Retailers faced with the knowledge that only so many consumers are going to walk through the door to buy the products in their stores are now adding new items with the hope of driving additional traffic. Best Buy is adding musical instruments, Menards is selling food and Walgreens has gotten into the clothing business.
The strategy of expanding the types of products sold in retail stores known for particular types of items, the Chicago Tribune points out, has had mixed results.
Barnes & Noble was successful adding coffee shops to its book operations. On the other hand, Jewel's venture into selling lumber; not so good.
"Best Buy and a number of other large retail chains realize they're running out of space to open new stores," said Mary Brett Whitfield, analyst at TNS Retail Forward. "If you look at the run rate of the major retailers for the past 10 to 15 years, it's just going to be physically impossible to keep that up in perpetuity. A lot of retailers are looking at 'How can I sell more things to the people already in my store.'"?
Abt Electronics is a retailer that has expanded its offerings from consumer electronics to include upscale timepieces. The company opened a 900-square-foot watch boutique called Time inside its 65,000-square-foot store in Glenview, Illinois last November.
"The limits of what these big boxes are lead retailers to continue to want to find a way to experiment," Neil Stern, senior partner at McMillan Doolittle LLP told the Trib. "The question from the consumer is, what do you accept from the brand and what feels foreign."
Best Buy is hoping that consumers will not see musical instruments in its stores as being a foreign experience. The retailer, which has been successful selling recorded music and movies to consumers, believes musical instruments are a logical next step.
"Consumers have looked to us as a resource for music for quite a while," said Justin Barber, a spokesperson for Best Buy.
Burt Flickinger, managing director of Strategic Resource Group, thinks Best Buy may be on the right track. "There is so little competition, beyond Guitar Center and local independent stores, it should be a real destination category for Best Buy," he told the Trib.
Discussion Questions: What are your thoughts of retailers branching off into new categories of business? What are the criteria for merchants to be successful pursuing this path? Which retailers do you see as examples of the good and bad of pursuing new categories within established stores?