I woke up this morning thinking about James Earl Jones saying “If you build it they will come”. Of course 23 years ago when these words were uttered in Field of Dreams Kevin Kostner built a baseball stadium in the middle of an Iowa cornfield. If we change the context of the quote to today’s retail market, how would this be understood? I would suggest that the “voice” speaking to us in contemporary terms would be creating an app or an e-commerce website that both engages and successfully generates revenue without the overhead of commercial retail property. The former CEO of Best Buy Brian Dunn was quoted in a March telephone interview with Bloomberg Business Week as saying “The one critical thing we offer the world is choice. We provide the latest and greatest choice of all technology gear, from Apple (AAPL) products to Google (GOOG)products, and that brings more opportunity to help people put technology to use. That is a great place for us to be.” A week later Best Buy posted a $1.7 billion quarterly loss, announced the closing 50 stores and now Brian Dunn is looking for a new job. The failure to recognize the significant cultural shift in retail consumer behavior ultimately may bankrupt Best Buy and several other Big Box retailers unless they embrace the new customer dynamic.
Lets pinpoint this paradigm shift of consumer behavior so that we can benefit and become both thought leaders and adapt our business to meet the needs of the modern marketplace.
Before shoppers had access to apps and extensive exposure to e-commerce websites, the only way you could comparison shop was to go from store to store. Now we can walk into a retail establishment, look at the wares, scan a QR code and instantly find the same item online for less money. As we depart the commercial property we are able to use smart phone apps to comparison shop and purchase the item.
So what is the answer to the ideal retail operation?
Lets summarize, learn and be proactive to the new demands of today’s consumer:
1. Bigger isn’t always better. Again as I have reminded you before, focusing on a niche market and perfecting your operation and processes will create memorable customer engagement. This will allow you to compete in qualitative areas that the customer cares about rather than focusing on price comparison. Remember if you have to compete on price someone will always sell for less.
2. All new and current operations need to be built in a scalable manner that will allow the seamless execution of mobile technologies and platforms. It won’t be long until a majority of e-commerce will be done on smart phones. Again “if you build it they will come” but make sure it is “app friendly”.
3. Educating customer’s remains critically important, however the methods in which you do this have changed. Many customers are not interested in walking into your retail venture and receiving a sales pitch. Using social media to educate and engage whether is it a blog, YouTube video or an app, teach customers what they need to know by using their smart phones.
The last question in my mind regarding this subject is what will become of the strip malls and the shopping centers that once housed these mega stores? Will your local Best Buy turn into an Urban Farm? Probably not, If I were to guess probably a “Cash for Gold” store.
May all your efforts lead to productive apps and all your limbs be mobile.
Until next time, be good and cultivate your community of friends.