Recently in the news we have heard about Target and Best Buy laying off people. Radio Shack and Staples are going to close stores and weak earnings all around. Many want to blame the weather or online retailers are being blamed. I have news for you, online retailers are not the problem, the brick and mortar retailers are the reason they are failing.
I have worked with and in an number of industries and retail is one of them. I have friends at companies like Best Buy, Target, Amazon, Apple, Walmart, etc… One of the things I have seen is a clear pattern among those that are struggling, an unwillingness to embrace the future. This unwillingness is the biggest factor for why brick and mortar retailers are failing.
Back when I was in the trenches of retail, I remember working along side people who had been in the industry for 10 plus years. They would always talk about the “good old days.” Back in the 90’s, retailers had it made, the Internet was not socialized to the extent it is now and online retailing was mainly books or other small items. They basically had the run of the place and could do what they want because we the consumer didn’t have many options. I remember being in meetings where these people who had been around during that time period and the early part of the century, would talk about how great it was back then. How much money they made. I’d remind them how those products that made them money don’t exist for the most part anymore.
But this attitude was not limited to just where I worked, it was widespread among retailers. I would talk to my counter parts at other companies and they would all tell me similar stories about how retailers just didn’t want to change. In my last year at Best Buy, I used to tell everyone, that the customers are waiting for us to catch up, it’s our job to change, not the customer’s job. Few people really understood what that meant.
Customers have changed, the economic shock of 2008 forced us all to change our behavior. Is there showrooming, yes, and there always has been! Do customers come into stores and use their smartphone for shopping, yes but are they doing it to price compare, not as much as the media would have you think. Customers have migrated to multi device shopping and fluid channel shopping. Customers want real time and personalized services that speak to them. Customers want to know they are getting the best value. All of these things, most retailers totally ignore or only give it a half hearted attempt. And that is why retailers are failing.
Really, it is that simple. Most retailers have their “customer experience” designed around the political or org structure of the company, not the actual experience that customers have. In most companies, you have a team that runs mdot, tdot, dotcom, stores, apps, and often they are separate teams when it comes to boots on the ground. Somewhere high up in the org chart is one leader they all report to but the problem is, these teams are not how customers shop. I don’t assume I should have a different experience because I’m on an mdot site and the team running it has different ideas about experience than the dotcom team. But this is how retailers operate! At the end of the day, they don’t address the needs of the customer.
Now it’s not all their fault. A big reason retailers are failing is macro economics. Prices have gone up, and a lot in some cases and salaries haven’t kept up. So now the average consumer has seen milk go from $3.99 a gallon to $4.99, eggs from $2.99 to $.4, soda from 99cents to $2, gas from $2 to $3.50. But salaries have gone up 2% over the years. That means sooner or later you reach a point where disposable income just isn’t there because salaries didn’t keep up with costs. So either prices need to come down or wages need to go up and until that factor is solved, retail will suffer. Retailers can kind of fix this.
The point it, when retailers come out and claim it is the weather or the moon was not aligned properly or what ever, just remember, that’s all fluff to hide the fact that they have not figured out how to align with their customers.