The beginning of a new year is about reform, rejuvenation and, sometimes, reduction. We’re not talking about reducing waistlines, but rather store closings. Last year saw another record number of store closings. Sears Holding Company filed for bankruptcy and retailers such as Lowe’s, Macy’s and Victoria’s Secret all closed locations. Retail continues to fall on hard times. Whether traditional retailers are competing with Amazon and e-commerce in general or the rise of online direct-to-consumer companies, they’re struggling. But private equity continues to plague the retail landscape. One example of this formula for destruction is the closing of Shopko stores in 2018. Shopko is a rural retailer based in Wisconsin. In addition to its online presence, Shopko has 363 stores in 24 states, located in the Central, Western and Pacific Northwest regions of the U.S. Its regional influence makes it an interesting case, especially considering its niche customer base. Shopko is owned by the private equity firm Sun Capital and its story is all too similar to the demise of beloved toy retailer Toys ‘R’ Us. The company is drowning in debt and has done everything from selling pharmacy customer lists to competitors like Hyvee and Kroger to taking new loans in an effort to recover. Closing 39 stores in 2018 was also a large part of this effort. In an article for RetailDive, analyst Nick Egelanian said that e-commerce had little to do with the store closings, adding “Being on a short leash by [Sun Capital], there is little investment in stores. They are a wreck.” Much like Toys ‘R’ Us, Shopko was unable to keep stores updated and relevant due to the cost of servicing so much debt. Today’s retail landscape is so cutthroat that consumers expect a slick in-store experience and all the ease of Amazon on a retailer’s website. When retailers, like Shopko, take on too much debt and can no longer invest in their stores, it’s a recipe for disaster. Brand consultant Brian Kelly told RetailDive that Shopko is just “another retailer broken by debt and a PE firm, caught in the death spiral of blindly trying to goose sales and [ending] up flogging the brand.” What makes Shopko interesting is not only that it’s a regional retailer, but also rural. One of Shopko’s largest competitors is Tractor Supply, which scored a customer loyalty score higher than even Amazon this past year (the retailer was only beat out by Costco’s net promoter score). Culture and brand loyalty are key and possibly even more important than ever before. E-commerce has made the locations of physical stores less relevant than they were 20 years ago. This means that retailers have to invest in their stores and keep customers coming back for a brand experience. Shopko hasn’t shuttered completely, but we’ve seen this formula before. Let’s not dwell on the store closings of last year, but rather learn from them this year. To read more about Toys ‘R’ Us, click here. To catch up on what IBSW has to say on e-commerce, click here. If you’re looking to invest in your business this year and finally understand your customer insights, let Ironbridge help you make sense of all that data.Click here to request a demo. UPDATE: In March 2019, Shopko announced it is going out of business. The retailer was unable to find a buyer for the business, but is still exploring options for its optical centers. According to Chain Store Age, Shopko's Chapter 11 filing described "excess debt and ongoing competitive pressures, and reported assets of less than $1 billion and liabilities between $1 billion and $10 billion." The retailer had been operating 360 stores when they filed for bankruptcy in January of this year. All stores are now expected to shutter. Written by Kim Kelly Consulting **This story is still developing**

Last month, we promised you more e-commerce strategies for 2019. Before we dig into social media marketing, customer loyalty programs and return policies, let’s talk about your foundation. In 1960, Harvard business professor E. Jerome McCarthy identified the four p’s of marketing (source). These four foundational principles are: product, price, placement and promotion. These principles remain relevant to modern day marketing. In fact, we at Ironbridge suggest adding more p’s: people, performance (e.g. ROI, profitability) and presentation. What has changed in the last 60 years is how marketers make decisions and ultimately implement the seven p’s. In 1960, marketers relied on focus groups and anecdotes from their customers to shape strategy. Today, particularly in e-commerce, marketers have enormous amounts of consumer data to make decisions that are fine-tuned to their customers’ needs. In a report produced by Forbes and Oracle entitled “Data-Driven Marketing: Push Forward or Fall Behind,” the authors note “This full immersion in data and analytics … shows how quickly brands and