Ten Years of Lessons: The Irony of It All
It’s been 10 years this week since we introduced RetailWire to the retailing community. We began with a simple notion: although we felt we had plenty to say ourselves about retailing, opening up the discussion to experts in the field and day-to-day practitioners could create a more multi-faceted learning environment.
Thanks to a generous and supportive BrainTrust panel and loyal participant-readership, we’ve continued all these years with surprisingly little change in our approach. So as we look back, we wondered if much has changed in the fundamental topics we cover and the lessons imparted now compared to February of 2002. Perhaps because, similar to the present, we were working to claw our way up out of a down economy during our inaugural year, many of the discussion topics were remarkably similar. But a scan of the headlines from the first few months after launch struck me with a profound sense of irony.
Who Pays for Marketing Private Label? (2002)
Warren Thayer (on our BrainTrust then, as now) asked why retailers and manufacturers agree that private label needs to be marketed “like a brand” and yet cannot agree on who should foot the bill for marketing.
Fast forward to a late 2011 discussion — Private Label Should Follow National Brands’ Lead on Marketing. The discussion question: Should private label suppliers help fund the marketing costs of retailers’ PL programs? According to BrainTrust panelist Peter Deeb, we’re no closer to a resolution now than we were in 2002. “Most retailers want the lowest dead net cost that a supplier can offer,” writes Mr. Deeb, “and the bid or auction process has driven down those prices to retailers. This process has forced manufacturers to run very lean so that any marketing funds are dedicated to product and packaging improvements.”
Blockbuster Challenges Netflix (2002)
The discussion article began: “Blockbuster CEO John Antioco hints that the company might be considering an all-you-can-eat DVD-rental offering to counter similar services offered by Netflix.” Well, correct me if I’m wrong, but I don’t believe Blockbuster followed this logical track. The rest, as they say, is history. (Oh, the irony.)
Is Kmart Caught in a Doom Loop? (2002)
From the writing-was-on-the-wall department … we cited author Jim Collins’ premise that when companies run into trouble, the desire for a quick fix can become overwhelming. “Lurching from one solution to another, the company never gains any traction.” Mr. Collins called it the “doom loop.” A&P (double irony) is used as an example of how Kmart should stop behaving.
Here are a few more early 2002 discussion headlines that drip with irony (no explanation required):
Killer Obesity Slays 300,000 a Year in the U.S. and 30,000 in England
Sears Places $1.9 Billion Lands’ End Order
Online Grocery Services Meet Mixed Reviews
Family Dollars’ New Store Sales Increase
Seven Steps Cement Gap Between Brick and Click
I believe in my heart that our audience has learned a heck of a lot over these 10 years and that they are doing their best to spread the lessons learned and warnings heeded. And for all the missed opportunities during this time, in many ways, the industry is miles ahead and learning at a faster clip … right?
Discussion Questions
Discussion Questions: How far have retailers come in the past 10 years in understanding and reacting to the challenges they face? In which areas have they made the most and least progress in your eyes?
Maybe Rick, maybe.
But there are any number of natural laws and other truisms that say probably not. Regression to the mean; “there are no new ideas — only reconstructed ones”; “what goes around comes around”; etc.
The truth is that the fundamentals of business and retailing haven’t changed a damn bit since you guys started this great vehicle. Only the players and the tools they use change.
As James Joyce once said, “History is a nightmare from which I am trying to awake.” Key word — trying. Many retailers have been fighting a holding action over the past decade, a grinding war of attrition characterized by a relentless erosion of market share.
Of course it all depends of which retailers you are talking about. Online retail has enjoyed a Renaissance while brick and mortar food retailers, for example, have had to scramble for every penny. I guess if we are talking about all traditional retailers I’d have to say they aren’t doing so well. Brick and mortar music retailing is all but dead. Ditto for movie rental. And, sad to say, probably ditto again for at least large, general interest booksellers.
But technology isn’t the only problem retailers haven’t addressed well enough. There has been revolutionary change in the consumer — economically, ideologically and in terms of their use of social networks. Lifestyles have changed and many retailers have had a hard time just keeping up.
