A Tale of Two Retail Channels  8/18/2017


Industry pundits are predicting the death of retail, or at least some cataclysmic event. And, of course, it is all due to the rise of the Internet, specifically online retailers. Why should consumers go out shopping at all when anything you desire is just a few clicks away?

While there is a certain amount of truth to that thinking, I believe it ignores a fundamental issue which drives retail. Simply put, there are really two reasons why any consumer goes shopping. The first is because he or she has a specific need. The second is that they want to shop, but may not necessarily know what they want to buy. For example, you might know that you want to buy a pair of basketball shoes, but you are not sure of the size or style, or that you just want to see what has recently arrived at H&M.

Take books for example. I buy a lot of books. Sometimes I have a very specific book that I want to purchase. Perhaps a friend recommended it, or I read a review. In this case, there is only one place I’ll go to buy it – Amazon. I can order it in a couple of clicks, it will arrive within 48 hours at my door with free shipping, and I have absolute faith that the transaction will happen smoothly.

But other times, I am not sure what book I want to buy; I just know that I want a book, maybe something to read while traveling or for a day at the beach. In this situation, I am much more likely to wander out to my local Barnes and Noble or an independent bookseller like the Strand Book Store in nearby Union Square. For me, the physical environment is much more conducive to considering the options and making an informed choice than the Amazon search function. And this is not because Amazon is not trying hard, it is because digital is uniquely good at selling you exactly what you want, but physical stores are uniquely good at displaying the options and providing an opportunity to leisurely browse options.

So what this means is that I really do need two retailers – a digital store that I trust to deliver everything I know I want and can specify in great detail, and physical stores that give me the range of options I need when I am just not certain what I want. Amazon and other digital retailers are now in the process of winning the first war, but I do not think that digital stores will ever win the war for the browsing customer; the digital medium is simply not the best choice when the consumer does not know exactly what he or she wants, and is looking for some serendipitous intervention to help find a product.

Which is why we’ve seen Amazon getting into the brick and mortar game and Walmart getting into the digital game in a big way this year – so they can engage both types of shoppers (and often, they are the same consumer).

So, brick and mortar retail isn’t dead. There really is a place in the world for brick and mortar stores to co-exist with their online brethren, especially for those consumers who want to touch, taste, smell, the products when making their selections. And for those consumers, a trip to the store is easier, better and quicker than ordering, returning and reordering -- sometimes multiple times – before they find what they like.

However, many brick and mortar stores need to step up their game in the experiential marketing department if they are going to keep these shoppers coming back to them. Stores which specialize in providing interesting, unique, unexpected goods and experiences are more likely to succeed than those who focus on providing the more mundane goods.

So the world is changing, and changing radically, but the new direction is clear. For brick-and-mortar retailers to succeed, they cannot simply be supply houses for what I know I need – the Internet just does that better. But they can become the go-to source of new ideas and discovery for consumers. Brick and mortar retailers need to refocus on their consumers in a new way – not focusing on what they know their consumers have always wanted, but focusing on what their consumers may want in the future. It is not an easy transition, but for those retailers with the vision to pull it off, it could become a very profitable one.

Like the line in the Sex Pistols anthem, Anarchy in the UK, “Don't know what I want, but I know how to get it…” if you can make your brick and mortar stores this place for products, you continue to thrive in an increasingly digital world.

David Diamond

President/Owner
David Diamond Associates

David Diamond is president of David Diamond Associates, a consultant to retailers, manufacturers and service providers to the food and CPG industries.He can be reached at (646) 742-1373

Comments

Dawn James
August 22, 2017 11:23 AM

David, great post on how the differences in shopping style will continue to have appeal to all. It's cross-channel retailing/marketing with a new expression through an Omni-channel. Dawn James

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