This week, two bits of news hit the streets—actually, most people got the news hitting their screens, since that’s where they get their news now…and that’s a good clue as to the theme this article will take.
The two news items were these:
· Amazon announced that book download sales (i.e. for their Kindle or other electronic readers) surpassed sales of hardback books on Amazon.com
· Barnes & Noble Booksellers, with 720 brick and mortar locations, has announced it’s up for sale, citing the crossroads it finds itself at with the rising prominence of electronic books mentioned above…
We can learn a lot from the failure of most music retailers who did not adequately prepare themselves for the decline and demise of physical recorded music products…and from what may be B&N’s smart move to get out while the getting’s good.
Retailers will be the main beneficiaries of such lessons but those that support or make a living from dealing with retailers, can learn from these events as well.
It doesn’t matter what type of retailer we are talking about. Many brick and mortar retailers have online versions of their stores, and that’s good…but for those that don’t, they need to realize: Online retailers pose a threat to any brick and mortar location. Lucky will be those who work for a brick and mortar location in a company that also has a strong web presence…and they can switch their job over to that division of their corporation. But for those smaller businesses out there with no web presence or a weak presence online, this needs to be addressed.
Think about it: What makes someone shop at any particular store? There are a variety of reasons, but throughout history the biggest three reasons have always been:
…and you know what Mr. Brick&Mortar Retailer? The web nails you to the wall in all three!
Location has always been dominant in these three factors. The biggest cliché in retail success formulas is “Location, Location, Location”. If your store was convenient to drive-/ride-/walk- to from the customer’s home or business, or between the two, your store had a distinct advantage. But now, the web beats you all the time, because the customer doesn’t even leave his house to shop!
Selection and price battle back and forth for second/third place. The selection on any web retail location is always superb—look at Amazon vs. just about anybody in whatever it is they sell. Price is the same way, the web can keep costs low and pass that savings along to the customer even if the customer has to pay a shipping and handling fee.
So what’s next, you wonder? Miles of empty storefronts? Possibly…but look around at the types of stores that seem to attract traffic. Notice anything?
For example, there seems to be a plethora of independent coffee shops even in the wake of the expansion and contraction of Starbucks. Almost all of these indies seem to be doing well. But nearly all of them host events like live music and open mic night almost daily. Starbucks didn’t do this as much. They sold exclusive CDs…but so what? Is that going to get you the customer out of the house, particularly when Starbucks usually sold the CDs on their web store as well?
Large specialty retailers like Michaels and Lowes hold seminars and classes on how to scrapbook, how to lay tile, any type of activity involving the product they sell, whether it’s hobby/craft related or having to do with home improvement. These events may not result in a customer actually buying anything at that time, but so what? It’s a form of marketing that a business must do to build its customer base.
Existing retailers must learn how to trick up their business by making their LOCATION a place to go, a destination to be yearned for by the customer. Retail Stores of the future will have to do a better job of enticing the customer out from behind his computer, into his garage, into his car and to drive several miles to get to that location! I’m not saying you have to hold “Ladies Night” like the local pickup bar does every Tuesday night…but as a theory, that’s not a bad idea when you think about it: Give single ladies heavily discounted or free drinks /food and that will entice more single guys who pay full price….plus, do it on the slowest night of the week.
This may mean more retailers are open later at night or longer hours on weekends to accommodate…so be it. If they try to trick up their SELECTION they run the risk of overstocking themselves and killing their turn on inventory and preventing open-to-buy dollars being available when they really need it, like the holidays.
If they try to trick up their PRICES they will slash their profit margins and go the way of many failed businesses in the past that thought PRICE was all that mattered to the customer. A smaller chain or independent retailer simply cannot compete on price with the likes of Wal-Mart, and whenever they attempt, they lose.
Support services and suppliers for retailers, such as sales reps, would be wise to keep an eye out for such opportunities to accommodate the “tricking up” of LOCATION. Don’t just push more SELECTIONs at “better” PRICES, because that will only result in the failure of the brick and mortar retailer to continue in business, or to continue to be a lucrative account.
If Support picks up new product lines or engages in joint venture with other companies that can accommodate just that kind of help to make the location a more desirable one, that will endear them to the retailer and expand upon the role from being a salesman/customer to teacher/student. We all remember good teachers with far more fondness than we do good salesmen, don’t we?
An example? How about the supplier of mugs, coffee makers and store fixtures for your typical coffeehouse becoming suppliers (and better yet, installers) of sound and audio equipment? Or, at least joint-venturing with a music store that does just that kind of installation? In return, that coffee-equipment supplier might be able to get some references from the audio technician of some of the churches, schools, offices, theaters he has serviced…and when this writer last checked, coffee machines are used a lot in all of those places-- so much so that the standard store-bought models often break down.
More and more, the retailer of the future will be providing a service, an entertainment if you will. If you have a retail store you should already have some way to sell online either by your own site or partnered up with Amazon or another web powerhouse. But you must make your store a better location/destination. If you are in any sort of retail support business, find ways to help keep your customers on this trend.