So I’d have to give retailers a C minus for their efforts since RetailWire debuted. Of course there have been some remarkable retailers over the same period, but one has to be careful about painting everyone with the same brush. Maybe that’s the bottom line: A few have been exceptional and the balance, not quite mediocre.
I was thinking “the more things change, the more things stay the same,” Ben. We often talk about fundamental changes here on RetailWire, while those of us on the front line recognize that we will never (or rarely) induce fundamental change. Maybe 10 years is not a lot of time for some of what has been proposed over the years.
Somehow I tend to think retailers were more effective when their world was less technologically generated. Technology is where I think retailers have fallen behind the rest of the business world. They talk the talk but do not walk the walk.
Some battles go on, such as private label vs. brands — that one may never end. The most vulnerable of retailers have either been chewed up by new technology and tough competition, or are barely hanging on and will be gone way before another 10 years passes. To me, what’s changed the most in the past ten years for retailing is the advent of social media and mobile technology, and the ability to target and service customers in a more”omni-channel” way. Over the next ten years, I’m sure we’ll see the complete integration of all shopping channels and shoppers will venture out to physical stores because they want to, not have to. Meanwhile, the diamonds of retail seem oblivious to retail’s travails: Costco, Apple, Amazon, Publix, Trader Joe’s, and the like may have mini-slumps, but they never last long.
Retailers have learned many lessons over the last ten years. They are the same lessons that the generation before them learned, or, more succinctly, the more things change, the more they stay the same.
What are these lessons?
1. Pay attention to what the customer is asking for and give it to them.
2. Customer demographics and preferences are different around this vast country and changing rapidly. See lesson #1.
3. You need to offer something unique, be it product or service. Otherwise, you’re a convenience store.
4. You better pay attention to changing technology. Ignore it at your peril.
5. Competing strictly on price is a footrace to the bottom.
To your question as to learning at a faster clip, the ones that are still around are. You should ask again in another 10 years.
Individuals within retailer and brand organizations have known the challenges and many have known this day would be upon them, but up until recently they have not felt enough ‘pain’ that would force the executive team to react to the digital revolution and the empowered shopper it has created. The new landscape has inflicted real ‘pain’ and forced retailers to innovate and respond in an expedited manner. The scope of the required disruptive changes from core infrastructures, their associated workflows and the business models needed to support these initiatives are significant obstacles to overcome. The ‘pain’ that retailers now feel that is being inflicted by the digitally empowered shopper is forcing rapid change. It is no longer a ‘nice to have’– it has now become a ‘must have’.
First of all, congratulations on ten years! I was a late bloomer and joined in 2003. I believe the change we see in retail takes time because we are in a conservative industry and few challenges are solved quickly … even in ten years. Talk about very basic problems like inventory management/out-of-stocks, etc., and we are not very much more advanced than we were twenty years ago.
Have patience. We ARE getting better. And the tools available today will help make progress accelerate.
From my perspective, retailers as a group have made the most impressive progress on the internal dimensions of their businesses. Chains have gained scale by growing larger; pricing systems have squeezed out a few margin pennies; employee productivity has been improved.
For all the operational improvements, however, stores and the shopper experience are no better — some might argue they are worse: The paradox of scale dictates that the larger the chain, the greater the distance (both psychic and physical) between headquarters and shoppers. Demand-based price, promotion and markdown optimization has become a commodity that, unchecked, can harm price image. Workforce management solutions have driven store service levels to a minimum along with payroll costs.
The big issues and opportunities of the day, meanwhile, remain pretty much the same, as the selection of RW headlines here indicates. It all boils down to making stores better for shoppers. Oddly, this is so often the lowest item on management’s priority list.
I’m an optimist about this; although I am also a curmudgeon about this. I’m rather proud to have been part of RW’s first decade of dialog about this since day one. I’m certain that if we were to fully mine all 78,000 RetailWire comments published over this span (15 articles per week x 10 average comments per article x 52 weeks x 10 years) we would unearth every good idea needed to make retail really, truly good.
