The slow death of large retailers

I think the larger retailers need to get back to basics, but also have vision for the years ahead.  Here are 5 things I've been thinking about that they can do:

1. Streamlined products - Retailers need to streamline product offerings to new/unique products, high sell through commodity products with features that clearly differentiate them, sell co-branded retailer/vendor exclusive products and sell services that assist consumers with the products they sell. Make people come in for those products unique to their stores.

2. Store within a store/ Smaller footprint -Work together with other large retailers selling to similar demographics, to be a "store within a store" whether online or at a familiar large retailer.  Smaller foot print stores with clear branding, good product mix and a great experience would also be a way to go.  JCP has been trying to get off the ground with a new retail launch a few years back, though it seems the Board of Directors didn't have much patience for any long term strategy.  Though they did manage to put in smaller stores like Sephora within their stores and an update their clothing lines with quality brands at reasonable prices.  That said, a new round of store closings was announced recently, so it may have been too little too late.  I think a Consumer Electronics mini-store within their store, like a mini Best Buy or a national jewelry retailer could also do wonders to up the quality of their very basic jewelry section.  JCP has been struggling for years, but now is the time for innovation or it won't be around much longer.

The "store within a store" idea fills a product gap that an existing retail chain might have, allows each retail chain to either cut expense or get additional money toward rent/online presence.  Apple did well by putting their stores within CompUSA stores in the early 2000's - then Apple decided to break out on their own, with Apple retail stores, which ended up being a very successful move.

3. Training - Apple educated salespeople at CompUSA for their internal Apple stores, and those sections of the stores always had customers. However, CompUSA didn't give that same level of intense training for their other products, because most vendors couldn't afford that level of regular commitment.  Beyond CompUSA, retailers typically charge vendors thousands of dollars to do lunch and learns, product trainings, pre-prints, end caps, etc.  Vendors with limited Marketing Development Funds (MDF) can't afford advertising at Tier 1 stores, or only sporadically, after dropping profit margin to just get on the shelf.  Is it any wonder that so many vendors disappeared in the early 2000's? For that matter, is it any wonder CompUSA, CircuitCity and others went away too?  Ultimately, the consumer has been left with a limited product choice and fewer retailers.

4. Retail Greed - Retailers need to re-evaluate its short term monetary (MDF) focus, for longer term success. They need to see Vendors as true partners - good retail buyers already know this.  Some take vendor MDF money because they can, but not because it creates any long term sell through or is part of a bigger strategy.  Smart retail buyers require vendors to have strategic and tactical promotion plans, and to use creative marketing ideas that gets ROI for both the vendor and the retailer.  In the future, it would benefit retailers to allow their sales floor teams to be educated by vendors at little or no cost to the vendor, so consumers can buy at the store, without having to research online.  Retailers should also showcase new vendor products or in promo emails at a LOW cost and assist vendors in navigating their store's demographics and special needs.

Sure, a buyer can force a vendor to pay $30k for a line or two in a store hard copy catalog that no one will ever use, but that is not going to generate sales for the vendor or the store - it's just about collecting money.  That kind of low-level extortion has been going on for a long time and retailers need to take responsibility for seriously marketing products, not just taking a cut.  Vendors also need to get more creative and come up with promotions beyond instant rebates to get foot traffic to the stores and increase sell through.

5. Low Price Focus - Retailers still have the upper hand when it comes to hammering vendors to reduce cost to buyers and MSRP.  WalMart has a reputation for really getting vendors to cut their prices to the extreme and vendors do it in hopes of selling a huge quantity of product. It's a risk that some vendors lived to regret, because the sell through numbers didn't match expectations.  This kind of agreement has left many smaller vendors taking huge financial hits or out of business.  That said, WalMart has staked it's claim on having the lowest price in town and price cuts are great, BUT, it is only one factor - and it doesn't always create long term sell through.

There will always be people in search of a deal, but a majority of people will be looking for more. They want a good price, but they also want service, product knowledge, a nice store environment, appropriate product selection,  quality, online purchase options, product customization and more. Now that consumers have come out of their economic bunkers after the Great Recession, they are caring more about those other things, not just price alone.

Even in 2017, we're still seeing retailers close or downsize and I expect we haven't seen the end of it.