Back to the Future
Jennifer Marks -- Gifts & Dec, May 17, 2012
After best buy announced last week that it will close 50 large format stores and open 100 small Best Buy Mobile stores, Bloomberg News proclaimed: "The Era of Big Box Retail Dominance is Coming to an End."
The rise of online shopping was cited as one of the factors along with the "showroom" phenomenon whereby consumers visit a store to check out merchandise in person, then pull out their smart phones to do a price comparison online and buy electronically from another source.
"Other forces are conspiring against the big-box model. Baby Boomers no longer have kids at home and don't need to stock up on food and packaged goods," Bloomberg reported. "Their kids are marrying later and delaying having their own children, meaning fewer are buying houses that need to be updated and furnished."
For an interesting counterpoint to all of this, one need look no further than the small-format, down-market retail channel. Dollar General, Family Dollar and Fred's throughout the recession have been giving up general merchandise space to expand their refrigerated and frozen food offerings. Last week, Family Dollar announced it will drive more frequent visits to the store by adding tobacco, Pepsi products and name brand cosmetics from L'Oreal and Maybelline.
Just as Walmart turned the grocery world on its ear by charging hard after food and consumables, the so-called "hard discounters" are looking to provide an alternative that is a hybrid of the old-fashioned neighborhood supermarket and a local convenience store.
In short, the entire complexion of the retail world is in flux. The recession years have brought the emergence of an entirely new retail fomat: flash sale sites. (Question: How long before we begin to see consolidation in this sector? My money says it starts next year.)
Along with the proliferation of fl ash sale sites, I suspect we'll begin seeing more pop-up shops around the country - emulating a formula Tuesday Morning pioneered before it settled into more of an everyday off-pricer. Amazon earlier this year announced it will test a small, stand-alone store.
From the mid-80s through the mid-90s the industry went through a wild ride as category killers exploded (then consolidated), warehouse clubs blossomed (then consolidated) and regional discounters made plays to expand their territories (then were largely killed off).
Looks like we're going back to the future.
Jennifer Marks Editor-In-Chief
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