decades. It was formalized as part of the Toyota Production System by Shigeo Shingo and called poka-yoke in Japanese. This replaced the original name, baka-yoke, which translates as “idiot proofing.”

Many Lean Thinking professionals teach and incorporate this construct into processes. It was originally implemented in production systems. You see it in situations where two hands are required to run a machine, even though one would clearly be enough. By making the operator use two hands one can be sure that neither hand will be cut off by the machine.

I have been in several fast food restaurants where they serve your meal in a basket that they do not want you to throw out. Sometimes they have signs to remind you, but mostly they fish a lot of baskets out of the trash each day. Waste and not a fun job.

I was recently in Glendale, AZ and before doing a workshop for the Coyotes, I stopped for lunch at Shane’s. They serve your meal on a plate/basket they do not want you to throw out so they make doing the wrong thing hard as you can see from the picture. Basically the trash chute hole was smaller than the size of the plate/basket. Pretty clever, very effective and a great example of making doing the wrong thing hard.

Mitch

What Is Lean Marketing … Really?

Occasionally I feel the need to resurrect this question. As I have noted a few times in the past, the term Lean Marketing has become bastardized by consultants with their own agendas. Since we are consultants too, one could argue that we also have an agenda. We do. That is to keep the term “lean” from being bastardized for no value-add.

Marketing itself is a broadly defined, and therefore effectively undefined, term. Adding a new modifier and now broadly defined term “lean” just makes it even more vague.

The term “lean” has been around for decades and basically means removing “costs” that do not add value. Running lean does not mean running on a small budget. It means not doing things that don’t add value. Just because you try something that does not work does not imply waste, if you learned from it.

The first attempted change to lean when applied to marketing was to suggest small budgets. I wrote about this in 2009. The popularity of the book, Lean Start-Up, which has good concepts, but is more about agile than lean, further bastardized the term lean. As a result of that book, many have started referring to Lean Marketing as meaning the application of so-called Lean Start-Up principles to marketing. Again, lean is about removing waste, not doing it cheaply. Waste is waste. Mistakes made while learning are not waste unless they were preventable, or you don’t learn.

Lean thinking is a valuable tool in the application of business processes. Revenue side or fulfillment side. Agile and flexible organizations usually have a competitive advantage from the use of those skills and methods. They are not about lean; they are about methods.

In the end it’s about doing the right things right. Being fast and flexible has always been a competitive advantage, but as we note in our book, Value Acceleration, what was once a competitive advantage, soon becomes a competitive necessity. That is what’s happening today with agility and flexibility. They are becoming a competitive necessity.

Constraint Analysis, Lean Thinking, and Continuous Improvement are the three cornerstone process tools needed to compete effectively. Learn them, apply them, and win.

Mitch

Digital Marketing Failure

It’s my opinion that many marketers who focus on digital marketing stop thinking. They become enamored with the automated nature of the process, and the fact that it’s “free,” and therefore don’t think, as they should.

Here is recent example.

My wife and I were considering using one of the home delivery food prep companies where they provide you all the ingredients and recipe to make meals you might not otherwise make. This is especially true if you need small amounts of unusual ingredients. We looked at Blue Apron and Home Chef, and signed up for both and are using neither.

Why?

Blue Apron requires you to take 3 meals a week. We don’t want to. We have an account with them, but have never ordered anything, and they have never asked why. To be fair, they have rarely reached out to us since we signed up.

The other service was Home Chef.  They only require 2 meals a week, which was a better fit for us. Until we discovered that they charge for delivery if you don’t take three meals a week; and the delivery charge is almost as much as the third meal. That was annoying, so we have never ordered anything from them either.

However, unlike Blue Apron, which sends an occasional email about how wonderful they are,  Home Chef keeps sending me emails asking me if I am “Ready to Home Chef?” No I am not for the same reason I have never ordered. They don’t know why and if they were to change their policy on delivery, I would not know either. However, their digital marketing engine is grinding away. Clueless about why it is not working. But maybe on a % basis it is, so they’re “happy.”

It just seems obvious to me that if someone signs up for your service (which requires effort) and then never uses it, they might be a good candidate to ask “why not.” But then maybe I’m missing something.

Mitch

 

The Root Cause of the Lastest United Airlines Fiasco

As many have read today, United Airlines was caught, again, in an embarrassing incident. This time having the police forcibly drag a doctor off an over-booked flight. They offered $400 and then $800 to re-accommodate and only got two takers when needing four seats. They used a computer to randomly select two other “volunteers.” Unfortunately, one of the “volunteers” refused and he was removed by police. The cell phone video of his removal has gone “viral.”

United’s CEO has apologized and offered to get to the bottom of it. I can save him the time. Lost in the many words written was who they needed to place in the four seats: United employees who needed to be at the destination to fly another flight. That’s right, they bumped four passengers to accommodate employees. Customers first, I don’t think so.

However, let’s assume that not getting those four employees to the next airport would inconvenience over 100 other customers. Fine, I’ll buy that, but then why did they stop at $800? Certainly there was some price that would have gotten two more people to say yes? $1,600? $20,000? Certainly they could have bought off two more people for a lot less than it will cost them in bad PR. And they are an airline for goodness sake, they could have chartered a plane if need be, again for less than this incident is going to cost them.

How did this happen? Simple. At United and most other airlines, passengers are an inconvenience to the movement of airplanes. Nobody really cares about them or the solution would have been easy. Hey, I know a UPS employee who rerouted an entire plane to make sure Christmas packages were delivered on time. Cost a fortune and he got praised, not fired.

United is, unfortunately, not unique in the airline world with this culture. So, for those planning to “never fly them again,” good luck with that. Most other airlines, would have done the same thing.

Mitch