E-Commerce vs. Brick & Mortar
Change is constant and inevitable. Will real stores survive or give way to "virtual"stores”? Well it has happened and will continue to do so at a faster rate.
Let’s take a walk down memory lane. Television hit the American households in the late 40's, early 50's. Lots of folks predicted the demise of Movie Theatres. Well, TV did make a huge impact on going out to the movies, and especially in small markets. There were many "Last Picture shows". Yet the movie industry adapted, adding technicolor.to the big screen, long before TV was made in color. Then, Dolby “surround sound” and now movie theatres are offering dinner and cocktails at your seats.....and people are social creatures and like to be out and about. So The Film industry has adapted and Movie houses are alive and well.
Retail will also adapt but not without many casualties.
When my colleague first broke into Retail Development/Leasing over four decades ago, he had the pleasure to represent one of the great mom/pop toy stores in San Francisco {King Norman's Kingdom of Toys} for its new store developments. King Norman had a popular local kids’ TV show at the dawn of TV. He offered the very best in customer service, such as free gift wrapping and even free local delivery. Norman told the story in the early 70's that he could no longer compete with what he called the category killer/big box competition, Toys r Us, which came on the scene. Norman and most mom and pop toy stores are gone. It seems then and now that consumers want deals and one-stop shopping with huge assortments. They are now getting that on the Internet.
But of course there are grave social consequences to Big Box or Internet shopping.
My colleague was also asked to deliver a key-note speech years ago in The Hague on the impact of Big Box stores, “The American Experience”. Ironically, when he was preparing his talk there was a front page story in the Wall Street Journal ,"The Death of Main Street". Pawhuska, Oklahoma was by all reports a Norman Rockwell thriving Main St town -- the butcher, the baker and the candlestick maker. Well, the Town Council voted approval of a new 140,000 square foot Wal-Mart just a few miles out of town. Within two years most of the mom and pop stores were gone -- impossible to price compete with the purchasing power of the giant category killers.
That town of Pawhuska paid a huge social price to save a few cents on a bottle of aspirin. It lost its heart and soul.!!!!
I personally feel that shopping on Main Street is as much a social experience as it is the need to purchase consumer items. However, my recent experience at a local "family" restaurant has changed that view. Over half of the patrons, both families and couples, were texting or otherwise using their "smart phones" rather than engaging with their friends or family at the dinner table. So, this upcoming generation is becoming reclusive behind their electronic gadgets. Therefore, Internet shopping is right up their alley.
The theme of this piece is change. Someone will always build a better mouse-trap, so businesses dealing with consumers need to keep up or get out. Some, as in my mention of King Norman, simply can't compete.
Smart, savvy retailers integrate the tool of technology with their product lines so as to enhance their brick and mortar locations. They don't deny the power of technology. They use it in different ways, but I for one am grateful that the remaining brick & mortar locations will prevent the entire world from becoming at-home cavemen shoppers supporting vast warehouses in cheap valley canyons (á la Amazon, etc.) Successful small retailers like regional players Liquid Marin & Toss are doing their share of digital advertising (e-marketing) to drive traffic to their locations in Marin and the greater Bay Area.
Liquid Marin uses “Deals of the Week” videos on their email blasts to hype their current offerings, which are basically high quality items at a great value. Their website announces Live! Learn! & Play! Owner Melissa McLane believes in making that personal connection to everyone who enters her store – thus her theme of living life inspired. Their website encourages an inspired lifestyle that includes not only both on-line and in-store deals , but workshops and art classes for new experiences, community & fundraising (being “present” in every moment in our environment – to “be a part” of where we are.) Their one-of-a-kind items range from home furnishings and accessories to books, luggage, and contemporary fashion for men, women and children. Whether it’s the huge parking lot sales, which they have on a regular basis or preparing their next video – she relies on a dedicated staff that embodies her dream and theme.
Toss, which now numbers 6 stores, specializes in unique, fresh design looks for their quality line of totes, travel bags and accessories. Prominent on Toss’ website is this introduction, “since 2004 the girls at Toss have been living and breathing handbags!” Their unrivalled assortment of totes, travel bags and accessories has specific target markets in mind. They personalize and customize for sororities or just your own “one-of-a-kind” tote! Their product line – both as presented on the web and in their stores – is chic, unique and carefully chosen – “flair for fashion – eye for detail” as their owner is wont to say.
Other savvy retailers invoke a variety of internet tools (e.g.social media, videos, coupons, online and instore specials, membership, clubs) to increase popularity, loyalty and demand.
The Apple Store, as a technology giant, is a firebrand that shows collaboration between virtual and “real” stores. Their very successful Apple retail stores are often the busiest stores in the mall or on the commercial street – capturing that appetite of a public ready to learn and embrace change. Again, education and inspiration are part of the formula.
Even as brick-and-mortar stores face unique hurdles, on-line shopping walks a fine line too. To market regularly without becoming annoying is the new challenge. I recently “unsubscribed” to Country Outfitters Boots, as they were much too present in my daily in-box. I did the same with Office Depot and Staples –“unsubscribe” has become the order of the day.
Consider the BIG BOX book sellers, Borders and Barnes & Noble, putting hundreds of independent booksellers across the county out of business the same way that Toys r Us killed the local toy stores. Now Amazon and electronic readers are the demise of the BIG BOX booksellers. Borders is already gone and Barnes & Noble is soon to follow!
That takes us to Jeff Bezos' Amazon. His business plan is very basic: develop a huge product assortment on the web, establish huge distribution facilities that can cover several states, offer low prices and NO sales tax A conventional Retailer would have to have dozens of stores to cover the market reach of Amazon. The efficiency of the Amazon concept is hard to beat!
Take the Electronic sector. Best Buy is hurting. Consumers use Best Buy as a comparison showroom. Then they order what they want from Amazon, for the most part TAX FREE, though this is in flux right now. On big ticket items saving 7 to 9 % is a big deal!
With so much of my working career in Retailing, I indeed felt wearing apparel and shoes were safe from the impact of Internet trading. I was so wrong. Look at the enormous success of Internet-only shoe seller Zappos and virtually all Clothing companies have a big web presence.
I also thought the Drug and Sundry store category was safe. Well, sites like Warby Parker, Birchbox, etc etc are penetrating that sector as well.
A new software company, FaceCake, has just been launched to make shopping easier at retail outlets, a virtual dressing room where folks don't have to go through the hassle of "trying on" multiple outfits. Who would have thought of a virtual dressing room? Except now it won’t be long before websites will provide this service to Internet customers who happen to have a web-cam attached to their computer. I found a recent Internet shopping survey by Lab42 most interesting;
A huge motivator for Internet shopping was FREE SHIPPING
70% said they shop on line because of better sales and promotions.
95% shop from a computer but only 4 % from smart phones, This is temporary. Smart phone shopping will dramatically increase in a short time!
About 68% of Internet shoppers do not return purchases, but sites offering free returns get big play!
Two thirds of shoppers "overwhelmingly agreed " that online shopping was a big winner, as it was easier to browse and more convenient.
Yes, there will always be Retail stores, one-off boutiques, fashion designer labels and, of course, items that require test driving, e.g. cars and mattresses. Retail will continue to survive and thrive where the good buyers and good merchants make good choices -- creative, innovative ideas and trend-spotting.
Savvy retailers beware and don’t forget the words of Heraclitus. “Change is the only constant in life.”