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The Future of Retail

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  • Faust
    kitsch killer
    • Sep 2006
    • 37852

    The Future of Retail

    Dude is on some Silicone Valley drugs...



    Op-Ed | The Future of Retail is the End of Wholesale
    BY DOUG STEPHENS 5 FEBRUARY, 2015
    E-commerce will rapidly reshape the entire economic model of retail, spelling the end of wholesale, argues Doug Stephens, founder of Retail Prophet.

    TORONTO, Canada — Retail is facing a monumental problem that no one seems to want to talk about. It’s that the entire economic model of revenue and profitability for retailers and the suppliers they do business with is collapsing under its own weight and soon will no longer function.

    Part of the problem stems from the continued pervasiveness of online retail. Global e-commerce increased by 19 percent in 2013 alone, a figure that was likely equalled or bettered in 2014. With those sorts of multiples, it’s entirely likely that upwards of 30 percent or more of the total retail economy will be transacted online by 2025.

    Our dependence on stores to serve as distribution points for products is rapidly diminishing as digital media, in all forms, becomes remarkably effective at serving our basic shopping and distribution needs which, until recently, could only be fulfilled by physical stores. Now, just about anything we buy can be on our doorstep in a matter of days, if not hours, via a myriad of online shopping options.

    The physical store has the potential to be the most powerful and effective form of media available to a brand.
    The End of Wholesale

    This historic transition raises a few critical questions: How can the financial models for retail revenue and profit, which haven’t changed significantly since the industrial revolution, sustain if the core purpose and definition of a “retail store” itself is being completely reinvented? How can retailers continue to buy products in mass quantity at wholesale, ship them, inventory them, merchandise them, train their staff on them, manage them and attempt to sell them, when the consumer has a growing myriad of options, channels and brands through which to buy those very same products? How many of today’s retailers will simply stand by and watch an ever-increasing percentage of their sales cleave off to an expanding mosaic of online competitors — which, by the way, may include many of their own suppliers who are now selling direct to consumers?

    It seems inevitable that retailers will have to define a new model; one better suited to the fragmented market they find themselves in...

    Continue on BoF

    Fashion is a form of ugliness so intolerable that we have to alter it every six months - Oscar Wilde

    StyleZeitgeist Magazine
  • panosjapan
    Junior Member
    • May 2015
    • 14

    #2
    It's actually a very interesting article. The section "The Experience Is The Product" is close to what every entrepreneur is trying to find in his/her brand: its heart and soul. The intangible qualities.

    "Part media outlet, part sales agent — a new breed of experiential retailers will use their physical stores to perfect the consumer experience across categories of products."
    This part falls under the new strategies that are looking to transform a brick & mortar store into a real-world version of a brand's website, which is not limited to an ecommerce function.

    A New Revenue Model
    "Retailers who can design and execute these sorts of outstanding customer experiences will likely charge an upfront fee or “card rate” to their product vendors based on the volume of positive exposure they bring to the products they represent in store."
    That is interesting. I'd like to see how are they going to quantify it, because if it is through sales, then it's no different from a consignment deal.

    I happen to have read today another interesting article: How to Build a Brand People Can't Resist on Inc.com. It writes about the tactics Bonobos and Warby Parker use, and where the whole retail experience is going.

    An interesting excerpt is this:
    Physical stores will be everywhere, just in different forms. Because if there's one thing everyone agrees on, it's that--duh--the basic act of touching products and seeing them up close still matters. As McKenzie at Westfield Labs puts it: "Imagine if the internet existed first. Think how excited people would be the first time they could visit a b&m store."

    Comment

    • Shucks
      Senior Member
      • Aug 2010
      • 3104

      #3
      wow that's two articles full of real marketing bullshit right there.

      "stores should provide branded experiences" and "keep inventory / real estate risks low".

      oh rly? what else is new.

      Comment

      • panosjapan
        Junior Member
        • May 2015
        • 14

        #4
        Originally posted by Shucks View Post
        wow that's two articles full of real marketing bullshit right there.

        "stores should provide branded experiences" and "keep inventory / real estate risks low".

        oh rly? what else is new.
        I don't think something being common sense should be considered bullshit. On the contrary, I think the articles try to offer a new perspective on how to achieve those goals.

        Comment

        • Shucks
          Senior Member
          • Aug 2010
          • 3104

          #5
          Originally posted by panosjapan View Post
          I don't think something being common sense should be considered bullshit. On the contrary, I think the articles try to offer a new perspective on how to achieve those goals.
          no no, the bullshit part is all the nonsense obscuring the common sense, trying to dress it up as something new.

          see - it even has u confused!

          Comment

          • panosjapan
            Junior Member
            • May 2015
            • 14

            #6
            Originally posted by Shucks View Post
            no no, the bullshit part is all the nonsense obscuring the common sense, trying to dress it up as something new.

            see - it even has u confused!
            Hahah. Well, I think this whole discussion stems from the fact that a lot of retailers were too afraid or close-minded to accept the changes that e-commerce brought, so afraid of becoming irrelevant is what keeps a lot of them up at night.

