Our colleague Jeff O’Heir at Dealerscope — in response to a story we covered titled Target Looks to Suppliers for Help in Combating “Showrooming” — has written an editorial outlining strategies that Big Box stores might be able to use to take advantage of the fact that consumers are more educated, or at least have on-the-spot access for price-comparison and product information.
However, the offering of better customer service has time and again been proven in this country to be nearly worthless. The almighty dollar is what always rules the day, which is why Vizio sells more TVs than anyone else in the US right now. Consumers like me are the bane of the Big Box stores like Target. We get in, we get out, and we buy the loss leaders and move on to the next store. We price match, we use coupons, and we generally want the employees to stay as far away from us as possible.
Obviously, we are not the average consumer, but brick-and-mortars need to realize that they’re barking up the wrong tree. They need to focus on doing the one thing that physical stores have on the online competition — carry staples like cables, blank DVDs, and the top 100 or so movies in their stores, the stuff that people expect and/or need immediately — but otherwise act more like etailers. With the overhead a retail store experiences, especially in high rent districts, they cannot hope to compete by finding the lowest price and matching it. Amazon (who, interestingly enough, is opening a storefront of its own) presently floats on a supermarket-level profit margin of about 3%, which relies on moving huge amounts of inventory on a daily basis to keep the doors open, a quick death for virtually any other form of retail
Big box stores need to start renting out more floor space, like they already do with Apple or cell phone companies now. Their rent should pay the bills of keeping the doors open, and the gravy should come from the consumables and media releases. Essentially, the Best Buy of the future should look more like a mini-mall of the past than the crowded floors we see today. The items that are actually on the floor should be the stuff that’s moving in and out quickly, with the rest in local warehouses for fast delivery.
Can this model work? Potentially, but it requires a fundamental restructuring of virtually every part of the supply and payment chain, creating partnerships instead of the retailer/supplier game that’s running now, and I don’t know if the industry is, or ever will be, prepared to play that game.
Read Jeff’s take at [Dealerscope: “Showrooming” Can Be a Blessing]