All this talk about price cuts driving retail sales is driving me nuts.
Nobody goes to a store to get a cheaper deal than they could online or, if they get it, there’s an overwhelming likelihood that the store will be out of business sooner versus later. The idea all but explodes any pretense of a store brand meaning anything (other than Wal-Mart, which means cheaper deal).
It worked to prompt a lemming stampede on Black Friday, but Silent Saturday followed thereafter. Price is about as durable a brand attribute as wind direction. It’s just a rotten reason to shop at a store, at any time during the year.
So why all the price cuts now?
For all of its innovation, CRM, and value-add experience branding, most geophysical retailers have yet to figure out how to compete with their online brethren. The primary differentiator continues to be immediate gratification, as real inventory can be distributed upon checkout (online has to ship, unless it’s selling a digital asset). I go to a store because I don’t want to wait.
So retailers’ strategy centers on inventory management: how much can be displayed; when can orders be delayed or cut; what items will sell best, and need to get merchandised up front. Space has innate value, as buyers and reps alike know that there’s a direct correlation between inches of exposure and dollars of sales.
No wonder price is the biggest (and/or only) quality that most of them feel empowered to adjust and offer. The rest — employee experts, extended service agreements, member cards, whatever — is still incidental to the primary vision of brick-and-mortar retailing. All they really care about is monetizing the real estate with the physical stuff they put in it.
No wonder consumers don’t really care. I’m a dim bulb, but I think that the retailers who survive this holiday season (and the rest of 2009, which won’t look much better), will have come to a central realization: the competition is real, not virtual. And there’s lots better and smarter stuff they can put into geophysical space than merchandise.
I have never understood why booksellers have allowed themselves to get whacked by online retailers. Books (like lots of products) are tangible things…tactile objects with smells, etc….and decision-making involves lots of qualities, like referral, review, comparison, contemplation, and sampling, that aren’t necessarily digitally duplicable.
So a bookstore isn’t competing with an online retailer, per se, as much as it’s fighting for a portion of my limited travel and visitation time, right? Yet most bookstores are aisles after aisles filled with books. Amazon does that a lot better, and cheaper, too.
I can count on one hand the interesting things that have occurred in stores while I’ve been visiting during the past few months. Most of them were bad happenstance, like a kid puking, or someone trying to run away with stuff. This is after how many gazillions of dollars, and reams of expert blather, have been devoted to the idea of "experience" and its importance to the retail equation?
Of course, there are exceptions, but the vast majority of brick-and-mortar retailers don’t know what to do with customers. And, when they rely on price to drive traffic, the resulting experience involves sharp elbows, long lines, and reminders of the many other reasons why shopping online can be far more civilized.
Where are the in-store promotions? The roving entertainers? Themed-days, or hours, or whatever? I don’t have the right answer here, but the questions should be able creating not just brand-relevant experiences, but memorable experiences that are consumer-relevant.
Finally, don’t customers stop being customers the moment they buy something? I can say that I shop at Target, but 99.9% of the time I’m not shopping there at all. What does the company do to keep my attention during the rest of my life outside of the store?
Run image advertising, mostly.
Seems to me that brick-and-mortar stores could find ways to utilize online technology to engage with me in meaningful, ongoing ways that might, in fact, drive me into stores more often. Virtual retailers don’t have the resources to offer added benefits or experiences in reality. Shouldn’t Target measure its brand strength base on how many times I go back to the store (and by what I buy, and how much), instead of how fondly I might think about its ads?
The holidays are going to stink. But I’m hopeful that the crisis will be cathartic for retailers, and that the smart ones will embark in 2009 on the true journeys of reinvention that, up to now, they’ve barely even recognized, let alone begun.