Was doing the Google-dive a few days ago in preparation for a customer presentation.
Two numbers popped out. Amazon sales were up 40% in 210, to $34 billion. And the current vacancy rate in US shopping centers is at 10.9%.
At first glance, it’s easy to see that online sales are eating into store-based sales. Morgan Stanley reports that online is now more than 10% of all revenues in a number of product categories, from consumer electronics to jewelry.
It’s also painfully obvious that the greatest creators of new retail real estate vacancies in North America (Borders, Hollywood Video, and Blockbuster) have digital tire tracks on their chests.
Hmmm . . .
But let’s take a moment, and look beyond the obvious. And specifically at the future of the 1.22 million stores in the USA that occupy 14.2 billion square feet of gross leasable area. Which calculates out at 46.6 square feet of total retail space for every man, woman, and child in the country.
What retailers are learning – all too slowly, in many cases – is that the opening of more stores is not the end-all, be-all path to revenue growth. In certain categories, comp-store revenues in status quo stores will decline faster than good stores can be opened. Revenue is now a question of channel optimization. Store operation is more a question of net margin.
Second, the store’s not dead. But the store must evolve rapidly – probably into smaller footprints, with virtual selections and services. Probably into living-breathing web sites, where net-based experiences offer the transparency, speed, abundance, and expertise that shoppers find on the web. Probably into interactive, educational, experiential zones, where shoppers learn and play. Probably into a tri-furcated structure of large, full services-experience stores, small footprint urban-and-fast stores, and down-sized low-cost stores.
This past week I had to take care of a broken windshield of my car, dealing with both the insurance company and the window repair shop over the weekend. For most people the thought of dealing with insurance and auto repair is probably not a retail experience one looks forward to, but it worked out well for me, and got me to think what what made it a good experience, and it really comes down to a few key points during the shopping journey.
My entire customer journey started with a phone call to the insurance call center to file the claim, I was routed to the glass claim center, where they took my information and verfied my identity, then connected me with the glass company and set up the appointment for the replacment. I went to the glass shop and had the glass replaced over the weekend, and was on my way. So what made it a good experience?
Facebook, Twitter, Groupon – Social media sites grab the headlines as their valuations continue to skyrocket based on the perception that these sites significantly influence how we work, play, and shop today. But how influential are they, really?
We know about Facebook and what a HUGE country its participants could now form; its growth continues unabated. More people spending more time on games, vacation pictures, and stalking former flames.
Twitter is truly a new media outlet with fast-breaking, world-changing news being tweeted 24x7. Look at how Twitter helped to bring down an entrenched dictator in power for over 40 years in Egypt to get a sense of what unfettered access to information can do – even if it is only 140 characters at a time. In its less world-changing form it is also a source of ongoing banality that can numb even the most avid tweeter.
And Groupon – yes Groupon continues to grow quickly as well. With its most recent foray into China the company is in 43 countries and has 51M subscribers (source: Economist) but with other group coupon sites springing up like weeds in springtime, its competitive advantage has been severely eroded. The concept has, however, changed shopping in ways that weren’t even anticipated only three years ago.
So what’s a retailer to do? And perhaps, more importantly, how can retailers make money in social media?
The food truck industry has grown quite significantly as chefs and entrepreneurs look for new ways to reach customers without heavy capital investments. With television shows like Food Network’s Great Food Truck Race, and streamlined permitting processes in many cities, mobile food retailing has been popping up all over the San Francisco area where I live.
“Curry Up” Trucks in San Francisco Bay Area displaying social media information
One of the the interesting things in common with the food trucks is that they are all using social media, especially Twitter and Facebook, to reach out and interact with customers, and there are three reasons why.
In January I was at the National Retail Federation trade show for their 100th annual convention in New York City. While at the show it struck me that the world of retailing has changed a lot in the past century – not that I’ve been around to witness ALL those changes although sometimes it does feel like it
Cigar boxes gave way to mechanical cash registers to today’s sophisticated point of sale systems. Farm and artisan products delivered by wagons morphed to sophisticated supply chains integrating distribution centers, trucks, ships and aircraft. Most people today associate the word “amazon” with an online retailer rather than a river in South America.
As we look forward to the next 100 years of retailing, the industry is facing a huge transition. Consumers are shopping on the web, on the phone, in the stores and leveraging personal technology to do “My Shopping, My Way” -- they’re looking for a truly custom shopping experience. Consumers are interacting with retailers not just through their purchases, but also through social media such as Twitter, Facebook, blogs etc. in real time. They are expecting their online and offline shopping experiences to look and feel the same. They don’t care about channels – they demand a ubiquitous brand experience.
For retailers, these rising expectations have profound impact on their strategies in a number of areas from marketing, to store operations, to real estate, to employee retention, and physical and data security. In this retail blog, we will be exploring the impact of technology in these areas with Cisco and third party experts in a number of settings including industry events and online discussions as we talk about how retailers can address this market transition.
We hope you will join us going forward and also participate in our other retail social media properties including Cisco retail on Twitter, Facebook, YouTube and Linked In.