9 ms·

Hard Lessons Breathe New Life Into Retail Stores

87 points by gk1 8y ago

jseliger 8y ago
“These are big shifts,” said Craig Johnson, president of Customer Growth Partners, a research and consulting firm. “It is like turning around the Queen Mary. You can turn the rudder, but it takes time to gain a purchase.” To my mind, most physical stores ought to be like showrooms: innumerable products are hard to judge solely from pictures and text descriptions but easy to judge with ten seconds in person. Let online and off converge.
- qualitative 8y ago
  Okay, but there's the old Amazon's showroom problem. People go to the store, look at the thing, then, maybe buy it online anyway, for any number of reasons. Net effect, physical locations become showrooms that move very little actual product, and fail to close the expected number of sales.
  - kreutz 8y ago
    They buy online because of the difficulty surrounding getting it home - with that problem fixed I imagine the Amazon showroom problem is no longer a problem.
  - gk1 8y ago
    I think that's exactly what parent is suggesting: The physical store should be for letting people try and touch items, before they buy them from your website. Warby Parker, Bonobos, and (in some states) Tesla already do this.
    - scarface74 8y ago
      That’s fine if you are selling your own product in the store and online. Apple doesn’t care if you use thier store as a showroom and buy an iPhone from the carrier. That doesn’t work if you are Best Buy.
      - nordsieck 8y ago
        >> The physical store should be for letting people try and touch items, before they buy them from your website. > That doesn’t work if you are Best Buy. Apparently it does work if you're Best Buy. > we price match products shipped from and sold by these major online retailers: Amazon.com ... https://www.bestbuy.com/site/help-topics/best-buy-price-match-guarantee/pcmcat297300050000.c?id=pcmcat297300050000 https://www.bestbuy.com/site/help-topics/best-buy-price-matc...
        travmatt 8y ago
        If I’m understanding your comment correctly, you believe the fact that Best Buy has been forced to price match as a way to stop losing business is evidence that they’re not losing business?
        zeta0134 8y ago
        Nah, it's that Best Buy doesn't make most of its money on the items they price match. Their big sellers are their mobile department and all the accessories folks like to pick up with their new purchase, which are very often store exclusives and have incredibly high margins. They make a killing on chargers, adapters, phone cases, you name it, but actually make tiny margins on a lot of their "core" items. The big ticket item they price match is often kicked back by the vendor anyway, so the store doesn't lose out when they do it. Their goal is just to get folks in the door, and let the momentum of a good sales interaction close the deal. (Questionable on the "good," they're admittedly not very good at screening / training, but in aggregate this strategy works well for them.) Best Buy price matches because it gets people in the store. I don't believe for a second that they did it in response to losing business to online storefronts; rather, I think it's far more likely that they did it in response to other retail chains doing the same. Their customers came to expect it, so they obliged, as a marketing tactic to make sure their retail competition didn't have that as an edge. Their price match policy is also pretty strict; they won't match just anything on Amazon, it has to have some degree of verification and be from a trusted seller. (Especially for things like iPads / common fake listings, etc.) Last time I checked it had to be "Sold and shipped by Amazon" but that might have changed, it's been a while. (Source: I worked at a Best Buy store for about 4 years.)
    - gedy 8y ago
      That doesn't work if Amazon, et al can charge less than you can charge to "showroom" them for. People don't pay for expertise, etc online, they buy the cheapest.
      - bobthepanda 8y ago
        Chain stores are like car dealerships; you don't actually need them to sell branded products, they're just a middleman that makes it easier if you don't care about that type of stuff. The rise of Amazon, and the rise of brands that 100% own the physical display of their wares and don't use Amazon (e.g., Warby Parker), are putting the middlemen out of business. Unless you offer some customer service experience that is hard to duplicate (independent bookstores and their curation, Sephora with its makeup gurus, etc.) your middleman store is going to have a rough time.
  - lozaning 8y ago
    Sounds like someone needs to Start-Up a showroom for electronics. Im imagining that the model would be to charge flat rate fees to device manufacturers for floor space on the showroom. If you remove the need to drive revenue from end user purchases it wouldn't matte where they actually buy.
    - swimfar 8y ago
