DEEPER DIVES: From Targé To Tired

Good Morning,

First, as always, thank you for joining.

There’s been a surge in new subscribers. To everyone receiving their first issue this morning, hello and welcome.

As Q1 is wrapping up, a lot is going on in the Supply Chain and Logistics space. Growth and connecting with customers are top of everyone’s mind. If that’s something you’re working on and you’d like to connect, you can now book time with me directly.

Here’s what this issue brings:

• The data is starting to come in. The 2024 peak season is looking like a lot of middle-of-the-road products, discounts, and discomfort.
  

• It was Walmart week. They made a splash with some killer results and more infrastructure announcements. They’ll be back in the news again this week with Target publishing their Q1 earnings
  

• Have you noticed a drastic shift in your LinkedIn reach? Everyone has. Let’s get into what’s going on and how it seems the algorithm has changed.

Emerging Trends You Should Know For The 2024 Peak Season

Friday we tested a new idea for community connection.

It’s simple.

Start a LinkedIn Live Audio session and leave it open for an hour.

Anyone can join.

Anyone can speak.

It’s a fast and low-barrier way to get more conversations going and to hear about what other people are doing.

One participant ended up sharing some interesting perspectives on current container rates and their take on upcoming Supply and Demand issues.

That got me thinking.

What’s the early data showing for ocean freight movements?

What are retailers signaling with the orders they have already booked?

Here are the key points that caught my attention:

1. Freight volume is re-balancing. More freight is finding its way back to West Coast ports
   

   

   
   
   

2. Most retailers expect consumers to be price-conscious again this year
   

3. Mid-range priced retail made up 80% of the orders currently placed
   

4. There’s been hedging against an ILA (International Longshoremen’s Association) strike - East Coast port impact.
   

5. Service providers are increasing their rail activity to support coast-to-coast moves
   

6. Transloading needs are expected to be high this year
   

7. Some brands are bringing in inventory earlier. Others are holding off and are waiting a bit longer before shifting strategies due to geopolitical uncertainty

What Can You Expect If You’re A Service Provider

Warehouses

Retailers may be looking for more space or to re-negotiate traditional peak season pricing for increased inventories.

They will want to hold it longer, and won’t feel that they are generating the right revenue to support the high seasonal increases.

Premium or luxury-type SKUs will dwindle. It’s important to manage your facings / bins to make sure that you don’t have too much space tied up by items that may move slower than historicals.

Transportation

With more mid-range products in stock and a flatter sales trend, I would expect more retailers to look for increased frequencies on their product movements but with lower order levels.

They may be looking to create a consistent flow of goods to their stores and DCs to ensure that they aren’t stuck working around inventory that is moving slower than normal.

Delivery | Last Mile

Everyone expects the market to be competitive. Free and fast shipping will be used to try to convert customers and support promotions.

Since retailers will engage in ongoing discounting, they will be back at the table looking for the lowest rates for D2C order fulfillment.

Make sure you understand their customer base, what they are shipping, and how often they typically do it. There are some major lanes and pockets of activity that are ripe for regionalization. Be mindful to not overextend your network, which will burn too many hours moving around.

Retailers & D2C Brands

Basic discounts and extended promotions may struggle this year.

Last year, entire malls felt like they were a sales rack from October through December.

Grabbing customer attention and capitalizing on it right away will be a major success factor.

• If you are going to invest promotion dollars, consider short in and out sales with strong offers

• Don’t get stuck believing you have to do the same things for all stores or every customer

  • Take advantage of regionalization

  • Position inventory where you plan to sell it

  • Double down on the markets and segments where you have strong brand and/or product penetration

• For eCommerce orders, surprise customers with unexpected inserts into shipments

The 2024 season will be a weak status quo for most retailers.

The ones who stand out will be those who take the opportunity to lead from the front and start thinking differently about the seller / buyer relationship. The best thing you can do for your brand is delight and wow your customers. Word-of-mouth network effects are only getting stronger.

Target Needs To Shift Gears. Chasing Walmart Is Killing Them Softly

I haven’t seen much on Target over the last few months.

They’re like that one guy at the party. People remember he was there, they saw him around, but he wasn’t saying much. Kind of sitting in the corner all alone.

With their Q1 report expected to come this week, I’m curious how it will align with the initial 2024 plan.

The main buckets that I am watching from them:

Customer Experience

There was a lot of focus on making store enhancements and adding new services. This was paired with a revamp of the Target Circle 360 program.

