March 1, 2017

Is Retail Doomed - Like Apple?

This article makes for an interesting read. David absolutely knows what he is talking about - and I am absolutely no retail pro - just an observer from the outside - so it would be foolish to question his analysis. That said, I couldn’t resist building on it to try to shed light on what might be going.

Thoughts. Observations. Call them what you will …

To make sense of the following it really does make sense to read all of David’s article - and then ask yourself … has the pendulum swung too far in the direction of digital electrons and away from physical atoms. And if so, are we now seeing a correction? Remember Them ? I often look to music as my canary in the coal mine to give insight into digital disruption. No - not books. All Amazon did to disrupt that was to change the warehouse and distribution model and so improve pricing.  Digital books came a long time later - and still haven’t really changed people like the ‘MP3’. Music (via streaming) is as close to legally free as you are ever likely to get - and even as it is - so boxed sets, packaging, vinyl, meeting the artists … etc are all on the upswing. I believe this is a symptom of people wanting that real world experience. That emotional connection if you will MEETING the need for artists seeking to make a living. Meanwhile, Amazon ate books stores up - and now are looking at opening their own physical book stores and Apple, a pretty successful company pins a lot of its success on their stores - with the net result that they are the highest revenue per square foot of any retailer in America. So, I got to wondering if Ben Thompson’s ‘smiling curve’ - which he applied to publishing - but actually borrowed the concept for from Acer’s Stand Still - might equally apply to retail. The curve is actually all about ‘value at the edges’. David’s examples of  “Aldi, Primark, TK Maxx, Poundworld & TJ Hughes” are all (to my mind) great examples of the Tesco ‘pile-em-high-sell-em-cheap’ business school. While at the other end, we have the ‘experience’ retailer - i which I would in which category I would include Apple, and better Jewelers, Art Galleries, Specialist stores and I am sure you can add in your own kinds of stores that you go to = that you would have a hard time replicating on line. Apple … Doomed! The stores that used to dominate the British High Street - MandS, BHS, Woolies are exactly those stores that fall at the bottom of the smiling curve - the fate of being neither one … nor the other. And the UK isn’t alone - JC Penny, KMart, Seers, Kohls … the news in America is full of those self-same failing business models. Makes sense to me. How about you? But there’s more …. David writes

It is not all “doom and gloom” however, as there is still the opportunity for retailers to rise again using their new-found wealth from digital online retailing to invigorate their “bricks and mortar” estate. Smaller, specialist shops with fast turnover, great staff and entrepreneurial thought- leaders, could lead to a new breed of retailing.

Exactly - those stores are on the other side of the curve to the mega stores … and I agree with David. LOT’S of potential here … but the scaling of those stores is going to be different. Somehow Apple have managed to do it - but I can’t really think of anyone else that has that many stores, with that level of success. The key however is don’t scale for scales sake. Ask yourself, are you for ‘shareholder value’ or ‘customer value’. A little topic I touched on here just last week. And secondly, the world of electrons and atoms are not exclusive - they should work synergistically. Which is where ideas like

  • check our stock online and pick up your purchase at our store this afternoon
  • book your appointment online, to get your fitting tomorrow morning at a time that suits you
  • once I have your measurements, if you want to order again - just click the button - it will be shipped stright to you
  • etc etc etc … once you start thinking about how to improve the customers experience for your business - the ideas will just flow - and as David says …

“We don’t have it but you could order it online and pay for delivery!” This is a typical example of today’s culture of digital retailing and assumes that everyone is online all day, every day, smart ’phone to hand and without the ability to string a sentence together grammatically.

yup - that is not going to work.

One final comment - BHS

David writes:

BhS was a great British retailer which lost its way through disastrous management who had almost no idea of what the British public wanted nor how to run a company, let alone a retailer.

Probably true, as I said earlier - I am no a retailer - but I do read the news papers. This just in today for example … BHS: Sir Philip Green says report into conduct at failing retail chain is ‘biased and unfair’ | The Independent

Philip Green has shown the rich can game the system. We need to stop another BHS

Philip Green agrees to pay £363m into BHS pension fund

I have written about this before …. as far as I know Green does know what he is doing - like I discussed in this post from about a year ago - scroll down to the section ‘Fraud’.

I have no idea if Green is truly guilty - but I do believe that there is no smoke without fire. And this was an awful lot of hot smoke. Despite his protestations.


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