KOHL'S next Mervyns
Updated: Dec 3, 2019
Consumer direct distribution has proven the concept and has been adopted by consumers nationwide. The retail market was disrupted by technology, and those retailers behind the curve will be left out in the cold. Amazon has proven its value to consumers by providing a vast product offering at competitive prices that arrive within two days. Maybe retailers still blindly believed that consumers enjoy the process of shopping and be able to physically touch an item before they take it home that day. The perspective can be justified to those managers who say "that is the way it has always been done, why would we change." This mindset is very damaging in today's professional landscape of technology and information systems. The world advances itself by a factor of two every twelve months and continues to evolve at an accelerating rate. Those who sit idly by will wake up one day in a world they can no longer recognize. The Boomer population is notorious for the disbelief of technology and its capabilities.
Managers of retail apparel companies need to wake up to the realities of the expedited distribution network created and mastered by Amazon. Amazon has set the bar in the retail space for distribution, marketing, and customer service. Consumers can try on apparel for seven days, buy and return items to Amazon for free with a Prime account. (Free Prime Offer) Traditional brick-and-motor retailers operate much like a fisherman on the dock waiting for their customer to come to them. Online retailers are like fishers on a boat where they can go to the customer and target them directly. This analogy is used to explain that there are higher concentrations of larger fish in the deep waters of the internet compared to the small fish that get washed ashore to brick-and-motor stores. Retailers with minimal or zero online presence will not weather the storm and will most likely go out of business within the next few years.
KOHL'S is a perfect example of being swallowed whole by Amazon. KOHL'S has a joint venture established with Amazon to return Amazon items to their physical store. The KOHL'S strategy may have been once customers are in the store, they will shop around. The Amazon return section in KOHL'S is located in the back of the store, which makes you walk through the aisle of KOHL'S. The unfortunate part for KOHL'S is that the Amazon return line is longer than the KOHL's purchase line. It is an excellent service and extension of competitive respect for Amazon, although it does not seem like it was an effective strategy for KOHL'S. It did, however, prove to Amazon that opening a small physical presence regionally would provide benefits to its users.
KOHL'S offers free shipping for purchases greater than $50, or you can pick up free in-store. Picking up for free in-store is not a convenience as one must still drive and spend money and time to get to the store. Consumers value their time far higher than in past generations. The world moves exponentially faster in the information era than it did Before Google. The trend will continue for brands to sell direct to consumers, and traditional brick-and-motor retailers will prove obsolete. Nike recently announced its efforts to focus on consumer direct marketing and distribution. More brands will follow, and the conventional retail model will be unrecognizable.