If you’re a retail industry executive, these are the kinds of charts that keep you up at night.
U.S. consumers, particularly younger ones, are spending much less time in malls and in physical stores. Store foot traffic has been dropping for years, which is subsequently putting pressure on merchandise productivity and comparable store sales – which have generally been pretty dreary in the physical retail sector.
For retailers, though, the bad news doesn’t stop there. The decline in store traffic accompanies a slow but steady long-term shift in consumer tastes away from retail staples like apparel and towards other consumables like food, digital media (ex. music, games/apps) and personal electronics:
It’s been something of a running theme over the last ten years, particularly in the blogosphere and social media, to declare that blogging is doomed. With the closure of Andrew Sullivan’s iconic blog, this debate has been spun up once again: Ezra Klein bemoaning the decline of the blog in the era of the social web, and Ben Thompson pointing out that his own recent success with Stratechery is a counterexample of “Blogging’s Bright Future.”
I think the rise of Stratechery actually provides some interesting lessons to anyone paying attention to the future of business models in journalism, blogging and the web generally. But as so often with new media, the medium is often confused with the product. Talking about the success or failure of blogging itself is a little like arguing about whether the smartphone “works” for whatever one wants to use it for. Blogging actually works pretty well for some goals, and less so for others.
Rather, a more interesting question might be – what will blogging be used for in the future, and importantly, who (if anyone) will pay for it? These are the kinds of questions that cleave blogging away from the future of journalism, I believe, and more towards… whatever you want to call what Ben is doing. Indeed, I’m inclined to agree with Klein: blogging is still a pretty crappy business model, and it’s certainly not a viable future for journalism.
But then, who ever said blogging has to be about journalism?
In the last two weeks since my post Whither, IBM?, the company has announced predictably dismal Q4 and FY 2014 results, gone through another round of layoffs, and given its top executives (including the CEO) a raise anyway. As we begin 2015, I want to follow up on my last post (which, due to an outbreak of social shares, has quickly become one of my most-viewed ever) to provide a little more detail on why IBM must transform – and how.
Here are three mega-trends happening right now in technology:
- Software is now reaching everyone, everywhere
- Commoditizing hardware markets have intensified the value of software
- Software is enabling massive disruption of established markets
Any one of these would be a major challenge to IBM as the company is constituted today; taken as a group, they collectively represent nothing less than a dagger pointed at the beating heart of Big Blue. The problem is not simply that the company has now missed multiple successive technology cycles, and the growth opportunities they represented; rather, it’s that the leadership of IBM has only very recently woken up to the fact that those cycles existed at all.
Let me explain how each of these challenges is a problem for IBM.
In the weeks since I resigned from IBM, I’ve been trying to organize my thoughts on the future of the company. A few recent developments have helped crystallize the points I want to make: first, there’s been a spate of high-level departures from the company, some public (1, 2) and many others which I’ve just heard about through the grapevine. Second, rumors about a major reorganization have surfaced in the tech press, reflecting widespread rumblings within IBM itself. These developments are related, but are only properly understood with a clear picture of what’s going on at IBM as a whole.
The Computing Tabulating Recording Company.
IBM is a company in transition – both by choice and not. Its sprawling size, century-old legacy and multitudes of business lines make this transition noisy, messy and very public. Changing strategies for IBM involves breaking a lot of conceptual models that a lot of people have held about the company for many years, perhaps no where more so than in the financial community. This is one of the reasons why much the mainstream coverage of IBM is highly simplistic, ill-informed, or flat-out wrong. (Indeed, that could describe a lot of what finance people write about tech.)
I remain a true believer in IBM. I have faith that the company will find its way again, and that IBM will still be selling to our grandchildren one day. But in the meantime, there’s a lot of soul-searching to be done. In the last several months (and particularly since the crappy Q3 results were released), there’s been something of a dogpile of criticism of the company, much of which is unfair. So here I’m going to try to offer some more thoughtful criticism on how the company can find its way again.
Edit, 11/23: I’ve added an update since the Q4/FY 2014 results were announced.
Thinking through the recent Andreessen-Horowitz investment in Mixpanel has got me thinking about the overall economics of the digital analytics industry over the past few days. (Plus, my wife and I finished all of The Americans, so unless I get back to re-watching Battlestar Galactica over the holiday before season 4 of GoT hits iTunes, there’s nothing good on TV.)
As I’ve said before, I believe that digital analytics is a foundational business tool for any modern enterprise, and what we’re seeing in almost every industry today is a divergence between those companies that have evolved to embed this technology into their strategy and execute on it, and those that have not. Digital analytics – web, mobile, and the like – enables and complements all sorts of marketing and ecommerce technologies that are now table stakes for a competitive business, which puts the analytics vendor itself in an incredibly valuable strategic position. No wonder, then, that competition is so heated.