agencies have recognized the potential benefits and rushed to replace outdated ‘gut feel’ decision making with quantifiable research.” (Click here to download the full report). In fact, their research found that 74% of respondents from the consumer and retail sector reported using data-driven marketing strategies for either the majority or all of their campaigns. Are you? You’re likely already familiar with the “p’s” of marketing. But we want to do a deep dive on how data can help you make marketing decisions at every turn (or, every ‘p’). Stick with us for the next few months and we’ll drill down on product, price, place, promotion, people, performance, presentation--all from the lens of data-driven marketing. We’ll show you how Ironbridge can get you access to this data and drive your marketing. If you haven’t already signed up for our email list, click here. In the meantime, we’d love to hear from you! Tell us which p you’re making data-driven decisions around. Or, is there a ‘p’ you’d like to refine using data? Please sound off in the comments! Written by Kim Kelly Consulting

For manufacturers, Amazon can be both a blessing and a curse. A report from Statista states that “Amazon is the leading e-retailer in the United States with close to 232 billion U.S. dollars in 2018 sales.” Any business would love a piece of that enormous revenue pie. Reports from various sources say that more than half of these sales are generated from marketplace sellers (even amidst changes to the fee structure). This is a huge opportunity for manufacturers, but it comes at a cost. One of the major costs is customer connection and loyalty. While Amazon has created a platform where customers are much more ready to buy than those doing a simple Google search, they’ve also created a platform where their own branding eclipses that of the manufacturer. For instance, customers often say “I bought it on Amazon” and may not even know who the manufacturer is. Furthermore, Amazon does nearly all the communicating with customers and sellers are actually prohibited to market to their Amazon customers. This makes sense in practical terms--wouldn’t it be annoying to be added to an email list for every product you’ve ever purchased on Amazon? But, from the manufacturer’s perspective, this is devastating. Amazon describes the relationship a seller is allowed on their “Seller Central” portal: “Amazon will provide all the order and shipping emails to customers; you must not send order or shipment confirmation emails. This is to avoid conflicting messaging or confusion for the customer. Remember that selling on Amazon requires less communication by you to customers, since much of the process communication is handled by Amazon.” Amazon’s marketplace has given rise to a slew of new businesses created solely to sell on Amazon. The model, called FBA (fulfilled by Amazon), allows an individual to purchase goods online from overseas, add branding and marketing and ship it directly to Amazon’s distribution centers. For these sellers, Amazon taking the reins on communication is a key component to their success. But for established manufacturers, it’s a key to brand confusion. The seller’s guidelines go on to state: “You must not market or advertise to Amazon customers, nor divert them in any way from the Amazon sales process. You should follow this even during permitted communications, such as when responding to buyer inquiries about your products or their orders.” This arrangement benefits Amazon, but makes it difficult for brands to form any real relationship with their customer base. So as an established manufacturer, what are you to do? Sure, you have to sell on Amazon to some extent. And you can also check out Amazon’s competitors by selling on similar platforms created by Walmart and Target. Target’s platform, called Target+, promises shoppers a more curated environment. RetailDive writes, “While it's hard, if not impossible, to beat Amazon on volume, a more carefully curated assortment of on-trend brands (a classic page from Target's merchandising playbook) may give it an edge with online consumers.” Time will tell if this platform is more favorable to manufacturers, but they’ll still miss out on the direct connection to customers. The other option is to sell directly to the consumer. This way, you can control your interactions with your customers, learn about them and communicate directly with them. You’ll probably adopt a strategy that runs both of these scenarios at the same time. But the better you get at D2C sales, the less you’ll need Amazon. Learn more about selling D2C in our blog series from last year. If you’re a manufacturer, we want to hear from you! Do you sell on Amazon? How do you balance your customer service with Amazon’s terms and conditions? Tell us in the comments below, or write to us here. Written by Kim Kelly Consulting