Amazon, the new retail giant, holds themselves harmless for disrupting consumer shopping habits. Walmart, likewise. Businesses giants like Sears are shutting down, selling their bread-making brands (think Craftsman) or selling out completely.
Baby Boomers, acclimated to the ‘a handshake closes a deal’ era of transacting, are confused by this tap-to-pay global phenomenon young entrepreneurs call ‘tech commerce’. Meanwhile, today’s kids seem to understand the concept of swiping screens by age 3.
Today’s retailer, fighting to claim their share of consumers expecting convenience to meet or exceed cost, blame multi-billion dollar ecommerce companies for the downfall of brick-and-mortar businesses they’re inadvertently closing – with the help of consumers.
Let’s establish motive by hopping back to 1931.
A Fred and a smile
A then 45-year old businessman named Fred G. Meyer, more than likely tired of driving 15 places to gather items for his family, decided to form an incredible buyer’s extravaganza: the one-stop shop. Based in Portland, Oregon, consumers could come to this megamarket and purchase groceries, pharmaceuticals and even get their Auburn Cabriolet lubed. By the 1950’s, these larger combo stores ballooned to 70,000 square foot ‘hypermarkets’ and were stocked by plants Meyer opened as the demand for other tangible goods increased.
Mind you, folks, this was during the height of the Great Depression, ultimately ending when Roosevelt stepped up in 1933.
Was the local dime store shaken by this innovative new means of shopping? Inevitably. Was anything done to slow Fred’s climb to stardom? Apparently not enough, for Fred Meyer’s intelligent approach allowed him to model the 1980’s supercenter dash that would introduce Wal-Mart Supercenter, Kmart and Target. Hendrik Meijer, the Dutch barber who also entered the grocery business during the Great Depression, entered the supermarket world in 1962 via his Michigan-based Thrifty Acres stores until eventually rebranding as simply ‘Meijer’.
Businesses that failed to grow with consumer demand went quickly into the red.
Consumers wanted more convenience. Businesses obliged.
By the 1980’s, consumers were being pampered by size and selection. This meant even fewer stops than before, but it wasn’t enough – even more convenience was sought. So, megastores willingly obliged.
Having initially failed in his attempt at hyperstores, Sam Walton nailed it in 1987, having four such stores by 1990 known as Hypermart USA. Produce quality slowly improved, variety grew, but eventually his Wal-Mart dime store vaulted into the world’s #1 revenue generator slot by 1990. Citing a misunderstanding of the hyperstore concept, Sam Walton eventually scrapped Hypermart USA as ‘defunct’ by 2000, but it didn’t matter – Walmart began offering everything under one roof.
Other stores adopted this model of one-stop shopping, slowly branching off into smaller niches. If you needed electronics, you went to Circuit City. Pharmaceuticals, Walgreens. The list was incredible. As the 20th century made its final curtain call, Walmart had grown to epic proportions despite Sam Walton’s 1992 passing, Meijer sustained yet Kmart was unknowingly about to endure rough times, thanks in part to Wal-Mart and the rise of Target.
As the 21st century began, the internet began replacing the need for cars to complete shopping tasks – leaving businesses scrambling to stay competitive. Mom and dad’s suitcase-sized cell phones were getting thinner, computers were being produced with more powerful features, and 56k dialup was turning into lightning fast broadband.
Consumers got lazy. Few retail stores properly adjusted.
With fast internet, point-and-click shopping and ways to get things retail stores failed to carry, consumers stopped caring about Circuit City holiday sales. They stopped shopping the small-town shoe salesman who carried the latest New Balance model. Once thriving dime stores were beaten down by the buying power of Dollar General.
But wait, it gets better.
A small online bookstore, incorporated under the name Cadabra, was about to ameliorate an entire generation of physical stores. That’s right, it took 80-some-odd years, but the once ingenious one-stop storefront has been replaced by the new champion of one-stop shopping: Amazon. The pandemonium Amazon has created is forcing ‘old-school’ retail into insolvency – during a nonfinancial crisis, at that.
They’re not just contributing to a consumer’s desire for one-stop shopping, either. Amazon has driven the price of products down to seemingly nothing for items that should theoretically cost much more. It’s disrupting other medium-sized businesses as it’s costing too much to enter the ‘pay to play’ world of product procurement.
And it’s not just product availability Amazon is dominating. Value-added services such as installation of purchased products, music, movies, games and a suite of business tools are subduing retail establishments daily.
But Walmart is surviving. Grocers like Aldi’s are fighting back. How?
Follow the consumer’s lead. It’s that simple.
Let’s follow the current story line:
- Man monetizes consumer need for convenience.
- Buyer increases demand for more product under one roof
- A hungrier consumer wants mega stores of all sorts, not just for foodstuffs
- Consumer wants to sit on duff and shop for goods under one roof from their homes
- Business increases purchasing power and introduces value-added services to its core
It’s hard to imagine where the world of retail goes from here. But this is the direction consumers are moving, and following the footprints of today’s consumer may be tricky to the layman.
But it’s possible if businesses stop complaining about the cannibalization of brick-and-mortar establishments, and embrace the consumer’s narrative instead.
Specialize in specialties.
If your goal is establishing sustainability as opposed to fostering widespread growth, continue your current retail model – sustained success is entirely possible even with behemoths like Amazon playing in your backyard.
However, a good portion of you who’ve skimmed this far want that quintessential ‘chain store’. Let me assuage your fears of failure by recommending the following piece of easily adaptable advice: specialize in convenience-driven products that afford you the right to fully control pricing.
Let me explain.
A ‘retail apocalypse’ happens when one giant (we’ll use Amazon) controls substantial product procurement outlets, product volume, and convenience factors. Simply put, smaller guys cannot match millions in daily buying power or offer free two-day shipping perks, forcing them into either narrower product lanes – or out of the retail race completely.
Much like Starbucks offers an array of coffee and specialty confections, success can be achieved by micro-niching. You won’t find coloring books, crayons, toiletries or Sennheiser headphones at Starbucks – only coffee products, and confections. Period.
Passion sells, and everyone is buying.
What’s your passion? Do you know guitars, furniture, clothing? Stop stuffing too many products or disciplines under one roof, because consumers are frankly tired of it. Turn your passion for ‘x’ into something others may appreciate. Source whatever materials needed to fulfill this passion locally, or from locations few know about.
Rather than invoking such outside-the-box growth strategies, business owners nonsensically bash the efforts of these megacommerce companies who are constantly reinvesting and innovating ahead of consumer demand. Think of Black Friday, and why you’re not selling jack diddly.
In short, they’re listening. And you’re not.
Most businesses are formed based off passion or profit (or both). Those who establish a foundation of passionate commerce tend to outlast profiteers trying haplessly to engage supreme corporations in a price war in hopes of someday becoming profitable.
In a world dominated by Amazons, adapt to consumer demands for ‘rare and special’ innovations, or board up shop. Just don’t whine about apocalyptic conditions or complain about businesses who’re listening to consumers you once catered to.