Just like consumers cannot be categorized as representing all consumers, retailers or manufacturers can not be categorized as representing all retailers or all manufacturers. Some retailers and some manufacturers are leaps and bounds ahead of the competition in specific areas. No retailer or manufacturer is leaps and bounds ahead of the competition in all areas. There has been much progress in all areas but not by all companies in all areas. Measuring progress by average movement distorts what has been happening in the industry.
The headlines cited — and most any that COULD have been cited — are manifestations of issues that are age old (they would have been similar in 1902 or 1902 B.C.), so not to downplay RW’s noble efforts, but since they hadn’t been “solved” in all that time, I doubt much has changed in the past decade.
But happy B-day, of course, and don’t have too much cake (we don’t want obesity slaying 300,001!).
In the last 10 years, everything has changed. Except, of course, for the fundamentals; good design sells, price is an American god, superior customer service rules and the Internet will sooner or later change and dominate everything.
Wait a minute, maybe nothing retail has changed … we just have less money.
It was interesting to go back and look at the comments from 2002. I was surprised to see even my own comments there. It’s hard to believe it’s been 10 years.
Just as Ben notes, “The truth is that the fundamentals of business and retailing haven’t changed a damn bit since you guys started this great vehicle.” The more things change….
Al notes a few great retailers “Costco, Apple, Amazon, Publix, and Trader Joe’s.” All of the factors existed then as they do today. They each still have a great product or service delivered in a way that consumers find value. But, isn’t it all a service?
Each of these retailers, successful all, have a different approach or means of delivery, but it all boils down to the same thing. What ever they do, they do it well — the fundamentals. The fact remains here; no silver bullets. What does continue is, if you deliver a product or service in a way the consumer is delighted, they will reward you with prosperity and longevity. Some of the mediocre have longevity, but not prosperity.
My guess is that the four mentioned will be on the list 10 years from now. My guess is also that there will be one on the list that we haven’t heard of, or that might not even exist yet. That one will have the same characteristics of the four. Along with the four, they will utilize the tools of the day in such a way that their customers find benefit.
What I do know is that the fundamentals are simple. It’s just that they are hard to execute and they are even harder to convince the mediocre that they are important. The more things change….
In my estimation, the answer to this question is simple. The most progress has been made in the utilization of technology to run the business and to help make better business decisions.
On the other end of the spectrum, most retailers have still not figured it out; it’s still all about people and the interactions that take place between them. As retailing becomes more high tech, it also needs to become more high touch.
I wonder when most retailers figure out that great front line employees are not a disposable item.
Ecclesiastes 1:9 – What has been will be again, what has been done will be done again; there is nothing new under the sun. (NIV)
Many changes have occurred in retailing over the past 10 years. Clearly, retailers have become much more aggressive with their promotions in direct mail, e-mail and on their website. In addition, most retailers have recognized the impending challenge that comes from mobile commerce.
At the same time, there are a broad range of challenges that many retailers have yet to fully address. The first, and most important, has to do with customer experience. The high level of turnover and low level of empowerment of retail managers and associates has led customer experience to deteriorate over the past 10 years rather than improve as you would hope. In addition, only the top elite retailers are leveraging customer insight to effectively segment, target and personalize communications, benefits and offers based on customer preferences and past behavior.
The failure of many retailers to fully address these issues has led to increasing commoditization of the retail environment and a lack of differentiation that threatens margins and ultimately the survival of many retail businesses.
Improving the customer experience and leveraging insight about customer behavior are both much less expensive endeavors than they were 10 years ago. It is my hope that the next 10 years will show dramatic improvements in both those areas, improving the business for retailers and the experience for their consumers.
Hey in fairness, Blockbuster had a strong vision for digital distribution of all entertainment content in 1992.
It’s only after a content owner (Viacom) purchased the company in 1994 and diverted it’s cash-flow that it rolled-over to suffer it’s ultimately inevitable fate.
🙂