Working in e-commerce is being a part of two worlds. The retail world & the online marketing world.
In the online marketing world every few months you see an article about how SEO is dying or already dead. After a few years of this you realize it's not dying it's just changing.
In the retail world we have the exact same thing. Every few months you see a big brand close some stores and everyone screams that retail is dead. And just like with online marketing – it isn't actually dead it's just changing.
Experiences Over Stuff
One of the biggest factors is how millennials spend their money. Millennials by and large prefer experiences over stuff. They're far more likely to spend their money on travel, good food, and unique experiences:
* Air travel has increased every year in the past decade (except 2009)
* US consumers spend $144 per month on food prepared outside the home. Millennials spend $202.
* US & Canadian Millenials spend 62 billion on media
As our demographics change our retail industry should change to reflect that. And it's a hard change for stores. They have to throw away everything that worked for the previous generations and start experimenting all over again.
And our current retail industry is all about stuff. Most brands can't offer an experience so millennials spend their money elsewhere. We buy stuff on Amazon. Sell us something different or unique in a store.
Retail Can Be Advantageous
You don't know the advantages of retail until you work in e-commerce. Retail let's you chat with your customers. You can learn about customers & more importantly solve any problem they have instantly. They don't have to spend 30 minutes searching for the right product (what's the name again???) they can ask someone in store and they'll direct them to the right place.
It's also a richer medium. Online stores have live chat at best. A face to face chat gives you 90% more information just from reading body language, tone, and facial expressions. We inherently trust those conversations more than a text chat.
If you want an example of who is doing it right look no further than Apple. Apple makes a killing in their retail stores (more than $5,000+ per square foot). And they do this by employing people who actually use & love the products they sell. Any question you have they likely had the same question and they can help you find that solution because they're genuine fans of the product.
You can also go in for minor troubleshooting at any point and they'll usually help you for free. Anecdotally – I went in with a charging issue and they cleaned the lint out of my charging port and sent me on my way in about 5 minutes. That builds a lot of trust for them.
And lastly, many Apple products are an experience. I went into an Apple store just to look at the Apple Watches when they came out. It was fun to look at them even if I don't want to spend the money on them right now.
Why Retail Is Struggling
Toys R Us announced they're closing their stores and while it's sad this really isn't surprising to me.
They're a store that sells stuff. And you get get that stuff on Amazon or eBay for the same price if not cheaper.
You don't get any special care when you go into the store. The employees are minimum wage workers just trying to get a paycheck so they rarely know anything about the products. And if something breaks you probably just order a new product online you don't take it back to the store.
They didn't offer any compelling reason to go to the store instead of buying the toy online. So people did just that. They stopped going to the store and they started ordering online.
My friend Joe Casabona said something interesting about Toys R Us:
If they evolved from a place to buy toys to a place to play with toys. They already had a video games section. Why not make a mini arcade where kids could pick a game and console, play it, and then buy it?
And this is something that could have moved the needle. Be a place where parents could bring their kids to play. And everything the kids play with can also be purchased to take home. This could be done with video games or even regular toys.
I'd charge $4 per kid. And that entry fee can be used as a deposit towards a toy at the end of the day. So you'd make money whether the kids just played or if they used that downpayment to buy a toy.
This is something Amazon or any other online retailer can't compete with. They might beat you on price. But you provide an experience parents & children love and a unique advantage in that kids can play with the toy before they buy it.
We've Invested Too Much In Stores
I want to bring up one last point. More retailers will close. Don't be afraid by it. It's what happens when you over invest. Which is precisely what the US did.
The U.S. has 7.3 square feet of retail space per capita, versus 1.7 square feet per capita in Japan and France.
We've spent so much money on stores and all of that retail space takes money to operate. Unless we spend 3-4X as much as Japan & France there's no way we can maintain that square footage. We'll either have to up our spending or more likely let stores fail and recalibrate after that.
In the meantime if you're in retail make sure you offer value. If you just sell stuff and it's not the cheapest price you're probably not going to last long.
“You don’t know the advantages of retail until you work in e-commerce.”
That rings true.
As B2B e-commerce tools continue to improve, I suspect we’re going to see a growing number of relationships among niche producers and specialty retailers who, together, figure out how to marry “stuff” that is highly attuned to a specific market with complementary experiences.