            Combine that with a constant, and somewhat unhealthy, obsession to bring digital into every aspect of our 'analogue' lives and what you get is articles with these ideas. :)

            Comment

            • byhand
              Senior Member
              • Dec 2011
              • 273

              #7
              Physical stores are going the way of the dodo, and no think tank devoted to saving the retail model that includes physical stores is going to alter that. The tangible experience of touching a product can be had whether a product is bought through a transaction in a physical store or online. Buy something online and don't like it when it arrives, simply return it.

              People are going to be living in bubbles with no need to ever leave the confines of their home. This is already possible in big cities. A person needs the lure of an inviting experience to coax him out of the nest. That experience can be created in a retail situation via interesting architecture, an engaging staff, a social experience like a party and special in-store deals that require your body to be in the store.
              Last edited by byhand; 06-05-2015, 01:08 PM.

              Comment

              • Faust
                kitsch killer
                • Sep 2006
                • 37852

                #8
                That's more of a science fiction proposition on your part that overlooks such glaringly obvious things like a) people by nature are gregarious animals b) shopping has become a leisure activity c) hassle/frustration of return can be formidable for many people.

                And there is the fact that e-tailers are rushing to open physical stores - Bonobos, Warby Parker, Nasty Gal, Rent the Runway, etc. etc. Here is just one of the slew of articles about the phenomenon.

                Andy Dunn was at a Ralph Lauren when he asked to use the restroom. It was reserved for employees only, but they made an exception for Mr. Dunn, e-commerce pioneer and CEO of Bonobos, who is leading…


                E-commerce v B&M is not the real question about the future of retail. The real question is the big guys dominating the little guys because the market the world is flat and brand-to-consumer model cutting out the middlemen, stores included.
                Fashion is a form of ugliness so intolerable that we have to alter it every six months - Oscar Wilde

                StyleZeitgeist Magazine

                Comment

                • panosjapan
                  Junior Member
                  • May 2015
                  • 14

                  #9
                  It's actually not Ecommerce vs BM. It's how can we make them coexist seamlessly and have one complimenting the other. Again, as someone said: "Imagine if the internet existed first. Think how excited people would be the first time they could visit a b&m store."

                  B&M stores will not go away, they will just stop being siloed from their digital extensions.

                  I also don't think that the small guys are screwed. Look at Bonobos and Warby Parker. Those companies were tiny startups that used the most democratic platform to ever exist, the internet, and succeeded.

                  Look at Kickstarter. If that's not the most romantic thing of our times in product creation then I don't know what is. Everyday people bringing their creations to life with the help of the average consumer.

                  We're just wired as a specie to focus on the negatives and overlook the positive ones, which far outweigh the negatives at the moment.
                  Last edited by panosjapan; 06-06-2015, 04:35 AM.

                  Comment

                  • voltbird
                    Senior Member
                    • Feb 2014
                    • 103

                    #10
                    There is also shopping as it relates to tourism, and my guess is that certain cities will be more insulated against e-commerce competition than others. E.G., I don't expect SoHo storefronts to gradually crumble into Chase banks and Duane Reades... though I do expect them to change.

                    Faust has a point. If the experience is indeed the product, the storefronts that characterize neighborhoods like SoHo may soon reflect the demographics of its visitors, native or otherwise. I'm not sure what that is going to look like five or ten years down the line -- we may not like it very much, because it may all be Warby Parkers or Bonobos or Everlanes that have already successfully cultivated a marketable image and willing audience. Meanwhile, I am wringing my hands over the boutiques I knew and loved falling victim to draconian rent increases, which is a massive financial pressure compounding any competition from online sales.

                    I have a hunch that if Trash and Vaudeville, Search & Destroy, Tokio 7, etc are killed off by rent costs, the vacuum will be filled by some of the flashy newcomers that Faust mentioned. The tourists will leave their hometown Banana Republics, Urban Outfitters, and Ann Taylors for the one or two Nastygal outposts in New York or LA, and that will constitute the new tourist shopping experience.

                    Yikes.

                    Comment

                    • Faust
                      kitsch killer
                      • Sep 2006
                      • 37852

                      #11
                      Speaking of insane rents



                      This article documents well how, ironically, blight is coming to neighborhoods not because they are bad, but because they are too good and greedy landlords are waiting to cash in.
                      Fashion is a form of ugliness so intolerable that we have to alter it every six months - Oscar Wilde

                      StyleZeitgeist Magazine

                      Comment

                      • voltbird
                        Senior Member
                        • Feb 2014
                        • 103

                        #12
                        You KNOW something's fucked up when Starbucks franchises start to get out of dodge.

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