I was just thinking how much it would suck to be a big box specialty retailer these days, and the phrase “death by papercuts” came to mind. I came across an article today which talked about Amazon’s Marketplace offering which enables specialist retailers to be exposed on Amazon’s store to schlep their goods and services. Specialist retailers pay a tiny subscription fee plus a referral for each sale to be featured on Amazon’s site.
Sure, this is old news, but it’s worth blabbering about as a warning to big box specialty retailers (think CE retailers like Best Buy, toy stores like Toys R Us, kitchen and bath stores like Bed Bath and Beyond) as well as those folks who have money tied up in retail stocks. I am increasingly beginning to believe that big box specialty retailers will go the way of the Service Merchandise. Think about it: as a consumer, you can do pretty much everything online and buy everything cheaper. I argue that the ONLY differentiation for retailers is one thing.
Touch and feel.
The human element and service is what retailers will blow hard about. Really? I do all my research online. And when I do get help in stores, it’s generally to go to a different store.
If you don’t agree with me, go your local Best Buy to purchase a fire wire adapter for your Mac. Stand in the aisle looking dumbfounded at the price, and ask a salesdude why it costs so much. He’ll tell you to either buy it and return it when you’re done with it, or he’ll give you the web address of his favorite gear store. It’s baffling. Doesn’t he get where his bread is buttered? (As a consumer however, my dear salesdudes/dudettes, please continue doing this because it really helps me out.)
So what does that mean for retailers?
Well, sorry to say, those specialty retailers will become showrooms for you to touch, feel, taste, smell and see to your heart’s content. Then, with a simple wave of their smartphone and a click of the bar code with your camera, you price shops on the spot. You know instantly how much more the retailer is charging to pay for those lights, the nice fixtures and the salesdudes who actually turn business over to competitors. (Note to the savvy reader: Search on “price scanner” in your phone’s app store and you’ll be amazed. Amazon just released their own.)
It sucks to be a big retailer. With one or two clicks, a specialty retailer can be on Amazon’s Marketplace and instantly gain exposure to Amazon’s huge customer base. While it is hard to get noticed, customers are increasingly turning to online to get their stuff and NOT buying from specialty retailers. It’s death by papercuts for retailers.
As a fun, oversimplified and reckless exercise: Best Buy has close to 2,000 stores in the US; Bed Bath and Beyond has close to 900; Toys R Us has 840. Figure an average of 25K fee per store (that’s low by the way), and another 50K square feet of parking space and you get 280.5 MILLION square feet of space. That’s nearly 6,500 acres of showrooms and parking lots between 3 specialty retailers. I say we convert those stores to farmland so we can feed hungry folks in Bangladesh…
Other than becoming farmers, what DO YOU think can retailers do?