The Retail Conundrum

May 4, 15 • Insight, WorkNo Comments


 

A conundrum is a confusing moment. And there is nothing more confusing than the state of retail right now.   Although, we are seeing some distinctly different strategies emerging.   All driven by the growing impact of online shopping on the traditional retail-shopping model.  Which by the way is probably only about 15-20% of sales. But that is enough to tip the profitability balance out of whack.

For starters let’s ask ourselves a question.   Do people in general like to shop? I believe they do (with me as a notable exception.) In fact, I think it is fair to say that a large percentage of the population actually live to shop – whether they buy or not. Especially if they live in a sub-Arctic Canadian climate like I do. Where going to the mall is some odd form of repetitive social exercise in recycled air.

Those less inclined to mingle with mobs on a Saturday are drawn to the online environment where shopping is a solitary, global, 24-7, desktop, laptop, tablet or most recently smartphone exercise. Click, click, compare, buy and ship. Thank you very much. Especially since you don’t have to deal with a dolt of a retail clerk. And you can show off your purchase to your table buddy at Starbucks.

On the other hand, we have The Apple Store. Where for many years this global monolith refused to play seriously at retail, they now set the new standard for retail leadership. Promise of the pricy high tech stuff behind the scenes in a minimalist desktop-like environment. Rock concert lineups for the latest hippest, I-am-cool gadget. And skilled retail support staffs that can help you buy anything you want – by helping you shop online. Even though it is in a store. Throw in prime downtown real estate locations and you have cash turnover like a Denver blizzard.

Meanwhile, large floor plate general merchandise retailers are struggling as customers come in to “shop by trying it on” but end up going home and buying it online cheaper from your competitor.   Witness the mega foul up of the Target launch in Canada.   Bad timing, poor product selection and a clearly bad read of Canadian shoppers and competition. Somebody just got relocated to Target Swaziland over this one I am sure. Worse yet, they still hold the leases on these large warehouse size stores in shopping malls – with no takers on the horizon.

So what is the magic bullet for retail success? It hasn’t changed in decades. Customer service – whether you are online or in store. High-end retailers are improving the purchase experience for their customers by making the purchase process easier, faster and more confidential. Because high-end customers don’t shop – they buy trends. And many don’t want to be seen or heard buying. Especially during recessions. They are also either reducing their floor plates or their number of stores. Successful online retailers have a bulletproof buying process, competitive pricing, foolproof shipping and post-purchase follow up and communication systems to die for. It’s kind of like blindfolded sex, but it sure beats faking it with a commission-driven retailer.

Let’s not forget WalMart.  Where it is all about price, right? Not really. It’s about customer service – albeit in a stampede management kinda way. Starting with the greeter at the door. What a novel concept. Canadians had to be trained in it because they thought it was rude.   Not so rude is the Walmart policy of actually walking a customer to the object they were searching for in the store. Because that customer had already made the purchase decision. They were simply closing the sale – without any sales pressure.

So where do we go from here? Well first we follow the demographic trends. Where the 1%er retailers provide everything their customers want at whatever price. Where the small niche players seek small space specialty locations with unique, sustainable buying experiences – witness lumbersexual male grooming salons.   Meanwhile, the great unwashed in the over-stretched middle develop an integrated retail strategy – where they can actually help their customer shop online in their stores – smother them with service love and make them feel like 1%er’s even though they will never be. All while quietly reducing their retail floor plates.

And there is always the booming flea market, cash-only, table seller medium. With lots of friendly one-to-one banter and creativity.

Individually wrapped and tax-free.

 

 

 

 

 

 

 

 

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Lp Focus with Pat (Lp) Camozzi, Renaissance man of strategic marketing communications, catchy copy and timeless slogans.

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