19704 Mon, 11/01/2010 - 4:06pm
There have been three great seminal changes in the history of retailing. That is about to become four.
The first was the creation of the modern American department store. John Wanamaker, Marshall Field and their contemporaries built huge retail emporiums that to this day are the top of the food chain when it comes to consumer products, particularly fashion goods.
The second was the explosion of mass merchandising, initially at Kmart under Harry Cunningham but more significantly and obviously on a larger scale by Sam Walton at Walmart. Discount stores have become the dominant retailing format in the country.
And the third was the development of the superstore, initially called a category killer and more generically known these days as a big box retailer. Toys ‘R’ Us under Charlie Lazarus invented the concept, but operations like Bed Bath and Beyond and Best Buy have taken it to its current incarnation.
Curiously enough, all three creations continue to co-exist to this day and these are the businesses about to be consumed by the fourth era of retailing. And not all of them will survive it.
The fourth wave is very different from the first three. That trio of eras has had one thing in common: Retailers set the rules and consumers played by them. By their very name, they were defined by the operators, not who shopped there: department stores, discount stores, superstores.
But the fourth era is very different: Consumers are setting the rules and retailers now have to play with them.
The era of Customer Stores has arrived.
It is the customer who now has the power in the shopping equation. They decide where they want to buy something: In a store, online or clicking on the remote control. They decide when they want to buy something: Store hours are irrelevant.
And they decide exactly what it is they are in fact buying: Merchandising selections are meaningless when the customer has access to virtually everything on the planet.
The customer controls the purchasing process as never before. And a lot of retailers don’t get it. They are still hung up on running sales when it’s convenient for them and only carrying certain brands and making the physical act of shopping centric to their needs and not their customers’.
None of this is exactly new, mind you. The customer has always been, at least theoretically, the focal point of the shopping experience when in fact it was the seller who controlled the process.
What’s different now is the scale and the enormity of the shopping universe.
How is the department store to stay the center of the fashion universe when somebody can sit in front of their computer, watch a runway show from halfway around the world and buy that garment with a click?
How does the mass merchant play the price card when there are hundreds, perhaps thousands, of low-price options available, both real and virtual?
And how does the big box superstore tout its assortment when an array of goods that makes that assortment look miniscule by comparison is available online?
When you are caught up in the middle of a revolution it is hard to understand what is actually happening. And the end result of this process is by no means clear. But a revolution this is, and it will mark a more fundamental change in the shopping process than anything that has come before.
Conventional retailers—from whatever era—will need to reinvent themselves because it is the end of retailing as we know it.
Get used to it.