STAPLES SHUTTERS MORE STORES

Another day, another category killer trims their store count. On the heels of Radio Shack's announcement earlier this week to close a chunk of their stores, the market brutalized Staples' stock on their move. It should applaud as Staples kill off marginal stores. Are you using as many pencils, binders and Post-It(R) notes as you did ten years ago? Are you paying as much for a PC as you did two years ago - if you buy one at all?

The market evolves and stores adapt. Closures play havoc with employees but they are also a sign of healthy responses to market conditions. Smart move, Staples. Over-reaction, stock market.

RADIO SHACK SHRINKS

   Retail is a dynamic, ever-changing universe. A&P was once the largest retailer in the world. Walmart was once a tiny five-and-dime compared to Ben Franklin stores. Chains like Home Depot and Staples and CVS barely existed 25 years ago. And don't get me started on fashion retailers like H&M which began in 1947 in Sweden and now operates in 53 countries. Kmart used to be the king of discount; now, they're the discounted king dragging venerated Sears to the bottom of the retail pond.

   Online retailing - or e-tailing - is definitely impacting their bricks-and-mortar brethren but mostly at the margin. The overall online numbers remain small - less than 6% of total retail sales in the US. Those marginal places where online is winning a bigger piece of the pie, however, have been books, entertainment (think iPod downloads) and electronics. And it's murder in those neighborhoods.

   The latest casualty is RadioShack which just announced the shuttering of 1100 stores, roughly 20% of their locations. Ouch. It's tough to live on the margin. Just ask Circuit City (d. 2008) or any of the thousands of mom-and-pop stationers, drugstores, apparel retailers, restaurants, gift shops, shoe stores and the like that have perished in this dynamic industry we call retail.

SEAMLESS RETAILING

   Global consulting company Accenture just came out with research that documents what we’ve been saying for years: online and in-store are converging as shoppers demand bricks-and-mortar stores evolve to provide the benefits of online and vice versa.

   Specifically, the report highlights these insights:

1.    Online Experience In-store: More people are buying online but picking up at a store.  Some are also ordering in-store and having delivered to their homes.

2.    More Webrooming, Less Showrooming: The study found that 78 percent of U.S. shoppers had webroomed (browse online then visit a store to make their purchase) in the 12 months before the latest survey, while 72 percent had showroomed (visit a physical store to see a product and then search online for a better price and make  purchase online).

3.    Free Beats Speed of Delivery: Though people have expectations of faster delivery, 57% of respondents preferred to wait rather than pay for next-day service.

4.    Retailers Aren’t There Yet: Survey respondents noted that they find offerings vary too much between online and in-store.  Retailers who figure this out – and many are working feverishly to do so – may enjoy a competitive advantage.

   As Chris Donnelly, global managing director of Accenture’s Retail practice, says, “Delivering a seamless experience across all retail touch points remains both a key challenge and prime opportunity for retailers today.”

   As long as shopping remains a vital part of the American economy, retail stores will, too.  Those retailers that deliver seamless shopping experiences - whether from one's phone, PC or shopping cart in an aisle - will remain vital to American shoppers as well.

RETAILING 2020

   Mark Twain was a rock star of the late 19^th century.  Unlike today where any star can be continually tracked through technology, people didn’t have the same access to their idols.  As he aged and infrequently spotted in public, gossip swirled that Twain had died.  He famously remarked, “The rumors of my death are greatly exaggerated.”

   Rumors of retailing’s demise continue to be greatly exaggerated as well.  Amazon, the great bricks-and-mortar slayer, just reported sales and earnings on Thu.  Sales grew 20% in the 4^th quarter of 2013 but earnings were less than 1% on sales.  The market punished the stock by sending it down 7% overnight because they aren’t making much money with their business model. 

   The world’s largest furniture retailer sees their future in-store.  Though IKEA started as a mail-order company, had 10 million new app downloads last year and saw online sales grow 20%, chief executive Peter Agnefjall says, "I think that in 2020 the absolute majority of sales will still be in our stores."  http://lnkd.in/drYKMCC.

   People still want to touch, feel, smell, taste and more fully experience many products before they buy.  Shoppers buy more when they can engage more of their senses.  That’s why the best retailers see that it makes sense to engage and enthrall shoppers, something that cannot be completely accomplished online.

   By 2020, new retail formats and technologies will emerge.  Many retailers of today will perish by then, especially those that fail to choose the right merchandise, the right messages and the right ways to deliver them to an evolving consumer landscape.  I predict without fear that that new landscape will include many great new retail stores.

