Executive Briefings

Retailers Need to Redefine What 'Store' Means

A large number of traditional retailers are struggling to grow profitably. In addition to bankrupt retailers like Sports Authority, many others are closing stores. Yet, the "Beast from Seattle" continues to thrive ... posting double-digit year-over-year growth, and now even quarterly profits.

Why is Amazon so successful while even the best traditional retailers are struggling? Many retailers need to take a hard look in a mirror to examine their historical baggage of the past and their failures to adapt to today's rapidly changing consumers.

Traditional bricks and mortar retail was founded on the premise of the "store" being the destination location where people came to shop. Stores were (and are) "showcases," where you put products on display and sold things at a price. Success was based upon merchandising the right assortments and achieving supply chain efficiency. Many big box retailers grew in size to have wider assortments (hypermarkets), or they specialized in specific categories of things like consumer electronics. And, if selling things slowed down, retailers ran mass media ads and promotions to drive customer traffic to stores.

The major challenge facing traditional retailers today is that the "store" is now where the consumer chooses to engage at this moment in time, not necessarily a physical location with products on shelves.

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Why is Amazon so successful while even the best traditional retailers are struggling? Many retailers need to take a hard look in a mirror to examine their historical baggage of the past and their failures to adapt to today's rapidly changing consumers.

Traditional bricks and mortar retail was founded on the premise of the "store" being the destination location where people came to shop. Stores were (and are) "showcases," where you put products on display and sold things at a price. Success was based upon merchandising the right assortments and achieving supply chain efficiency. Many big box retailers grew in size to have wider assortments (hypermarkets), or they specialized in specific categories of things like consumer electronics. And, if selling things slowed down, retailers ran mass media ads and promotions to drive customer traffic to stores.

The major challenge facing traditional retailers today is that the "store" is now where the consumer chooses to engage at this moment in time, not necessarily a physical location with products on shelves.

Read Full Article