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.
My Etch a Sketch broke this morning. I got so excited when I saw that a Mitt Romney aide was using it to frame his political views, now I am despondent and wondering where to turn. Thankfully the good folks and the readers of “Good, Evil and the Things I do” are here to assist me. When my Etch a Sketch was working, I was able to come up with numerous business ideas everyday. As a passionate entrepreneur I know these ideas would work and I invested heavily in every idea I drew. As each idea failed to pay off my cash reserves dwindled and now I must take up a carreer as a strategic marketing consultant. My new employer will benefit from my unique skill set especially the lessons I learned from Etch a Sketch. Here is what I learned:
History and Context are critical to making truthful assumptions toward sound business decisions. Since I was starting fresh every time with my Etch a Sketch I didn’t realize the importance of the aforementioned elements. Lets look at why this is important and build out a business model.
A. History–what motivates you? What is your world view and passion? What experiences can you draw on to become an expert in your field
B. Context–Evaluate the current state of affairs and find the opportunity for your innovation.
C. Inputs–What materials, labor, equipment and other resources do I need to start my venture.
D. Activities–How do I uniquely add value. I have an idea, take my materials and through a “proprietary” process create value for customers and stakeholders.
E. Outputs–What is the finished product I deliver? When I was using my Etch a Sketch, I kept erasing my ideas and never produced anything meaningful.
F. Outcomes–How do I want the world to change? This is a core value of Social Entrepreneurship. If I create a unique program to educate children, what values do I want to instill? Through my
intervention, how will I impact and change people’s lives?
G. Impact–Does my outcome have a measurable metric that shows how I qualitatively and quantitatively made a difference.
Finally the biggest danger with erasing my Etch a Sketch and always changing my views is that it ignored the assumptions I need to make to ensure that my Output, Outcomes and Impact are viable. By using a prototype and testing my idea to reach a proof of concept, I can show that my assumption is true and therefore my innovation will be successful and make a difference. However what do you do in a case where you “build it and they don’t come”? First of all don’t build it. Before you allocate your resources to a project that may or may not be viable, ask people if they will come to the ballpark. If your survey and information gathering indicates they will come, go buy some land and build it.
I would be re-miss without giving a link to the Etch a Sketch clip:
Go out my dear friends and build a sound infrastructure for your venture, but please make sure your assumptions are sound, you seek the truth and material evidence supports your cause.
Until next time, be good and cultivate your community of friends