Is Traditional Retail dead and a rotting dinosaur?

Traditional retail is a dinosaur and dead Can traditional retail really be a dead and rotting dinosaur, isn’t that a bit harsh?

The answer to this question is a resounding and unfortunate yes and yes it is.  Stores, chains and corporate executives would want to argue in the opposite direction and say that traditional retail is strong, but take a good look at history.  What reduced Circuit City, Tower Records and Linens and Things to a pile of steaming rubble?   Competition yes, but to a greater definition, online competition.   We are seeing behemoths like Blockbuster twist in the wind at the command of companies like Netflix, Hulu and online streaming presented by ATT’s Uverse as well as other content providers.  The world is quickly turning digital and embracing the flexibility that that business model has at its core.  And surprisingly, small mom and pop shops are leading the way!

But how exactly is traditional retail dead?  The author has owned a retail store, along with the lease, insurance, utility bills, permits, signage, payroll, marketing and negative influences of the local competition in the five mile radius that encompasses customers.  It was damn expensive running that enterprise, opening the store six days a week while seriously considering the seventh.  It was cold in the winter but the snow had to be removed, the heat at a certain temperature and everything had to be set, turned on and stocked for customers.   No one likes to see empty shelves, clutter or disorganization.

Case in point.  Linens and Things closed all 371 of their stores and then reopened online only giving them a tactical advantage to build a business without 371 leases, payrolls, utilities… you get the picture.   Circuit City has an online store despite shuttering its traditional retail agenda.  Sooner or later one has to ask why?  It is a simple conclusion.  Traditional Retail is a dead and rotting dinosaur and its happening in a single generation!

The reasons are simple but not so simple to replicate by traditional retail:

  • With an online business you can carry all inventory from a distributor or all sources for that matter.  You can present a virtual inventory on a just in time format, fulfilling orders after customers have paid you to deliver.  Traditional stores are paying by the square foot so their retail shelf space is limited to a very narrow slice of the real product selection.  And customers are starting to realize that.
  • Online businesses have higher margins than their traditional sister retailers and can offer higher coupons and discounts to attract and keep customers.
  • The operation can be run from a single location and even your home, offering margins that are much higher than most retail store operations.  Traditional stores simply cannot compete with an online business model.
  • The regulation is limited and government interference is to a minimum.
  • Most online retailers are only required to collect sales tax to customers they ship to in their home state.  The rest of the customer base understands that they are able to make tax-free purchases, saving the State Sales tax on their purchases.  This is a HUGE draw to purchasing online.
  • Online retailers often surprise customers with free products, coupons, brochures and other items that build the bond of loyalty.
  • Store hours are 24/7, 365 days a year.
  • Shopping carts can be built and programmed to meet the language needs of most any customer.  There are online shopping experiences that allow a customer to click a button and select English, Spanish, French, German, Chinese, Japanese, Russian, etc. etc.
  • Online marketing is more focused and the associated costs are much narrower than traditional marketing (another topic for another day) allowing the online retailer to hone in an market segments, specific product purchasers and specific or broad regions of focus.  The reporting and analysis of such marketing is very detailed and valuable.
  • Updating online presence, graphics and marketing strategies is a mouse-click away and can be implemented and launched immediately.  Traditional retail requires planning, printers and sign companies and permits.
  • Online webineers (my definition of a web Entrepreneur engineer) can tailor marketing, video, content and approaches of a website based on the customers location, weather and political climate.
  • Customers can shop discreetly using payment methods such as Paypal and Google Checkout, never revealing their credit card as in a traditional retail atmosphere.
  • There is no shoplifting.
  • The online retailer is not compelled to accept checks, potential counterfeit currency or methods other than chosen payment methods.
  • The online retailer can audit, analyze and change the delivery and shipping methods with pinpoint accuracy.
  • People can drink and shop without drinking and driving.
  • Cash register mistakes never happen, too much change is not given.
  • Employee theft goes away.
  • Deployment of additional “stores” is fairly easy in comparison to launching a traditional storefront.
  • Customers can search for products and information discreetly, without worrying about store cameras or others shopping nearby.  They can take delivery of the products privately.
  • The properly run just in time inventory business model eliminates the inventory misplacement problem.

Recently the Wall Street Journal wrote an article labeled New Tricks for Old Malls showing how the commercial landlord marketplace is adjusting to the killing and burying of the Traditional Retail model.  They being replaced with successful and fun enterprises from shooting ranges, aquariums, fencing training and kids bounce mania destinations.  But that does not help traditional retail itself.

The traditional retail storefront model is gone.  In the opinion of the author, we are seeing a rebirth of the killed off mom-and-pop shops who were decimated by the big box stores.  They are back, bigger and bolder than ever and if left unchallenged, the big box stores will be replaced entirely by the online business model of small to medium sized businesses.  And those who align themselves with others who have experience in the online marketplace are in a position to solidify their online presence and capture a huge chunk of the profit-driven online marketplace.

The author has been selling in the online marketplace for thirteen years, starting as an eBay power seller and moving to studying and practicing the art of eCommerce.  The market has grown as more and more people come online, bringing with them their appetite for selection, flexibility and store hours that work around their schedules.  As speeds of access to the internet improve, the lure of the presentation, the sale pitch or the storefront will be more and more appetizing than a traditional retail storefront.  LED screens and bright lights in the comfort of your own home and mood dwarfs a plotted and planned window display that required alot of work, manpower and cost.

We are seeing a transformation of social networking and information harvesting (again, another blog for another day) that will allow webineers to tailor specific products and pitches to customers based on their known Facebook likes, etc, etc.  The possibilities are limitless and with traditional retail, they have remain the same.  I have said the words traditional retail many times during this article to drive home a point.  Its boring, worthy of past reflection of course, but its not as exciting new and thought-provoking as online eCommerce.

Admit it, your hooked too!  If not, you will be.

Coming to an online store soon – you!

, , ,

Leave a Reply

Your email address will not be published. Required fields are marked *