I’m going to take stock of the digital analytics vendor landscape as it stands at the beginning of 2015, make a few predictions about where it’s heading, and then circle back to the a16z-Mixpanel thing, because it’s a real head-scratcher. And it makes sense to start by talking about the two biggest names in enterprise digital marketing – Adobe and Google. In that order.
I have at least one more post in me before the end of the year. Here’s a list of my most-viewed and -shared blog posts from this year:
I resigned from IBM last week. My last day as a Big Blue employee will be in the next week or so, and in the new year, I’ll be moving into a senior role at Demandware leading the company’s large enterprise accounts initiative.
As I told my colleagues internally this week, I’ve been very proud to be an IBMer, and to work on Coremetrics. My resignation was a little surreal, actually – I was in the Bay Area for a team meeting, and had “the talk” with my manager in the very same conference room where John Squire hired me years ago. So things have really come full circle.
I’ve been collecting my thoughts about IBM and its future, which I’ll probably wrap into a blog post at some point here soon. But for now, I don’t anticipate any big shift in the focus area for this blog – marketing tech, ecommerce, and how people buy stuff on the interwebs remains my interest area.
I’ll be staying here in North Carolina, but coming up to Boston fairly frequently. If you’re in the area, let’s hang out!
My wife and I held our annual holiday party last weekend for a few dozen close friends. As usual, it was awesome: Southern cocktails, homemade treats, a nice fire going, two dogs and a decked-out tree. Good times. Over some drinks, I took the opportunity to conduct a totally unscientific poll about something I was curious about – the mobile commerce behavior of our friends. Specifically, I wanted to know: do you actually buy stuff on your phone?
The reason I asked was because of a weird pattern I’d seen while trawling through the annual ecommerce reporting data from the Black Friday/Cyber Monday weekend. According to IBM, on Cyber Monday, roughly 1 in 10 online sales was on a smartphone, with an average order value of approximately $100. ($100!) Nor was this an outlier – similar figures were cited by Adobe Digital Index and comScore.
The idea that some people are not only actually shopping for stuff on their iPhones (the percentage of sales on Android devices is far lower), but also spending quite a bit of money on them, honestly mystifies me. I don’t understand the use case at all. Yet – the data is there, and I’m not one to argue with hard evidence. This paradox has gotten me thinking quite a bit about the ongoing fragmentation of paths to purchase, and what it means for 2014’s emerging marketing buzzword: customer journeys.
The tech web is awash in coverage of the kickoff to the holiday shopping season in the U.S. this week. Predictably, ecommerce sales are up strongly year over year, with lots of interesting detail about sales patterns between different device platforms. But that’s not the interesting news. What many found surprising, though probably shouldn’t have, was that total retail sales over the long weekend were actually down somewhat this year. The National Retail Federation reported an 11% drop, others less. The drop, of course, is all from in-store sales, which took it on the chin as shoppers simply didn’t show up for the “door buster” sales.
In many ways, the trend towards shopping online has had a tremendous, historic leveling effect for retail (and most other industries). After all, companies are now all equally discoverable on the web or via app. But while this evolution has demolished some of the old empires (ex. Radio Shack, Staples), the reason why is because ecommerce enhances the premium of a powerful brand and great customer experience, and strongly links the two together. Some companies have started with the first and developed the second (ex. Walmart, Target), while others have done the opposite (ex. Amazon). Interestingly, both Walmart and Target are reportedly doing just fine over the holiday shopping weekend.
The onset of the holiday shopping season, and the flurry of coverage surrounding it, provide a great example of how this process is playing out. The web’s asymmetry and winner-take-all markets are fracturing the traditional model of marketing, selling, and customer acquisition, and in the process creating a lot of new winners – as well as solidifying some of the old ones.
A few months ago, I went shopping for clothes in a real, brick-and-mortar store at the mall. I don’t particularly enjoy shopping, and my experience inspired a blog post about the future of brick-and-mortar retail that has now become one of my most-viewed/linked posts ever. In it, I basically pointed out that the physical store shopping experience hasn’t really changed in decades, and that that’s a huge problem for retailers catering to consumers in the midst of a massive shift in buying behavior.
The retail sector broadly is grappling with any number of new ways to connect to customers digitally: the now-table stakes ecommerce offering, to social presence, to in-store analytics and beacons and much, much more. Some retailers have embraced this new paradigm of selling enthusiastically, while others have ignored or even fought it. While this is often framed as a cultural issue (cue “legacy retailers resist change!” lede), I’ve long suspected that it often has a lot more to do with incentives and business strategy.
Since I wrote that post, Apple Pay was released to much acclaim (my take here). The reception to Apple Pay in the retail world has created some key signals that I believe are relevant to everyone in ecommerce and marketing tech today. Namely: how important are building relationships with customer experiences, really? And what are each company’s priorities for its own (inevitable) digital transformation? Apple Pay has helped answer these questions and gives us some clues about how different retailers see themselves relating to their customers.