Retail Forecast: From Table Top to Laptop
How has online shopping behavior changed the retail landscape? I think that stores will continue to thrive in different formats. But some retail businesses function better online than they did in a bricks — and — mortar store.
One surprising recent example is Michael C. Fina, a carriage trade Fifth Avenue retailer of high-end table top and gift merchandise. They recently announced that they would partner with Amazon as an online business only, closing their one physical location for good.The 80 — year — old store was well-established and had a freestanding website of its own. But recognizing the benefit of Amazon’s quicker turnaround in filling online orders, the venerable retailer has decided to go to online-only business. Why? Because Amazon can fulfill an order in 24 hours. Fina’s fulfillment averaged 72 hours on average. Apparently even Fina’s carriage trade clientele demanded faster turnaround than it could provide on its own.
They are taking a very 21st century approach to a very traditional type of business.
And theirs is a business which may well work better online than in a storefront. Tabletop is a category which is notoriously difficult to present in a visually appealing way. Rooms of china patterns, faced out on shelves tend to blur the differences in design quality from one pattern to the next. Crystal tends to disappear, even with a dark background. Good lighting is critical but is often difficult and expensive to achieve, even with the best lighting consultants. Flatware tends to go into floor fixtures and, again, is hard to romance. Even more difficult is being able to convey to the customer ( often a nervous bride ) how all this will look on a dining table or in her own home.
There is no doubt a way to assort all this virtually and make substitutions and even mock up actual table settings while sitting at home. Online merchandise presentation has progressed to the point where is it very easy to get a detailed visual description of whatever you want to buy. With a lenient return policy, merchants can encourage a customer to try things at home and send back what doesn’t fill the bill.
A core business for Michael C Fina is the Bridal Registry and online fulfillment is now the primary channel for delivering goods. The store’s vendors are designer goods from vendors such as Buccellati and Georg Jensen. Other luxury online retailers have proven that immediate gratification is a key aspect of serving the affluent customer online. Companies such as Net-A-Porter have shown that fast access to goods previously thought to be unmarketable online gratifies their customer’s appetite for merchandise. The online market for luxury goods has no geographical boundaries or seasonal limitations. So if the retailer has effective supply channels, their business is scalable as long as they can deliver increasing quantities. Luxury apparel companies have already responded to increased demand by continuing to break down the barriers of seasonal delivery. For the Fina Company, the challenge will be to increase their presence in the customer’s homes through rapid delivery and fresh merchandise introduction. Hopefully their vendors will partner in the enterprise.
Why is this a meaningful partnership for Amazon? I suspect that the answer lies in the bigger picture strategy of the company’s apparent desire to dominate the retail marketplace. Sales volume gained is less the point of this than access to a customer base and further penetration into the more sacrosanct areas of affluent customer behavior. Luxury retailers know that the moneyed customer will typically continue to spend as long as there is merchandise to meet their interests. But they trade down as well. Hence the desire for Amazon to capture the interest of this customer base. They can add on sales in other areas, and the association with Fina gives Amazon a cachet with their customer which they might not previously have had. It also gains Amazon entrée into a vendor structure which might not be that eager to partner with Amazon alone.
Is this a trend that will eventually do away with physical stores? I don’t think so. But the role of the store becomes very different in the future. Access to merchandise is no longer the primary function of the physical store. And businesses like Michael C. Fina which work better online may well desert the shopping avenues and high-end malls of America.
Plus there is a current trend in the other direction: online businesses that open stores. Amazon, for example, has opened bookstores. Sales of e-books have trended down for the most recent period as well. Browsing printed books may in the end take precedence over download. It will be interesting as well to see if Amazon and Fina will partner in new forms of merchandise presentation for the future, or make other innovations as a result of this partnership. The retail marketplace is constantly in flux and stores change as social habits evolve. Stores of the future will function differently from those of the 20th century. But they will not all disappear.
Read the original article: “Michael C Fina, Park Avenue Wedding Retailer Bets on Amazon.com”, NYT Business Day April 5, 2016.
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