The risk of Clicks-and-Mortar

An incident over the holidays highlighted the downside when traditional retailers pursue a “clicks-and-mortar” strategy. Rather than being a box every retailer should check, traditional retailers, particularly successful ones, need to look at the risks as well as the opportunities and build a strategy that takes these into account.

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About two weeks before Christmas, my wife ordered a video game online from Walmart.com (the world’s largest retailer) for pick up at the store. She received no indication the order was in but assumed it was on the way. Three days before Christmas, after still not receiving confirmation that the product arrived at the retail location, she called Walmart customer service. At this point, she learned the order was cancelled because “the product was damaged.” As this was the gift our son wanted most and was tough to find, she scrambled and eventually got it from Amazon using next-day delivery. After this incident, she vowed not only to stop shopping at Walmart.com, but also to stop going to the retail location (and convincing our son not to shop there).

To me, the key takeaway is that Walmart, incredibly successful with physical retail, is actually losing customers due to its online integration (which is actually better than many other traditional retailers). Thus, rather than increase the lifetime value of a customer (my wife) by adding an online component, they have significantly reduced her lifetime value. Continue reading “The risk of Clicks-and-Mortar”