Retail Apocalypse – You Can Pretend It’s Not True!

It’s a tough statement to make as someone who has been in the industry since 1981 – but like everything that started in the 80’s – we had a great run for a long time but when technology moves in and changes happen we just cannot expect things to last forever. And now I read daily the articles and missives from the industry genius’ that retailing is alive and well and going to be great!

 

So I dug into these optimistic words of wisdom and contacted many of the writers to see what they are basing their statements on. Of six authors only two bothered to even respond to defend or at least explain their positions. And those two were more disturbing to me than the non-responses. They were so disconnected to the independent retailer that it was alarming. Their articles were geared towards a couple of the largest retailers in the industry. Public traded companies who bleed money even when their sales increase. The articles of optimism certainly are not geared towards us independents.

 

One of the information providers for malls around the country published an article this week stating that MALLS ARE NOT DEAD… The Retail Apocalypse Never Happened! So I read with great interest to see what the article was based on. And, sure enough the writer explained that malls are being “re-imagined” to include health clubs, restaurants, medical centers and INDOOR SKY DIVING! Well, that really helps us small retailers, doesn’t it! All that we know is that small retailers have had to leave the malls because of lagging sales and the malls have to fill the spaces. They are doing what they need to do, but do not confuse an occupied mall with success for the retailers. They are success for the landlords who filled vacancies. Nothing here is helping the independent retailer.

 

So I continued to try to understand the other writers who claim retailing is not suffering. While a few articles stated that numbers are down, they have actually put the blame on the small retailers by not engaging the shoppers! According to them you can turn the downward trend around by giving better customer service and experiences. Put unique products into your stores and that’ll save the say.

 

I have heard that song and dance for years now and have to respond (again). I don’t care how many salespeople you have following around a shopper – this is not going to change the trajectory. Also, new products? Seriously? Every retailer is always looking for the new next best thing to cash in on. Do you really think you are going to get the scoop on buying the next hot product before the big box stores or online retailers? It’s not like the old days of the 80’s and 90’s – we have something called the internet! Not only do products move at the speed of light we now also compete directly with the online China sellers who happily sell directly to our customers. And as we learned many of our customers are willing to wait 3-4 weeks to get the hot item in the mail from China at a fraction of the cost we could sell it to them. So, the item is warm not hot when they get it – we still lose a great amount of business to this.

 

So to all the pundits claiming that retail is alive and better than ever – hey, I have an idea, why don’t YOU open a local store and experience the challenges first hand rather than sit at a desk in an office and spew inaccurate info and ridiculous “tips”.

 

My dear retail store owners, you are not doing anything wrong. You are not missing out on any resurgence of wealth for small stores — You are churning out a living and having to reinvent the wheel every day you open your store. You are in retailing because you love the notion of being a shopkeeper.

 

I wrote this to assure my fellow retailers that most of the articles about our industry are bull****. We live the industry daily. As you also know, things are all not gloom and doom – we do have business, just not as much as we had. My advice for fellow retailers is to stock lighter inventory to keep liquid and include as much variety in your merchandise selections as possible. Start or upgrade your website because e-commerce will be a factor in keeping your business rolling along. If you have the energy to create in store experiences as the pundits expound on, knock yourself out. Personally, I’m not putting on a clown suit and expending all my energy to bring in one or two browsers to my store!





Online Retailers Now Opening Stores

wholesale merchandise mallsHas the retailing world gone insane? Over the last several years online sellers have made significant dents in brick and mortar stores in every market and in every city. Many retailers had to jump into online selling whether they wanted to or not to keep a presence to the consumers. This addition has been costly and for many retailers has not been all that popular, as many online shoppers are scouring for the cheapest price.
Fast forward to today when new retailing reports are showing that many online stores that had been exclusively on line are venturing into brick and mortar situations. Has everyone lost their minds? Is this backwards day?

 

An article that was published in USA today talked about an online fashion retailer in San Francisco that has sold online only for a decade and then decided that it would be a great idea to open a physical store so he could interact with the customers. Lo and behold he discovered that he makes larger sales and were able to interact better with the customers. OMG – something us physical retailers have known about forever!

 

So now the hipster millennial trend is the NEW thing…opening physical locations! They even have a name for it – it is called omni-channel marketing. We used to just call it RETAILING!

