The Future of Retail

by Damon Payne 27. December 2012 15:40
TL;DR – The retail industry should look closely at current and future reality. Many retail businesses should accept that consumers like “kicking the tires” at brick-and-mortar locations, but want the prices and service of etailers like Amazon.com. Create a hybrid model where you go try that TV out at a Best Buy a few miles away, but it nearly always ships from a warehouse rather than you taking it home that instant.
Over the past 15 years I have watched industry after industry fight the advance of technology.

Let's think about some industries in the age of the Internet:

Newspapers
Music.
Movies.
Real Estate.
Publishing.
Retail.

The way we’re doing things now are profitable, proven, known, safe, comfortable.


Some of these battles are still going on; some of them are clearly over. I’m sure I’m not the first person to observe that each of these industries faced a challenge, a choice, and an opportunity. The challenge is that old models are clearly going to be attacked. Consumers want something new. Consumers can see that the technology exists for them to get what they want in the way they want it. The choice and opportunity is to either fight the new way, or to own it. The music industry could have owned digital content distribution. They chose to fight it instead, and now Apple is eating their lunch. I have a few contacts in all areas of the music business and related fields including artists, studio owners, and electronics manufacturers. They all live in fear of Apple. Apple says how high to jump. Apple owns it, because they waited too long and fought too hard.

Listing your home, inexpensively, using the Internet works. Your local Realtor would surely rather you pay them a 6% commission to do the same job. In my state and others, they spend a lot of money lobbying state legislatures to craft incredibly ridiculous laws that make some parts of the business models of Zillow, Trulia, or our own BuyHomes.com, illegal: under the guise of “protecting consumers” of course. The truth is these are all distortions of reality. It is reality that consumers want and can get music electronically: one way or another. It’s reality that when I sold my last house I paid BuyHomes.com $500 and a real estate attorney $400 and saved a fortune in commissions. When you tell consumers to ignore the man behind the curtain so you can keep doing what you have always done, you eventually lose.

What Year Is It?

 

I have, many times, been standing in a Best Buy needing help. For a long time. Maybe I need an employee to scan this iPad to tell me if it’s the new retina display model (it’s not indicated clearly on the box). Maybe I need to know if this TV is in stock. I’ve also had a 16 year old who doesn’t realize they’re talking to a life long Audio/Video nut try to tell me what this amazing Monster Cable is going to do for my sound system. I feel like Best Buy is practically pushing me out of their stores towards online sellers.
 As I consider myself an ethical person, I feel downright slimy on the (extremely few) cases where I have “kicked the tires” on an item in a store and simply bought it for less online. In other cases, like Best Buy, I feel they had a chance to earn my business and failed miserably. In still other situations, I went to Kohl’s to buy a pair of shoes and they didn’t have my size in stock. The salesperson dutifully offers to order them and they’ll be in in a week. A week? What year is it? Amazon will have these to me in two days, thank you very much. Now Amazon is even working on Same Day Delivery!

So What Should Retail Do?

 

Admit to reality and work witin reality?
There are obvious benefits from being able to walk into a brick and mortar location and kick the tires on electronics, clothing, etc. The cost of having a big enough store to have hundreds of TVs and 300 of the latest Xbox in stock is huge. The models for how the stores are ran and laid out are ancient. Amazon.com is just going to undercut you anyway. Consumers want to kick the tires and then buy online, so embrace this model.
I can envision a future where I walk into an Amazon.com branded electronics store. They have ONE of various models of TV, ONE BluRay player, etc. I can kick the tires. Only the most obvious new release movies & music are there for me to carry out of the store. Only the most current game releases are in stock. They have close to zero shipping/fulfillment because there’s essentially no inventory, no more in the back. There are kiosks positioned throughout the store where I can sign in and order the TV I was just looking at. I get my Amazon points, my Amazon Prime shipping, and everything else I’ve grown accustomed to since first becoming a customer in 1997 or so.
Best of all, I have not a shred of guilt. The store manager isn’t looking at me sideways, knowing I’m going to go home and shop around for the best deal on that wine ‘fridge. Retail will only exist in its current form in Boutique settings.
{Edit: Target will match Amazon prices year round http://www.geekwire.com/2013/target-allowing-customers-amazon-prices-products/#utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+geekwire+%28GeekWire%29&utm_content=Google+Reader }

Tags:

Business | Technical Community

Comments (1) -

Jason
Jason United States
1/2/2013 7:58:02 PM #

While I was looking at my amazon android app the other day I noticed that you can scan the upc code on anything and it will tell you how much it costs on Amazon.com.

Even year or so rumors circulate about Amazon opening a prototype retail store, so we shall see.

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About the author

Damon Payne is a Microsoft MVP specializing in Smart Client solution architecture. 

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