I’ll never forget
the day I visited an Apple store in my local mall. Compared to other packed-to-the-brim shops, the store was notable by its HUUUUGE open spaces and how the the customers were talking with each other as they migrated to various parts of the stores.
When you think about products in the past, it was all about, well, the product. A computer (and accessories), a TV, a stereo system, a reclining bed, a refrigerator…all stand-alone products with perhaps accessories satelliting around them.
Not so any more! Think about buying a TV today. You can focus on the TV, the speakers, the surround sound, the furniture in which you’ll sit, the Wii that wants to be attached and the like.
People are moving not so much to buying individual products, but buying components for entire experiences. Relaxing at home! Playing a game! Listening to music!
The question is, how will retailers address this issue? There’s a super article you must read over here - it begins:
Those that are in those businesses, as we all know, like to operate on a pretty low operating margin when it comes to selling those 11 or five SKUs. It’s a complete reversal of activity, whereas we used to make a lot of money on lots of hardware, and we’d let the assortment sort of self-destruct over time. Now the consumers are choosing. They want five different gaming consoles, and that’s it. They want 11 iPods plus maybe three or four other MP3 players and that’s it.
The interesting elephant in this room is we’ve now talked more about things that aren’t TVs and computers for the first time in memory. Those are smaller economics and the honest truth is those are smaller businesses. These are smaller dollars, smaller margins, less service, less warranty and the dynamics of the industry are never coming back, at least not in the same way. It will be very different.
Dave Workman, PRO Group : When you look at the retail stores, the old school of retail was really product-centric. Now, with the Internet and excellent retailers like Amazon, the dynamic in the market is that if you are just dwelling on the product alone, there isn’t enough margin to keep a traditional brick-and-mortar retail operation in business. I think there will be a paradigm shift for retailers over the next five to 10 years, and those that will come out of this as successful retailers are those that move from a product-centric to an experience-centric merchandizing scheme.
Part of that is a smaller footprint because you don’t necessarily need the size that you needed before. It’s not about having 600 televisions necessarily and maybe all of the choices that are available everywhere, because the thing that Apple has figured out, and which has resonated so much with the consumer, is the experience at the Apple Store. It’s not a product showcase as much as it is an experience people continue to come back for and talk about…..MORE….
What do you think?
ThankYouVeryMuch!
Owlbert
ps - speaking of entertainment:
Morning!
Whenever you hear of Star Trek, you probably think of classic lines like "He’s dead, Jim (let’s blog about it!)" or "Beam me up Scotty!" or "Computer, compute to the last digit the value of pi" etc.
