This is starting to become a habit.
Just yesterday, I was musing on the questionable future of a particular retailer, and how they've somehow clung to life like a cockroach after World War III. I also hinted (yes, foreshadowing in a blog entry) that I'd touch on this on a macro scale. Well, here I am, following through on promises made.
The store I'd pointed out in particular was RadioShack, a chain in the midst of a new branding approach (according to Engadget, the chain seems poised for a branding shift to "The Shack"). Ironically, a few nights before this article appeared on Fark, my roommate Adam and I made the offhand remark, "[We] wonder how they're still around." I'm not old enough to appreciate everything RadioShack once was. But I do remember the days of store-branded Realistic stereo equipment and home electronics, of radio-control cars, bins of electronic components, musical instruments. There were days when one had a reason to go to RadioShack. (In those days, there was a space between the two words, before the InterCaps trend caught on with all things electronic.)
I've seen an evolution away from that, but then I walked into the store at the Mall of New Hampshire just yesterday. Compared to the RadioShack with a space, it's like a different store. I'm not even talking about the evolution of technologies themselves. The second-rate home-theater equipment was nowhere near the front of the store, but I could find all manner of cell phones and iPod accessories. It's a small-format store anyway, but this isn't your father's RadioShack, seriously.
Of course, I pondered that for the $3 and change I paid for my coax coupler, I could have found one on some Web site for a fraction of that (plus shipping and handling, of course). And that's what got me thinking that maybe I needed to put this to hypertext, because I've wondered it more than a few times.
Those who read Freakonomics will recall the chapter in which Levitt and Dubner discussed how the Internet affected the term life insurance market by making information (quotes) accessible, and making it harder for third-party insurance brokers to charge more than the price the market would bear. Surely, the Internet's affected all forms of commerce like that. I remember standing in Best Buy with Carmine and Adam, frustrated that we couldn't access Circuit City's Web site for a price check (and trying to find a Web-based VNC client so we could skirt the firewall). More than just disseminating information, though, the Web has driven a new model of purchasing and distribution. You can't think about that without wondering how much responsibility it held for the closing of electronics chains like Tweeter and Circuit City, among others in all segments of retail.
I admit, I'm old-fashioned and still driven by instant gratification. There's something to be said of the tactile nature of taking a package off the shelf and paying for it. It makes cognitive dissonance more tangible, at least! I still go to the bookstore to buy a book, but if they don't have it, I rarely get on Amazon to place an order when I get home. I buy my electronics in person so I can play with them right away. I buy clothes in person...well, that's obvious. Also, I don't like shipping things to the apartment, where I don't know if someone will help themselves to my parcels if I don't get right home after work.
But there's not that much, aside from maybe groceries, that I can't buy online. If I weren't so enthralled by the act of getting out and spending money in the real world, I'd easily never have to set foot in a mall again. I have plenty of friends who do all their shopping with their fingers and a credit-card number. Even my mother buys most of our gifts online, and she's mildly technophobic. My dad's new camera was ordered through some Amazon-affiliated retailer for about $75 less (shipped!) than the store price at Best Buy. Most of my computer parts have been ordered through NewEgg, whose prices are way more competitive than Best Buy (or formerly Circuit City) could dream of being.
But where would that leave retailers?
I guess part of growing up is all about paradigm shifts. Evolution is survival, and clinging to the past is the most direct route to failure. Look at the RIAA; when potential customers embraced file sharing as a way to obtain music, instead of finding a way to fulfill and profit on a new market demand, they clung tightly to the old way of doing business, and used litigation to discourage the new technology. It's certainly done no favors for goodwill toward the RIAA. The news media is in the same boat now; newspaper subscriptions are dwindling among a younger demographic, but people still demand news. Some media companies found ways to embrace the new technology; others simply cried that subscriptions were falling short, and eventually closed the doors. More will close with time.
Such is the problem with retail. Since college, if I've needed something for my computer and didn't need it immediately, I'd order it from NewEgg. Service was fast, and the shipped price was better than any brick-and-mortar store. Plus, NewEgg had plenty of things (OEM drives and processors, anyone?) that the physical stores simply don't stock. Physical space is limited at a store. A warehouse outside LA is a little more accommodating. NewEgg has facilities in New Jersey now, and who knows where else. But the upkeep on those, say, five or six warehouses is far less than the capital expense of every Best Buy store and distribution center, never mind the floor employees necessary for each store and the staff that operates their Web site. It's obvious that Best Buy is going to have a lot more expenses to move the same product.
That's fine if you can provide some kind of added value. Store retail has an obvious value; you can see and try the product before you buy. For some lines of merchandise, that's more important than others. If I'm buying clothes, I want to try things on, match colors, and feel fabric. You can't do that effectively through a catalog or through the Web. So fashion retail may never entirely die. Electronics, on the other hand...I find it beneficial to try out a camera or a laptop, but if I'm going to go home and order it online, I've just made Best Buy's showroom my bitch, for lack of a better term. Then there's book and music shopping. With music and movies, if you know what you're looking for, it's not as if you're passing up the chance to try before you buy if you order online. Same if I know I'm looking for Dennis Lehane's new book; I don't need to see it to know I want it. But if I've never heard of Dennis Lehane and I'm just browsing the Mystery section at Barnes & Noble, then I think having the book on a shelf would be appealing.
