Are brick and mortar stores a dying breed?
Circuit City, Blockbuster, Border’s, Filene’s and the Sharper Image are only a few of the better known retailers that have closed their doors in recent years. The full list is ominous. Check out this Wikipedia listing if you’re up for a big shock. (http://en.wikipedia.org/wiki/List_of_defunct_department_stores_of_the_United_States) Sure, you can blame it on the natural evolution of things. Or stronger competition. Or the growth of internet shopping. Or constant price battles that force weaker players to fold up their tents. But, really, it’s more complex than that. Do you really care whether your office supplies come from Office Depot, OfficeMax or Staples? Does it matter if your light bulbs come from Home Depot, Lowe’s or Ace Hardware? What difference does it make if you buy your next TV from Best Buy or HHGregg? What’s relevant is that many of today’s retailers are turning a blind eye to the retail disasters or yesterday. They have forgotten how to differentiate themselves. They have become commodities. No, brick and mortar stores aren’t going to die as a relevant shopping channel. But as smartphones become a ubiquitous shopping tool and the internet offers a myriad of place to find it cheaper, customer loyalty will become more and more difficult to achieve. The question that ever retailer should be asking themselves is where to take a stand. Is offering the greatest customer service, like Nordstrom, an answer? Is it making the shopping experience a form of entertainment, like Apple stores, a way to go? Is providing the highest quality products, like Whole Foods, an option? Maybe it’s instigating the perception that being a generic brand is to offer unbeatable value, as Costco has done with its Kirkland brand. Whatever it might be, remaining a relevant retailer means digging deep to find a unique point of difference.
Spend this holiday season with Hilbert’s paradox of the Grand Hotel (and other tales of the precious customer)
19th century German mathematician David Hilbert described the concept of infinity this way: first, you must picture a hotel so vast, so overwhelming that it has an infinite number of guest rooms. This hotel is not only large, it is also full, with every guest room occupied. One evening, a sojourner enters the lobby, seeking a room in this hotel with absolutely no vacancy. Despite being sold out, the traveler gets a room, since the hotel is not limited by any finite number of accommodations. So the guest in room 1 is moved to room 2, the guest in room 2 is moved to room 3, and so forth, ad infinitum. The newcomer is put into room 1. The hotel can repeat this procedure any number of times whenever new clients happen to show up. Would that this were so for retailers—a steady line of customers snaking out the door, waiting to come in, every section packed, every aisle occupied, a hub of activity 24/7/365, one shopper after another after another with no end in sight. While this isn’t real, we’ve often observed sales associates who believe that customers are an endless resource. Like it’s no big deal if they don’t sell customer 1, because a customer 2 will be right behind. There’s always one more and one more after that. Take this incident at Best Buy, in which an employee told a customer, without checking, that a hard drive was out of stock. When he ordered the same item online for in-store pickup, less than an hour later, it was miraculously available. Or this customer service fiasco at Men’s Wearhouse, in which a saleswoman insulted a customer with lines like “I don’t know why you’re here,” and “I can’t help you now.” Even in the best of times, it’s foolish not ...
Would you like some pantyhose with that ceiling tile? (and other retail oxymorons)
Perhaps you were taught this instructive “stick-to-your-knitting” story of some years ago. It starred an over-eager Home Depot executive who came up with the idea that millions would drop to the bottom line if only the company could see its way to introducing L’Eggs hosiery displays at checkouts in all its stores. After making his case to the top ranks of the company with a convincing argument about potential financial gain and a not-very-convincing plea for the company to use this as a response to the increasing presence of female customers, he was quickly asked to abandon the idea—of course, right after being told to abandon his seat from the meeting. The teachable moment—seized on by the chairman—was that just because you could sell it doesn’t mean youshould sell it. Apparently not everyone has heard this entrenched business lesson—including some more recent Home Depot executives, who two years ago brought about losses with a similarly ill-fated decision to sell flat-screen televisions during the holidays. This week, Best Buy announced plans to sell patio ware—furniture, fire pits, grills and heaters. It’s their attempt to make up for lost sales in bread-and-butter categories like movies and music. This has all the makings to be the pantyhose story of 2009. We’ll be watching this one especially closely, as this is a retailer which has done many things right. Supermarkets used to fall prey all the time to the allure of selling higher-margin items—that turned out not to sell, like television sets. A recent sighting of candy bars at the checkout of a garden center store struck me as a stretch, and a rather sad attempt to presumably get something back from a decline in boxwood sales. Unexpected products in the assortment can delight customers. Urban Outfitters does serendipity masterfully. Probably until it was deemed illegal or immoral, Sears stores used ...
