mc3 and the leadership gap

Multichannel Merchant welcomes a new columnist to the fold: Love Goel, chairman/CEO of Growth Ventures Group, a multichannel retail investment firm based in Minnetonka, MN. A former chief operating officer for Federated Department Stores and Fingerhut, Goel will be writing about multichannel, customer-centric marketing, or as his company has dubbed it, mc³.

It is alarming to realize that most top retail executives and board members are clueless about how to create, build, lead, and integrate a multichannel, customer-centric organization. The gap between rhetoric and reality at most retailers is quite astounding. Here are the seven most common examples of leadership failure that we observe:

1. FEAR OF THE UNKNOWN

   Some retailers suffer from an “ostrich” complex in that they like to hide their heads in the sand pretending that the Internet doesn't exist or that two out of three of their store or catalog shoppers don't research products online before buying offline. They think the Internet is just another channel or a passing fad that they can live without. If you're guilty of this thinking, here are four distinctions regarding the Web to keep in mind:

   a) A Website is available to anyone — not only people who receive your catalogs or who drive to your stores — anywhere, 24/7.

   b) The Internet enables you to truly personalize an offer (product, price point, promotion) in real-time based on the latest available data about your business — say, inventory status — and more important, about your customer.

   c) Americans spend more time using the Internet than they do engaged in any other medium, including TV, newspapers, magazines, and radio.

   d) When used correctly, the Internet is a cheaper customer acquisition, transaction, and service platform than is a store or a print catalog.

   Here's one more data point of note: Multichannel customers are worth at least four times — and sometimes even eight or 10 times — as much as single-channel customers.

   We advise retailers such as TJX and Kohl's to quickly figure out how to make this transition before it is too late and they are left holding the bag. The same advice goes to merchants that believe they can let someone else, such as Amazon.com, run one of their channels. But kudos to one-time Web-only merchants who realized that they can benefit by mailing print catalogs and perhaps opening a store or two as well.

   We do not believe that the Internet will replace the store, the catalog, or other means of commerce. But it will continue to play an increasingly important role in how people learn about products and services, how and where they shop, and how they communicate. That's why you need to embrace it wholeheartedly and integrate it within your core business, rather than make it a silo run by a dispensable executive.



2. SHORTAGE OF TALENT

   Too many senior executives and corporate boards fail to heed the adage “a business is only as good as the people running it.” For an mc³ merchant, having expertise across channels and functions is crucial for dealing with each medium's unique challenges and opportunities.

   Many businesses, for instance, have a chief information officer or an IT executive lead their Web effort. That's akin to having a facilities executive in charge of the retail business. Likewise, a merchandiser who knows how to put together the right assortment of product for a store may have no idea how to do the same for a print catalog or a Website.

   The quality and composition of executive teams makes you wonder about the caliber of the board of directors at many of these places and whether the search firms advising them are ignorant or just plain greedy. The retail industry is not known for grooming the next generation of leaders and executives.

   As an aside, if you don't have a 20-something on your Internet management team, you are probably missing the boat.