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Wednesday, 14 November 2018

Retail canaries in a coal mine (3)

Last weekend, Dutch retail conglomerate Blokker announced the sale of its main retail brand (NRC). That same weekend, the Guardian stated that "85,000 jobs [were] lost from Britain’s high streets as retailers feel the pinch". These events reminded me of my blogs A Dutch retail canary in a European coal mine (2016) and A Dutch retail canary in a global coal mine (2017).

The problems in Retail are the result of: (1) excessive rent for retail locations, (2) excessive parking fees for retail consumers, (3) changing consumer behaviour resulting in the success of web stores like Amazon, (4) time management (my 2016 "busy busy busy" blog), and increasingly (5) personal safety issues like mass shootings in the U.S. and Islamic terrorism in Europe.

The above problems seem so profound that "Retail apocalypse" is a Wikipedia page. "Death of Retail" is also becoming a - more and more - common phrase. In May 2018, Moody's Analytics published an article that "The Death of Retail Is Greatly Exaggerated". 

Dana Telsey, CEO and Chief Research Officer of Telsey Advisory Group, stated: "It's not that retail is left for dead, it's that retail is being reinvented". In the words of CNBC-2017: "Veteran retail analyst Dana Telsey said the retail sector is undergoing dramatic changes in the era of big data and e-commerce, but will survive."

In the 1960's, various retailers came at your doorstep and sold food items like bread, eggs, fruit, milk, and vegetables. Non-food was sold in small but packed local grocery shops. In the 1980s, urban shopping malls took over. To a large extent, home delivery services by retailers feel like revisiting the 1960s. Knowing your customer has however been taken over by an algorithm

Success in (retail) sales is defined by a marketing mix of the 4P's (Product, Price, Place, Promotion) and a Unique Selling Proposition (USP). However, transparency is a major threat in Sales as Price then becomes leading. Internet stores created almost full transparency in the 4Ps. Hence, their immense success. 

Any brick-and-mortar retail activity that is also based on Price, is doomed. The 2018 bankruptcy of the U.S. department store chain Sears is a good example. Ideally, the price of goods should be less relevant, like in the Services industry. 

Today's USPs may be derived from supermarket innovation: automatic billing (Time), automatic check-in and check-out (Time), availability (Time), home delivery (Time), opening hours (Time), personal bonuses (Client, Price), and quality (Reputation). This suggests that Retail should expect 24/7 fully automated stores, like modern gas stations.

Death of a Salesman (2005) by Low


Note: all markings (bolditalicunderlining) by LO unless stated otherwise

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