Like other familiar chains, Boscov’s last weekshut its 49 department stores in Pennsylvania and nearby states, and the call center at its Reading headquarters, the result of anti-coronavirus measures that have shuttered U.S. stores, schools and live events.
Regional chains such as Boscov’s have been competing with Amazon and Walmart online, selectively adopting fast-changing ad technology that customizes prices and product offerings to online shoppers. Boscov’s has gotten help from Andre Golsorkhi’s Sidecar, a digital advertising agency that employs 200 at its headquarters overlooking Philadelphia City Hall, and has other regional and national clients such as Under Armour and some of 76ers partner Michael Rubin’s companies.
Their partnership, like many other business relationships, will be tested in the shutdown.
“Amazon and Walmart are the competition. They take 65 or 70 percent market share, ubiquitous, in just about every community,” says Jon Holmquist, Boscov’s senior vice president for direct marketing.
How can local chains such as Boscov’s hold out against Amazon and Walmart, with their billions?
“They are smart guys. But we have the advantage in our region," says Holmquist. "Seventy percent of our ecommerce business comes from the markets around our stores. That lets us compete.”
“We came up with what we called Our Everyday Prices. We went heads-up against Kohl’s and Macy’s that did a lot of marketing around discounts from higher base prices to get almost to our everyday prices. They were in the discount-coupon business. We weren’t — our prices were competitive ‘everyday’ — so we did really well against them in our markets.”
But Christmas 2014 was a test: It brought more business than Boscov’s pricing and order-fulfillment machinery could handle.
“We were trying to manage more than 60,000 items on our website manually, and we were overwhelmed," said Holmquist. “We came out OK for the customers, but it was an unpleasant experience for those of us working here. We came to the spring of 2015, and said, ‘We don’t have all the tools or the people we need. We’ve got to find a partner.’”
The family-owned chain had eschewed outside ad agencies, preferring to build its own advertising department, spreading its message through ads in local news organizations (including The Inquirer). Even efforts to hire outside search engine optimization and management agencies “hadn’t worked well for us. They were scattered all over the country. That was part of the problem.”
Closer to home, Sidecar was watching Boscov’s online traffic, and saw an opportunity.
“Lo and behold, in the middle of spring, I get a call from one of the Sidecar sales guys, Justin Smith. He said, ‘We’re just down the road, we see what you’re doing in comparison-shopping engines, and we think we have the tools that will help you.’”
At the time, Sidecar employed just 30 people, under Golsorkhi, a Harriton High School and University of Massachusetts grad. Over the next few years Golsorkhi expanded his workforce sixfold and raised early capital from Philadelphia-based Osage Ventures, Robin Hood Ventures, Gabriel Investments and national investors such as Ascent Venture Partners. And he sees the Philadelphia area, with Comcast and Michael Rubin’s retail brands along with online marketers like Revzilla and Monetate, as a good place to hire people without paying Silicon Valley or New York rates.
As a digital marketing agency, Sidecar hunts for retail clients’ customers online. It uses proprietary software tools to match the mostly likely consumers to buy a store’s items at good prices. “Retailers think about, ‘How do I connect with consumers with greater precision" while boosting profit margin? How do I [engage] that consumer across networks?’" said Sidecar CEO Golsorkhi. "We have the underlying infrastructure, the process, the service and the people to be your performance-marketing arm.”
And Sidecar’s own pricing made sense to Boscov’s. “They were willing to [get paid from] the incremental sales they brought to the business,” unlike agencies that demand a cut of all sales, whether they had added customers or not, Holmquist said.
“We worked out an automatic product feed, with product details and price, which are live on our site, and which we send them every day. They put us into their programmatic buying management system. That means they are essentially bidding for position and visibility for us, to show online shoppers Boscov’s products and prices most likely to appeal to them, given what Google and other popular sites know about those customers."
There is so much data to match — involving customers, products, sale pricing and coordination with e-mails and other ads — that “I don’t believe a human could now manage it" directly, without sophisticated software, Holmquist says.
Sidecar puts Boscov’s products in the path of past and likely Boscov’s customers in Google’s advertising engines, Microsoft’s Bing and Verizon’s Yahoo as well as Facebook and other social media. “We got through a really technical process, with Phil Turicik, our original customer service manager with Sidecar,” who has since been promoted to “director of enterprise customer strategy." Adds Holmquist, "Now we have two people, plus Phil, working on our account.”
"The Boscovs were pretty strict that almost every customer acquisition we make here, has to be, not only self-funding, but profitable. When a product becomes hot, you don’t have to bid as high.
"So you develop these strategies and you execute them in these marketplaces. That’s what Sidecar does for us.”
Since last fall Sidecar has also been managing a Facebook program for Boscov’s. “If you’re in Facebook, and you see ads for Boscov’s, 90 percent of that is managed by Sidecar. ”
Even with the stores and call center closing for the virus, retailers like Boscov’s can still move some products purchased online through third-party brands and their delivery services.
The shutdown has left anxious retail minds looking for new ways to reach customers and resume selling. What’s the next approach? “We’ve got a ton of data" on how customers have shopped, Holmquist concludes. "What we really need is information” — where are we headed?