Sunday, June 4, 2017

Pressure Cooker

Retailers, Grocers Prepare to Get Roasted as New Competitors Bring the Heat

In the few short months since I wrote the Unclumsy article on the sad demise of Radio Shack, the wave of retail closures has continued, now plainly visible above even our loud national politics as the business press covers every terrible detail of what, actually, seemed like a pretty obvious and inevitable arc.

One after another and across all industries, the casualties keep arriving:

Gander Mountain Closing all Locations, Going Out of Business [Read More]
HHGregg to Shut Down all 88 Locations Nationwide [Read More]
Bebe Is Closing All 175 of Its Stores [Read More]
JC Penney to Close up to 140 stores, Offer Buyouts [Read More]
Central Grocers Will Close 9 Ultra Foods Stores, Sell 22 Strack & Van Til Sites [Read More]
Sears and Kmart Might Not Have Enough Money to Stock Their Shelves [Read More]

In particular, having been plainly outplayed at their own game by online retailers, the news on Sears is harsh:
"Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern," Sears Holdings said in a filing with the Securities and Exchange Commission.
...and the smart money says it's not slowing down anytime soon.

The New York Times, indeed, asks: Is American Retail at a Historic Tipping Point?

And, Bloomberg reports, simply: America’s Retailers Are Closing Stores Faster Than Ever

It's a fact, of course, that brick and mortar stores are stymied by (a) the challenge to draw foot traffic from consumers who already prefer online shopping, (b) the overhead of real estate, (c) the burden of local sales tax, and (d) finding quality staff, but it's also true — and a much simpler explanation for their woes — that they've simply not prepared a way to follow their consumers out the door. Like Radio Shack, many retailers just have NO PLAN to extend the relationship with a loyal customer into their day-to-day mobile world. They had loyal customers and they let them walk away to Amazon.

The retailers that are succeeding in this new environment, like Walmart — note recent acquisition of Jet — and Target, are investing widely in technology. They're active — in investments, at the very least — and engaged — just check out Walmart Labs — and, like Amazon, unafraid of the change and advantages that smart technology investments will bring. They are working to develop the services that will integrate their brands and sales channels seamlessly into the daily and busy lives of their loyal customers. Take Amazon, for example. In the past few years they've rolled out:

1. Subscribe and Save: A simple mechanism to keep consumer dollars out of the hands of Walgreens and local grocery chains by auto-delivering items on a weekly or monthly basis. If you get the timing right — that's always the trick — this is the perfect reliable revenue stream for Amazon and a real convenience to the consumer.

2. Dash Buttons: A pack-of-gum-sized device to re-add detergent, your favorite brand-name snacks, and the rest of your recurrable items directly to your Amazon cart. I'm not sure the practicality of these buttons, but they make a heck of marketing statement and, without a doubt, have been a combined effort of brands to run an end game around retailers' premium shelf space and endcaps. In effect, Amazon will now own the real premium shelf space: at the consumer's fingertips, right in place of the item they need to re-order.

3. Amazon Echo: The latest in the Amazon assault on local merchants, it's a lot like Google's Home Assistant and it can, with the sound of your voice, re-order items, adding 'em directly to your Amazon cart. A virtual butler of sorts, it provides every reason in the world to forget about driving to your corner store or local grocer.

Aside from Radio Shack and the stores noted above, the pressure will continue on local merchants and, sadly, so will the march of poor earnings reports and coverage of store closings. Who will bear the burden of the next brunt? If you're in the grocery business, the answer is... probably YOU! Between the convenience of Peapod and Blue Apron and Instacart, the perfect shopping experience provided by specialty stores and boutique markets, and and strong initiative of Target into the grocery business — not to mention their dedication to finding keen technology solutions — the old-line merchants, it seems, will continue to feel the heat until they find the right mix of technology to co-exist alongside their current channel. That's what consumers expect, anyhow.

There's time for all this to change, of course, with executive leadership that recognizes that the upside to the challenge of change is really greater long-term stability for a business model that no longer relies on physical presence as much as it relies on a responsiveness to its consumers.

– Jon Roketenetz

Jon is the CEO of online re-order facilitator GimmeAnother and founder of 3VERB.