 

The newfound genius’ have discovered that there are great benefits by having a physical location and those selling fashion feel they can no longer ignore the client who wants to touch and feel the merchandise. Wow. something we have all been doing for eons until many were put out of business because of these same genius’ saying the internet is the ONLY way to sell. So, they rise through the carnage THEY made of the brick and mortar stores only to bring it back again. But this time they think they have invented a NEW way to sell!

 

My favorite addition to this story is that after years of the decimation of book stores and the burying of Walden Books, Borders and the dwindling down of Barnes and Noble, an announcement was just made that Amazon will be opening physical book stores next year!  I give up!! Is it just me?  Share your thoughts…

 

 

 

Showrooming – the saga continues

showroomingMany of our readers know the term “showrooming” but in case you are not familiar I will explain. Showrooming refers to shoppers who go to a store to see and feel the merchandise and then go online to buy it somewhere else, cheaper.

 

This has been a real problem for many retailers, especially the electronics giant Best Buy whose sales were certainly effected by this act. Of course it is completely within the law to window shop and compare and as retailers we realize that we cannot control the shoppers. I think it’s tacky when the shopper starts scanning product bar codes to use an APP on their phone to locate the product closeby at another store at a lower price.

 

Everything can’t always be cheaper! That’s just a fact of life. It costs money to run a store and shoppers will soon lose their window shopping when more and more stores close up because of no shopper loyalty or willingness to pay a dollar more to support your local businesses.

 

Many retailers have tried to fight the showrooming by switching to their own bar codes but found that APP’s also worked with product names and model numbers. So much for that. Then retailers like Best Buy became more proactive with their shoppers – using their sales force to engage shoppers on the sales floor. Not so easy to take snapshots of bar codes with a sales associate standing next to you. Also, the sales associates were able to discuss the product and pricing as well, and in many cases offering a price guarantee.

 

The price guarantee and trolling the sales floor worked for the electronics giant – BUT, and this is a big  but….the store’s margins diminished and they turned in a not so rosy profit picture after the holiday season.

 

So, in essence you can tackle the showrooming by being proactive on the sales floor and offering price matches but it will effect your bottom line. How long can you go seems to be the new wave of retailing. Thank you internet!

 

Ideas? Opinions? Share with us.

 

 

 

VIRTUAL SPENDING… WHAT IS THIS WORLD COMING TO?

The economy is starting to chug along again, although lately the stock market has had such big ups and downs. Many fellow retailers have been having a hard time selling merchandise at their stores and are looking forward to a better year mid-year 2010. When I say retailers I mean real stores with real merchandise that buyers can touch and feel.

 

WHY do I expound on “real” merchandise you ask? Well, let me share this with you and maybe you’ll be as crazed as I was after I heard this…

 

Social games have become a new trend on the internet. This new industry is sucking in staggering amounts of money. In one recent 30-day span, Playfish, a creator of social games sold for $400 million. Playdom, another game company raised $43 million in financing, while another, Zynga raised $180 million. Many are equating this trend to something larger than the dot com trend back in the 90’s.

 

Companies like Playfish can develop a game for under $100,000 and complete it in just a few weeks. These virtual games don’t even have to fight for shelf space. What makes me insane is where the bulk of the social-gaming revenue comes from: the sale of virtual goods. The virtual goods are digital stuff that doesn’t actually exist.

 

While the games are free, users have countless opportunities to buy stuff: Playfish says it sells 60 million items a day, from $14 engagement rings to bacon sandwiches that cost a few cents. The goodies make it easier to advance in the game.

 

Imagine that…people are shopping and they are spending… ON MAKE-BELIEVE MERCHANDISE! How sad is that? Well, sad to the tune of $75 million in sales for 2009 that could double this year! For fake bacon sandwiches and engagement rings for a game!!

 

Is it just me? Have I gone insane? How tempting would it be for us retailers to post signs in our stores offering “virtual” jewelry — just $29.95 for a pretend ring! And here we have these venture capitalists chasing these gaming companies to throw money into them. Then you have the players willing to spend real dollars for birthday parties for a digital pussycat! Can you say $75 million? I think we’re in the wrong business!

 

Have you heard of this? Are you a gamer? A retailer? Blog with me and let me know what you think.