D2C Fulfillment

Target fulfills 96% of its eCommerce orders from stores. At one point this was viewed as a strategic advantage and a profit driver. Now it’s starting to seem limiting against Amazon and Walmart’s Marketplace strategy

Supply Chain

They had planned to build new facilities to increase efficiency and speed. They had also planned more transloading and rail activity to better move products through the country.

Private Labels

Target wanted to continue to focus on their owned and exclusive brands. One-third of their total sales are because of these products. Are they performing in a world where customers want more variety?

Target & Walmart - By The Numbers

In every way, Walmart dominates Target.

Target cannot directly compete with Walmart and Amazon.

They don’t have the volume for it and they don’t have the customer density.

Target is going to need to develop a laser-focused strategy and execution model to entrench the customer experience and brand value they want to promise.

What was once a segment dominated by Target (middle to upper middle class), it’s starting to slip. Both Amazon and Walmart are making investments to gain more of the “luxury” shopping segment.

If Target continues down a path of “everyday low price” offers and creates more brand-owned private label products they may start to lose their edge when it comes to exclusive designer collections (something they have ruled for 25 years).

The Operations Opportunity

For Target to stand out, it needs to do more with operational execution and the type of innovation it pursues.

Programs like Drive Up With Starbucks and Target Circle 360 are window-dressing.

While Walmart and Amazon are selling everything, Target should double down on their exclusivity offerings.

They say they are “aggressively” looking for new D2C brands, I think they should be building an entire program around it.

I would have a rotation of D2C brands flowing through Target stores. Selecting the right brands based on their product type, target demographic, and regionalization. A cadence of regular in-and-out product movements would give Target customers what they loved most (exclusive access to high-quality products are great prices) while keeping them relevant to a shifting consumer base.

This program could have brands move through stores, then to their online (invite-only) marketplace, dropping off until their next appearance.

Next, I would re-evaluate the same-day fulfillment process. Currently, 60% of eCommerce orders are pushed through same-day fulfillment (pickup or delivery). This entrenches a high promise that limits options for consolidation and efficiency.

Third, I would look to connect two strategic goals and implement augmented reality in-store product locating. Right now the best anyone has is a live inventory connection to their website that a customer can see.

Augmented reality pathfinding within the store is both novel and highly functional. Anything that increases foot traffic and gets more eyes looking at your shelves is worth exploring.

Their results should be out by Wednesday or Thursday - let’s see what they have to say about Q1 and if there are any pivots they need to make.

LinkedIn Flipped Their Algorithm And Everyone Is Feeling The Pain. Here’s What You Can Do To Tweak Your Approach

If you just decided to get on the content marketing train, LinkedIn started you off with a bumpy ride.

The algorithms.

Everyone is always trying to figure them out with the hope of unlocking the system and getting massive levels of exposure.

It doesn’t matter what platform you’re on.

It’s always the same goal.

What makes it brutal though is that they are always changing. Sometimes subtly and sometimes it’s like a bull in a china shop.

The LinkedIn update last week was a bull.

Take a look at some numbers below.

So if your impressions and reach are down, you aren’t alone.

LinkedIn has been signaling for a while that major changes were coming. The most notable was improvements to the AI algorithms that rank and rate posts.

While there is no official release of what’s changed there are a few things that seem clear.

1. Text and image relevance. Personal pictures or images that have no relationship to the text are taking a hit. It’s not so much that a personal picture can’t be used, however, the consistency in doing it looks to be causing a penalty to your posts if you were doing it a lot.
   

2. Hashtags and Tagging. Overuse of these options (especially if people tagged aren’t responding) will penalize you. If you are using these, make sure to keep them light (1-2) and that the people you tag make sense for the content and will most likely engage.
   

3. Sloppy AI generation doesn’t seem to be going anywhere. While ironic that LinkedIn itself is promoting AI responses on so many posts, using these tools to write a surface-level post to check that activity box isn’t working.

What does seem to be working

1. Daily activity still seems to be rewarded. Posts are great but adding thoughtful and value-adding comments to other posts seems to generate better reach.
   

2. Sharing about what you know (and why you know it) is still giving the best results. The higher quality of what you share, the longer it lives, the better the rank
   

3. Posts that get a strong reaction from people to follow and repost what you shared seem to get a strong surge.

Even though it feels frustrating to see lower engagement and reach on your posts, I support and encourage every one of you who is putting themselves out there to keep it up.

Consistency and persistence will always bring results when paired with continuous improvement and a test and learn mindset.

That’s it for this week. Thanks for being here.