Retailers Are Dying Because They Trusted Advertising not Data
Shopping became a social activity back in the late 1800s Britain with the opening of Selfridges, the first department store. Back then, it was unseemly for women to go places unaccompanied, but Selfridges provided them with a safe space to spend their days. The sexist jokes about women and shopping are too numerous to count, but Selfridges literally started the “women be shopping” movement. Department stores sprang up everywhere which then led to the beloved American shopping mall. Malls became the place for teenagers to hang out. Food courts and trendy shops aimed at capturing teens plentiful allowances appeared almost out of thin air. Everything you could want you could get at the mall.
Today’s kids don’t really “hang out” like that anymore. They can meet up with their friends anytime and anywhere because they can always get in touch. The Internet changed everything. Most of all, it eliminated the barriers to entry in retail. Before the Internet you needed a lot of capital to get started in retail and paid high rent to get featured in the best shopping malls.
Now, anyone with a resale license can start a store online or sell on Amazon or Ebay. Amazon is dominating retail because it could dominate. The need was there. For everyone that loved going to the mall, there were probably ten people who hated having to waste time shopping. Amazon from its very inception has sought to solve the last mile problem; getting goods into the hands of the consumer fast and efficiently. But while Amazon was building an empire, people were still building shopping malls, department stores, strip malls and fancy grocery stores on the misguided notion, “if you build it, they will come.” They weren’t listening to the screams of their customers demanding more convenience, more choices, better personalization and home delivery. They didn’t listen when they kept selling the same stuff marked down 50 and 75 percent. They didn’t listen when they had to start laying off staff. Maybe they are listening now that they must close stores to stay afloat?
It is predicted that by 2020, 25 percent of American shopping malls will be closed. Sears, Macys, and other retailers that have enjoyed over a century of success probably won’t make it out of the 2010s. Smaller retailers like Payless Shoes, once a favorite of moms and teenagers alike, threw in the towel and other teen favorites like Abercrombie and Fitch and American Apparel are shuttering stores faster than you can say H&M. Today’s young shoppers don’t go to the mall for clothes and now with Amazon jumping hard into the retail game, expect to see them using their mom’s Amazon Prime account to shop Prime Fashion to try stuff on at home.
But even Amazon isn’t safe. They created a monster in today’s consumer and there is no way that consumers are going back to the way it used to be. In fact, tomorrow’s consumer will want more. The adage of “give the customers what they want at price they can afford, and they will come back,” is no longer true. The data supports that customers want convenience and that young people value experience over material goods. The retailers who thought they would wait out the online shopping “trend,” have found themselves uninvited to the party. Is it that they couldn’t or wouldn’t believe what was happening? Did they not see what happened to record and video stores? Did they not see the empty food courts? The data was there. But maybe they were too focused on their stock price. They were too focused on satisfying Wall Street and Wall Street’s analysts to obtain their “buy” rating (or at least avoid the “sell” rating), that they forgot they needed to satisfy the customer.
Amazon’s stock is high right now; some people may say a little too high for a company that never boasts a profit. It is their customer centricity that will keep them relevant in the minds of consumers. Not being customer centric is what is killing retail and the mall developers and store owners are blaming everyone but themselves. Retailers are only a middleman between the producer and the consumer. With the Internet, do we even need a middleman? Especially if the middleman makes is inconvenient and expensive to get what consumers want and need.