Retail At The Crossroads
At the corner of Fear and Hope Streets is a place called Progress
By Ty Simpson -- Gifts and Dec, 2/1/2009 12:00:00 AM
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| Ty Simpson is CEO of Brand Performance |
Recently, we took our kids to The Center of Science and Industry in Columbus, Ohio, to see an exhibit called “Progress.”
“Travel through time and interact with the technology from 1898. Then turn a corner and find yourself a generation later in 1962 in that same town,” the exhibit’s sign read.
On the exhibit’s Fear Street we learned that the 1898 generation was worried about things like the safety of electricity. Apparently in that technology’s early days, people and horses were sometimes electrocuted by underground wires. It wasn’t a huge risk— many more people died from fires caused by gas lamps at that time than from electrocution—but the concern was there.
Pedestrians weren’t the only people worried in 1898. The owner of Fear Street’s local mercantile was deeply concerned about losing market share to a new way of shopping. It was called “mail order.” Suddenly, instead of coming to his store, the shop’s customers could order products straight from their homes, then have them delivered directly to them, their purchase having been shipped by railroad in what was, for that era, record time. Mail order’s success had Fear Street’s retailers worried: Would downtown businesses like theirs survive in the face of competition from mail-order catalogs’ ease and convenience?
Fast forward to 1962 and that same local mercantile was now a fast-growing chain that was expanding throughout the Midwest. By that time, consumers were beginning to worry that retail chains were becoming too big, making too many decisions, putting too many family stores out of business. At the same time, others liked the convenience and appreciated the chains’ low prices. Sound familiar?
We are now nearly two generations later—and 2008 reminded us all, once again, that history repeats itself. Bank and automobile business bailouts, general economic turmoil, retailers just trying to survive let alone make a profit—the bad news has been inescapable. Bankruptcies of cornerstone brands that we all thought were immortal—companies that were considered American staples like KB Toys—were gone before Santa could even return to the North Pole.
What’s going on? Who’s next? As choices continue to narrow, are we facing a future where there will only be one toy store, one grocery chain and one bookstore?
Not so fast!
Indeed, there is a new guard of emerging companies who are building and connecting the retail network of the future. These are hungry, entrepreneurial companies that are ready to work with you to sell to the millions of online consumers looking for products they can’t find in their local stores.
New companies (comparatively speaking) like Google are now playing an active role on the frontline of ... yes, retail! Google is a new virtual salesperson who directs over half of online consumers to their eventual purchase destination. And Amazon.com, in addition to selling its own inventory directly to the consumer, has opened up its marketplace to thousands of additional sellers, offering their consumers (dare I say) a “googlezillion” feet of shelf space.
But those are just the biggest of the big. There are certainly other upstarts beginning to make a mark on Internet retailing. Perhaps you’ve heard of two of them. They may stand at the back of the line alphabetically, but they are moving rapidly up the ranks of online retailers.
Zappos.com is a footwear category killer with a reputation for stellar customer service.
Zazzle.com has an inventory-free model that offers personalized, made-to-order product ranging from shirts to shoes. It’s also the company that powers Disney’s online personalization program.
They’re not alone. A few online verticals are already operating under an increasingly popular strategy of fulfilling orders for better-known brands:
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GSI Commerce specializes in sporting goods and handles online retail for the likes of Dick’s Sporting Goods, Sports Authority, National Football League, National Hockey League and Major League Baseball.
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Cooking.com, in addition to its own retail site, runs the online retail sites for some of the biggest brands in food and cooking, such as Starbucks, The Food Network, Pillsbury and Betty Crocker.
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Buy Seasons owns/operates BuyCostumes.com and BirthdayExpress.com. Additionally, it’s the force behind most of the costumes bought online if you buy from places like Amazon.com, Target.com and (my own) Ty’sToyBox.com.
Meeting the challenge
Certainly, businesses are still finding new opportunities online. It’s time for us in the children’s products business to boldly face the challenges of today and take advantage of new opportunities.
I believe that parents will indeed make financial sacrifices to buy products for their kids. I also believe that more and more people are turning to online retailers who understand, listen to and provide information that helps them shop for what they need most efficiently and most economically, when they do make the decision to spend their limited resources on products for their kids. And so, it is time to put collective effort into online marketing initiatives, such as search engines and online product videos (see ExpoTV.com as a good example), in order to help them do that.
Toy manufacturers should ensure their products are selling on every last virtual toy shelf and seek out online partners who can convey to each customer why their product is so compelling.
But retail buyers beware. In today’s economy, the consumer is in charge and they won’t be shy about telling us what they want or leaving us in the dust as they move along to find something somewhere else.
Online shoppers want a great retail experience, and they’re learning how to demand just that. They want to be informed and they want to interact with the product they are buying. There is so much product information out there, accurate or not, that today’s buying decisions are heavily influenced by—if not entirely based on—their online presentation and experience. You want to have good online interactions with your consumers, or you’re sunk.
Online retail provides multiple opportunities to sell to consumers and keep them coming back once you’ve built a trust with them. Your online efforts have already developed a relationship with each consumer; that relationship will become ever more critical this year as consumers become even choosier with each dollar they spend. The relationship that they have with each product and each brand will be put to the test, and those that present the best combination of customer experience, choice and value will prevail.
How will your consumers choose which direction to go? At that crossroads, you’ll want to offer a clear path to your door. It should always be open, welcoming and ready for whatever traffic passes by.
We would love your feedback!
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