How We Sell

It was amazing to think about this disconnect between our clients, sitting out in their exurban campus in New Jersey, and the stores themselves, where the objects of their attention were sold. I felt as if I was dealing with a puppet master who was 10 miles away from the stage where the puppets were performing. This is not to say that all of that planning is bogus, or that the execution isn't generally pretty good, but it's by no means perfect. As we go into the 21st century, stores are struggling to control labor costs. As that happens, and as fewer people work the floor, more stores are going to get the merchandising execution wrong. In the grocery-store trade, it's been estimated that 25% of what's shipped never makes it out to the floor. A quarter of the marketing vehicles that are sent off to your local Ralph's Supermarket get in the back door and make a one-way trip to the Dumpster. That's a frightening number.

What lessons from your store research can you translate to commerce on the Internet?

I've been asked that question innumerable times, mostly from e-commerce companies. The Net is desperately looking for answers. In one sense, we can't translate much from the physical retail world to the Web. But in another sense, there's a framework in stores that could be powerful in e-commerce. Stores have a certain predictability: I enter using a doorway, after which I follow a prescribed pathway. Merchandise is presented in a certain way that is more or less consistent from store to store. I get assistance in a certain manner. Finally, goods are exchanged for units of value using an established procedure. Everyone understands those rules; it's a basic system that we've all grown up with, and it works at Calvin Klein as well as at the local Piggly Wiggly.

The Net, on the other hand, has no prescribed doorways. People can drop in as well as drop out. There is no established system for telling me, "This is the product." And most important, where the rubber meets the road in e-commerce is that there's no universally understood way of getting to the transaction. I was talking to the research director for one of the most progressive retailers in the world. He was tearing out his hair with a Web designer trying to figure out what their online shopping cart was going to look like.

Then there are some very basic issues: There are visual acuity problems and basic communication issues. Lots of stuff is designed on a 21-inch screen but is seen on a 15-inch screen. Above all, there is a basic kindness shown toward people in most stores that hasn't as yet been translated to the Web.

Even considering all that, of course, e-commerce has real power.

E-commerce has succeeded where the traditional connection between manufacturer and retailer has failed. Books, music, movies, porn, and stocks are five categories in which the relationships between manufacturer and distributor are fundamentally flawed. I say books, because the bookstore is still trying to sell them as consumables, and the market is buying them as durables. In the world of music, manufacturers are eminently closer to the artists than they are to the consuming public. And in 1999 music is still packaged the same way that it was in 1959 -- only the lp format has been shrunk down to the cd. To me, that's a disconnect.

The real opportunity online is with people who are ill-served today. Why isn't somebody figuring out where the disconnects are between present-day retail and present-day consumers? Is there a search engine that finds products for large-size or tall people? There are enough of them out there. The future of the Net is going to be great, but in its present form, it's trying to capture everything rather than focusing on exactly where it needs to go.

So what does that say about what the Web should be doing?

The Web should focus on creating something better, rather than being smart about recognizing distinct niches. Or it can play an important role by forming a bond between the cyberworld and the physical world so that they support each other. I love that you can go into a Borders and order a book from its warehouse via an Internet kiosk and have the book delivered to your house. And if it's not the book you want, you can return it to the store. But the Victoria's Secret Catalogue, the Victoria's Secret store, and VictoriasSecret.com are three separate businesses. That's really dumb. When you see that kind of division, you know that the Web opportunity is simply being missed.

So your forecast is, We'll always have stores.