Apart from the Chinese, Who Still Thinks Retail is About Storefronts?

In the Hutong
Nursing a sense of shock and wonder
1844 hrs.

Wall Street Journal columnist Jason Fry wrote a superior article (subscription may be required) in yesterday’s paper about how slowly, subtly, but very clearly online shopping outlets have changed the way he, his family and his peers shop for almost anything.

Books? Amazon.

Music? iTunes or Amazon.

Baseball cards? eBay.

Groceries? FreshDirect.

Reviewing this, he begins to understand why he gets stressed about actually going out to a store and buying something.

“So what do I still buy in the real world? The occasional comic book. (I could do that online.) Some
weekend mornings I take my four-year-old son to Target. (They have a Web site.) Oh, and I buy
soda and yogurt in our company cafeteria. (I could stock up on those via FreshDirect and bring them
from home, but I’m too sleepy in the morning to tackle planning that involves refrigeration.) Odds
and ends at the hardware store. I run unexpected errands, of course. We go to restaurants. Oh, and
haircuts are still real-world expenditures.”

He notes that this didn’t happen overnight, but that the experience of going online just got to the point where it was far superior to what he was getting in meat-space. He then ponders what will happen in a world with fewer retail storefronts? Maybe stores become relegated to serving the digitally-excluded. I can hear the schoolyard taunts now “you’re so poor your mama shops at stores!”

His conclusion – the only way for traditional retailers to prosper in this new age is going to be by offering a superior experience. Nordstrom. The Apple Store.

So by this point, you’re probably saying “well, yeah. Duh.”

So then, while catching up on my back issues of BusinessWeek (delivered, incidentally, electronically to my computer each weak via Zinio), I read an article about Amazon by Robert Hof that says in the second paragraph “Many people continue to wonder if the world’s largest retailer will ever fulfill its original promise to revolutionize retailing.”

A quick question Mr. Hof: who are these people you are talking to, and what holes do they live in? Sure, here in China maybe you could justify that attitude. On the other hand, please give Mr. Bezos a ring and ask him if he’s selling stuff in China. Not only does he have a subsidiary here on the ground, Joyo.com, he also sells containers full of product here each year. I know – every day I go by the management office for my residence compound and I see the stacks of Amazon books fresh from distribution centers around the world. And we’re a tiny little village of maybe 1,000 families.

But North America is just the most advanced example of what is slowly happening around the world. Retail is changing, and it is a direct result of the boom that Amazon spread (if it did not begin it).

My mentor, Bill Schereck, has been preaching the gospel of electronic retail since he was a low-number employee at QVC International. Bill is quick to point out that there are vast categories of product that sell better electronically than in a store:

1. Anything that is intimidating to buy at retail;
2. Anything that is embarrassing to buy at retail; and
3. Anything that has key features that are not obvious (i.e, anything with a microchip in it).

To which I add:

4. Anything that does not require personal selection at the point of sale (packaged goods);
5. Anything that does not need to be tried on first (apparel and shoes); and
6. Anything that appeals to a market that is not geographically concentrated (hobbyists.)

I don’t care where you live. If you make a living selling products that fit into the above six categories, either change your career or buy a computer: change is coming, and only the electronic will survive.

China will be no exception. Among the growing, increasingly busy middle and wealthy classes in the nation’s cities, the shift will take place – it’s only a matter of when, not if.

Thanks to Amazon.