5 NEW YEAR'S RESOLUTIONS FOR THE RETAIL MARKETER

   EMBRACE THE OMNICHANNEL SHOPPER.  People gather information from more sources than ever and want to survey the virtual landscape from their phone, tablet, laptop, desktop – and through the unalloyed advice of others.  It’s a brave, multi-dimensional world, retailers and brands.  Stop obsessing over showrooming and start obsessing over connecting with your shopper.

   IMPROVE YOUR ANTENNAE.  Consumers aren’t the only ones employing technology; so are your competitors.  Big Data is a big competitive advantage to more than the NSA.  Are you winning at understanding the big picture?  If you’re unsure, you’re losing.

   DON’T FEAR CHANGE.  The Ron Johnson and JCP debacle notwithstanding, marketing at retail is an inherently experimental, experiential realm.  If you’re not moving forward, you’re falling behind.  Test.  Analyze.  Repeat. 

   BE AUTHENTIC.  Don’t stuff the ballot box and use black hat techniques to influence purchase decisions based on trumped up input.  Instead, find ways to genuinely engage shoppers, understand their needs beyond a survey or focus group.  You’ll be rewarded with greater loyalty – and results.

   SHOP.  I’m continually amazed at marketers who spend so little time in the marketplace.  Are you in stores every week?  If you’re not, no matter what your job is, you’re not doing your job.  There’s no substitute for spending time in stores, soaking up the experience, seeing what works and what doesn’t, observing behaviors firsthand.

   Do these things and 2014 can be your best year yet.

MORE EVOLUTION THAN REVOLUTION

   As the year draws to a close, many of us focus on family, festive gatherings and food.  As we wrap up Christmas shopping and the presents we buy, retailers and manufacturers are wrapping up 2013 and looking to the future.

   Amazon recently announced plans to use drones to swiftly deliver some goods to their metropolitan clients within the next five years and are expanding their reach into grocery delivery too.  Carrefour, the world’s second-largest retailer, announced the purchase of 127 European malls.  Many of North America’s larger retailers have only modest plans for growth in 2014.  Consumer packaged goods companies, retailers and those that serve them continue to evolve as they seek profitable means of delivering value.

   Drones notwithstanding, selling through store environments continues to be the primary means of moving products from manufacturers to consumers.   Stores engage consumers’ senses, meet their desires for immediacy, provide social stimulation and represent the most economical means of delivering products to homes.  

   Not too many years ago, cellphones and overnight package delivery were the things of science fiction.  Today, 80% of 18-to-34-year-old Americans own a smartphone.  There are more cellphones than toothbrushes in the world.  Technology keeps getting better, faster and cheaper; retailers and consumer goods manufacturers are using it all to serve their customers.  Technologies may change quickly but human nature won’t change so radically in our lifetimes.  

   So, calm down, Jane and George Jetson: groceries and most Christmas gifts are still coming home in your trunk for the foreseeable future.  

AMAZON MEETS THE JETSONS

On 60 Minutes last night, Amazon's tireless founder, Jeff Bezos, introduced an R&D project that could reshape the delivery of their products:  Amazon Prime Air.  Though some years off and still in early-stage development, Amazon is clearly trying to attack one of their challenges: how to get products to shoppers sooner and cheaper.

Using "octocopters" - I suppose "drones" sounds too militaristic and menacing - Amazon envisions moving products to shoppers within a ten-mile radius of an Amazon fulfillment center within 30 minutes of order placement.  Here's their video promoting the idea:  http://www.youtube.com/watch?v=98BIu9dpwHU.  Pretty cool idea, eh?

Such a solution would theoretically allow Amazon to dramatically reduce logistical costs, one of their largest cost drivers.  It's visionary and just a little bit crazy.  Of course, people said the same thing of Fred Smith when he birthed Federal Express.  And, like FedEx that had government contracts moving checks for the banking system to underwrite the cost of rolling out a delivery system to business and individual customers, Amazon has their existing book of business that they can use to support this move.

One of my consistent beliefs has been that Amazon won't kill retail in part because their logistics model requires someone bearing the last-mile cost of delivery.  Today, YOU the shopper are the final mile delivery agent and you largely ignore your cost of cartage.  If Amazon overcomes that hurdle, they become even more formidable.  It still doesn't eliminate some of the other advantages that retailers have, e.g., touch/smell/taste before committing to a purchase, social aspect of shopping, selection curation, but it's a fascinating move.

Amazon has prided itself on experimenting and disrupting markets in the service of superior customer value.  Octocopters may or may not "fly" at the end of the day but you have to love their chutzpah and envelope-pushing behavior.  George Jetson would be right at home at Amazon.

SHOWROOMING: BOON FOR RETAIL

Showrooming isn't so bad after all?  http://hbr.org/2013/07/how-pinterest-puts-people-in-stores/ar/1