Did Amazon kill the Re-tail star

If you want to know the future, review the past.

There was a time when there was one store in town. And it sold almost everything you needed.
Food, hardware, clothes, and toys all bought under one roof.
One guy would be in the store to take your order at the front counter.
You could wait for him to gather your items or you could come back later to pick them up.
If your order was big enough, he would load them up in his wagon and deliver them to you on his way home.

As towns grew, the General Store couldn't keep up, so competition emerged. Merchants figured out that demand was somewhat based on supply, so they built bigger stores, put more stuff in them and eliminated the counter person. Customers could pick up what they wanted. They would go to the counter and pay the clerk instead. Less staff kept prices down. And low prices were the way to win the customer's loyalty.

Competitors showed up and started to specialize in products. New needs emerged with technological advances and economics of a growing population. Instead of General Stores, we built clothing stores, hardware stores, drugstores, grocery stores, liquor stores, and service stations.

Many stores were still General Stores, but they didn't identify as such. Sears, The Bay, Eatons, Woolworths, Zellers and K-Mart kept acting like General Stores but didn't accept the changes of the market demands.

Instead of picking out what we wanted in the store, we called or mailed our order to a counter person and our items would be delivered to our local depot for pickup. The item would be picked by employees, while we waited for its arrival.

By using technology, those first to the catalogue business benefitted greatly from their innovation.
Was the concept much different from the General Store?

Some companies figured out that they didn't need retail space. Why spend rent when customers are ordering over the phone and by mail? Enter Consumers Distributing.  From 1957 to 1996, Consumers Distributing sold "online" only. Their business model was flawed in that they were often out of stock when customers tried to order.

The new-age General Store emerged with Sam Walton guaranteeing lowest prices. He recognized the inefficient supply channel and knew if he fixed it, he couldn't be beat on price as the current game was being played. And thus emerged the term "Category Killer".

Say good bye to Consumers Distributors, The Bay, Sears, Eatons, Woolworths, Zellers and K-Mart. They were all competing on price with each other and Walmart changed the game to their advantage.

The General Store still exists and will always exist.

In 1994, technology brought in the next wave of competitors.
You still go to a counter. We call them websites now.
Someone else picks the item.
Someone delivers it.
You still have choice.
And price is still important.

In 2015, Walmart closed 247 stores.
According to Price Waterhouse Cooper, 56% of all worldwide retail shopping is done online.

The world of retail has changed.
You can no longer compete on price.
We knew that 23 years ago when Walmart started killing the competition.
We know that even better today as Amazon euthanizes Walmart.

So don't try.
Decide that you are not going to be the best price.
Decide that you are going to be the best at something else.

Some products are commodities, where the only thing that matters is price.
That's why Dollar Stores exist.

If you are trying to compete with these giants in a commodity type industry, you're like the chickens we used to kill every October. You're still bouncing around, but your head has been cut off.

"Customers" (I use the term loosely), are coming to your store, benefitting from your expertise, acquiring knowledge, checking out reviews and prices on their phone, and then making a purchase decision that probably doesn't include your store, unless they need the product now.

The future of off-line retail is dead, unless something changes.

Consumer prices are generally higher in traditional retail because someone has to pay for the expensive rent.
Offline retail cannot compete on price with online retail.
The metrics don't work.
Time is also a problem
Consumers are busy.
The old way of shopping is inefficient for these time sensitive buyers.

Despite this, off-line retail has a huge opportunity.
The king of off-line retail, Costco, knows this better than anyone else. Offering samples at the end of each aisle helps them sell more food but it also helps them stay ahead of online retailers by offering samples to create enjoyable shopping experiences.

CNBC reported in 2016 that Millenials are spending less money on stuff and more money on experiences. They'd rather ride a scooter and travel to a foreign country twice a year than own a Lexus and have a $50,000 debt.

Experiences over Stuff

I asked my millennial friend Craig about this and he smiled. He and his wife earn almost $150,000 per year. They own a modest home, no kids, and a dog. No fancy cars, but they travel four times per year.

Experiences over Stuff

The experiential shopping factor at a Walmart on a scale of 1-10 is 0.
The experiential factor on Amazon is close to the same.

They both sell stuff. You buy it. It shows up.

Off-line retail has something Amazon does not. It can offer an experience.
And I'm not talking about the cliche experience most retailers currently offer, like friendly service, nice posters, inviting music and well dressed employees.

Experience is deeper than that.

Imagine wanting a baseball bat.
Before you buy it, you can try it out while you hit a baseball into the stands of Fenway Park or Wrigley Field. Half virtual, half real so the customer can test the "feel and performance" of the product.

You can still buy the bat online for $20 cheaper, but maybe the "trial" comes with a $10 handling fee that is credited to the purchase of the bat if you buy it.

You can do that with almost any retail product. But it takes guts to move in that direction.

The world of retail is constantly changing.

Amazon will sell cheap stuff until the next General Store emerges. Technology will decide what that will look like, as it always has.

So the only way the new face of retail will survive is if it changes the way it offers new, exciting experiences to its customers.