Having Lots of Data Means Nothing If You Don’t Use It Well
So… about those DIGITALLY-NATIVE (or DIRECT-TO-CONSUMER, “DTC” or DIGITAL-FIRST) BRANDS. As many of you know, I’ve been excited about the energy that their “clicks-and-bricks” strategies have injected into storefront leasing efforts while making sure to note that the jury’s still out on their prospects for profitability in the longer term. And while the unraveling of Silicon Valley Bank has dominated the business press since Thursday (and presented a crisis for some in this particular retail subsector), another bit of news has gone somewhat unnoticed: a disastrous fourth-quarter earnings report for Allbirds, among the most prominent of the digitally-native brands. Known for a conspicuously un-showy yet comfortable and sustainable wool sneaker that had become an essential part of the Silicon Valley uniform, the growth story that it had been telling Wall Street completely collapsed during the holiday shopping season. As part of its response, it will be dramatically slowing store expansion. Fortunately, much of the problem seems to stem from market miscalculation rather than anything inherent to the clicks-to-bricks model: put simply, it launched new product lines in an attempt to expand its customer base, and they didn’t take. Yet haven’t we been hearing ad nauseam about how these digital-first companies have all of this great “DATA”, which supposedly enables them to more accurately pinpoint and effectively exploit opportunities? I’ve always heard this as a whole lot of hooey (and typical tech-industry hubris). Legacy brands have lots of data too, and the good ones know quite a bit about how to use it – when some pundit claims that DTC’s have a unique advantage because their online sales tell them where their customers are, I point out that retailers have been gleaning such information from their credit-card receipts for decades. Here, we are provided with a clear case in point that data is not destiny. I don’t mean to gang up on Allbirds – it is a cool concept in a nice package, and I really hope that the ship can be righted – but obviously, all of the data at its fingertips did not prevent it from some real strategic missteps. Ultimately, data means nothing if one is not interpreting it correctly.