The question is what that added value is worth. In the case of RadioShack, the added value used to be knowledgeable staff. The Fark play on the store's motto was "You've got questions, we've got blank stares." Part of keeping costs down means hiring employees who work for less, and the knowledgeable people will avoid that retail hell, leaving "associate" jobs to kids who know nothing but how to parrot back "Do you need any batteries today?" Was it worth $75 more to my dad to be able to touch the camera in person? Not when he had the tools to order it another way cheaper. On the other hand, my friend Erin paid the premium but walked out of the store with the camera that afternoon. Sometimes, you need it now. Newbury Comics was one store that did have the advantage of knowledgeable staff, but when their CD prices soared to FYE-level, that's when I stopped going in. I love music, but knowledgeable staff and buying local isn't worth a $5 premium on a CD I can buy for $10 at Best Buy.
This is a rambling entry, I know, but I just often wonder at what point we'll outgrow the very notion of brick-and-mortar retail. I'd like to hope we never do. There are two things retail has going for it. One is the showroom aspect. The other is the shopping aspect. Shopping online has never felt as natural for me. I'll stare at Web sites for twenty hours of the day, but aimlessly browsing a store isn't done online, it's done walking through aisles and touching shelves and looking at packages. TigerDirect, another electronics e-tailer like NewEgg, acquired the CompUSA brand through their parent Systemax, and is retaining some of the physical CompUSA stores as a sort of test approach. Some products will never translate to the digital realm. Plenty will, though. And so I can't help but wonder if, at some point, it'll simply be too costly to operate those big-box stores when a company could transition from retailer to e-tailer.
There's another element to this, too. Maybe I'm just not the typical retail customer. Let's look at my recent purchase of my pocket camera. I made probably three visits to Best Buy to look at the camera I ended up buying. I wasn't going to save a ton of money over the Best Buy price buying it online, and I had a gift card to use up, so I bought the camera there. But then, I said no to the extended service plan they wanted me to buy. They say that restaurants break even on the food and make their money at the bar. I've heard similar said about retailers, that they make the money off the service contracts and extended warranties they sell. And Lord knows you can't buy anything more than a CD at Best Buy without being offered an extended warranty. Here's one from real life: after my mom ordered my dad's new camera from that Amazon affiliate, they called with a post-sale confirmation call to confirm the order. They also recommended the purchase of rechargeable batteries, as "Canon strongly recommends against using conventional AA batteries in their cameras." Seeing as the camera is designed to work with AA cells and even ships with conventional batteries, we laughed this one off. My dad's theory was they sold the camera at a loss, hoping to profit on the accessories.
What I'm getting at is that the saving grace of the retailer isn't the savvy shopper who does his or her homework, uses the store to test the product in person, then makes a calculated buy. The saving grace is the impulse buyer who has no idea what they're really shopping for, and can easily be steered one way or the other. Or they know what they want, but they need that service contract to avoid problems in the future. I'm actually guilty of this myself; when I went shopping with my friend for a laptop, I was all for her getting an extended contract on it. It's a laptop; things are bound to happen, and while it's no big concern for me to swap a laptop hard drive and reinstall Windows, we both know that's outside her scope of ability or interest, and she can't always count on me being within a few miles with time to bail her out. I'd rather she have that line of defense. When I get my new MacBook Pro this fall, I'd like to say I'll opt out of the AppleCare coverage. But I'll bet I get the laptop at the store so I can play with it in a half-hour instead of a few days.
And if the paradigm of retail does change as we know it, where does that leave our malls? Where will kids shop? Hell, where will they hang out? "Oh, let's go to the food court, then go shopping for clothes and looking at blank storefronts!" Part of the evolution of retail may have to be toward a service orientation. That's one thing I'd thought about in the conversations about the desolate Bedford Mall. The Bedford Mall, of course, has about 20 slots for retailers, and maybe six or seven occupied. The end unit where Alexander's (and later the Drug Emporium and MVP Sports) was has been vacant since MVP/Decathlon moved out, and the Chinese buffet is gone next to it. The movie theater is long gone. With the closing of Linens 'n' Things, that leaves Staples, Marshall's, Papa Gino's, Bob's Stores, a couple one-off merchants and Michael's School of Hair Design. What retailers are you going to invite? The obvious candidates would rather be at the more-accessible Mall of New Hampshire. The Gap left the Bedford Mall for greener pastures years before, and other stores followed. But what can't be replicated at the big mall are local service businesses. It makes little sense to have another Old Navy in the Bedford Mall, but an optician's office would be a good fit. Maybe that's the shift we'll see with retail in general. You can't shove services down a fiber-optic backbone, and convenience will win out if you can put them all in one place.
I can't imagine how hard it will be for retailers to make money the old way, but I can't imagine it dying out altogether, either. But hey, as long as I die before Starbucks becomes a brothel and coffee shop, I'll be okay.