VIEWPOINT
Filling In The Gaps
K EV I N CO U PE FOUN DE R , MOR N IN GN E WS BEAT.CO M
“If change is happening faster on the outside than on the inside, the end is in sight.” – Jack Welch That’s my definition of a gap – facing a world in which change is happening faster outside my business than it is inside my business. It also prompts a question that I would pose to my readers (and, in fact, I pose this question to audiences almost every time I give a speech): Can you honestly tell me that change is happening quickly enough inside your company? Few can. Few do. Now, I don’t want to make this about Amazon…at least, not just about Amazon. While it is entirely fair to hold Amazon up as a company that has embraced innovation and disruption and a strategy of building an expanding and all-enveloping ecosystem that is specifically designed to create almost insurmountable gaps between it and its competitors, it also has to be pointed out that there are lots of ways out there to compete with Amazon and to close the gaps that exist. If you are going to compete against Amazon, best to take a page from “Moneyball,” the Michael Lewis book (and subsequent movie) about how the Oakland Athletics and their General
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Manager, Billy Beane, had to find a way to compete against teams like the New York Yankees that had payrolls as much as 10 times the size of the A’s. You do it by identifying different strengths than the Yankees do, and by emphasizing elements of the game that exploit the opposition’s weaknesses. That’s the way to close the gaps. There are ways to do this. I do believe that it is incredibly important that every strategic initiative or tactical move begin with one simple question: What does this do to reinforce our brand identity and value proposition? Now, more than ever, I think retailers that have typically made short-term decisions – like only doing sampling when some vendor is paying for it, or building a business model based on allowances and fees that mean that you are making money on the buy, not the sell – are even more likely to make decisions in the current environment that don’t necessarily serve the business’s longterm prospects. The wrong thing to do is try to compete directly against Amazon, since its size and valuation gives it access to a lot of cheap
money. My friend Scott Moses, who runs the grocery and restaurant investment banking practice at PJ Solomon, points this out all the time – and that Amazon has such an economic advantage because it is able to borrow money “cheaper than most countries.” But innovation and imagination don’t have to be costly…it just means being willing to entertain new ideas, test them quickly, and use every one of them as a way to reinforce your connection to and relationship with the shopper. When things don’t work you can drop them, and then try something else. As long as you’re always trying to serve customers better, I think they’ll cut you some slack. I’m fascinated by Nordstrom’s opening of Nordstrom Local stores (three in Los Angeles, with two opening shortly in New York City) that offer customers a place to try clothes on, get them tailored, obtain expert advice and maybe have a cappuccino or a glass of wine; the only thing it doesn’t have is racks of clothes. The only clothes you’ll find in the relatively small Nordstrom Local stores are those that you’ve picked out online and have had transferred there to be tried on. It is intriguing that Walmart – which generally does not occupy the same competitive space as Nordstrom – essentially is trying the same thing, with two Walmart Pickup Points