      They have a few stores like this in the Bay Area. I think it's a great idea, but I haven't been to one yet. https://b8ta.com/ https://b8ta.com/
      - ihartley 8y ago
        They're interesting. The one by me feels like a sharper image with 20 products, but they're fairly high quality/price. They seem to have about 20% turnover of new products every time I drop in which is maybe every two months or so. The products seems somewhat split between things I'd want to see before I bought, some of which made me not want to buy them, and things I wouldn't: I do want to see digital picture frames to see they still haven't gotten the resolution high enough, and I liked being able to try bone-conduction headphones without having to buy them, but I don't need to see wifi routers in person before I buy one.
    - deleted 8y ago
      [deleted]
  - luddaite 8y ago
    I've recently started doing the opposite. I'll search Amazon to see what products are recommended and see if I can find those (or something similar) in local stores. This is particularly true when I am buying something that I don't know much about. I basically use Amazon as initial research to discover what properties I should be looking for in an item.
    - SyneRyder 8y ago
      Same here. I was looking for items on the new Amazon Australia, then noticed one of the stores selling on Amazon is just a couple of train stops away from me. It made me realize I should check their own website, and they'll sell it to me for $50 cheaper if I don't go through Amazon ($65 if I include the shipping).
  - technobabble 8y ago
    Sears, despite their bumblings, had a half-baked solution to this. At some of them, you'd pick the product on a showroom floor, grab a ticket (like for a meat counter), then, at a waiting area by the entrance, you'd have your fridge/washer/air conditioner wheeled out to your car.
  - ppseafield 8y ago
    Best Buy for instance does price matching with Amazon, so if you're already there, you can buy it now vs. waiting on a package.
- dpeck 8y ago
  And that is a lot of what Best Buy has transformed itself into, a brand showroom, and its thriving.
- kalleboo 8y ago
  I recently bought a 4K monitor in a physical store. I was worried about how 4K over USB-C, HiDPI scaling etc were going to be supported with my Mac. At the store I was allowed to plug in my own laptop to their display model and give Xcode a spin to see how the display looked in my regular workflow/text size/etc. The price was the same as Amazon once you discounted their loyalty card earnings.
rossdavidh 8y ago
So, one thing I didn't know for a long time was that grocery stores charge the producers of packaged goods for shelf space. Grocery stores buy the produce, around the periphery, but in many cases just rent the shelf space to the manufacturers of the finished products. Presumably this is not always the case, I'm not expert in that sector. But I wonder if the solution to the "Amazon's showroom" problem is to imitate the grocery store model. I note that Amazon felt compelled to buy a grocery store chain, in order to get a purchase in that sector.
- jsiepkes 8y ago
  I wonder how much that really matters. In the end a brand has a certain amount of money it can "give" the grocery; They can give this money by buying shelf space, lowering purchase prices, giving marketing money, etc. But it the end the size of the bag of money is still the same.
  - rossdavidh 8y ago
    True, but the division of that bag of money between the showroom and the shipping department could be different.
- thaumasiotes 8y ago
  > Grocery stores buy the produce, around the periphery, but in many cases just rent the shelf space to the manufacturers of the finished products. Presumably this is not always the case There's an interesting balancing dynamic there. Brands really like to be at or below eye level. On the other hand, if I went to a grocery store and the store didn't carry Oreos, I would have a pretty negative opinion of that store (and I don't even like Oreos, personally). Based on that, I assume famous brands have a good amount of market power relative to stores. But I care very little about what shows up in the toilet paper aisle; I would guess payment-for-placement is more significant over there.
  - bobthepanda 8y ago
    You may not shop there because there are Oreos. But Oreo is not negotiating in a vacuum; they have to fight off the Keeblers and the Chips Ahoy and the Pepperidge people for that same shelf space. You don't want to wind up in a situation where your competitors have better placement than you (e.g., Uber ads being shown above the fold in a search for Lyft).
mjevans 8y ago
Physical stores also SHOULD have a benefit that Amazon seems to have no will to address. Quality control. If you do have an item through a retail store with a physical presence, not only should (common) items be there at any time, they should also be of actual durable quality.
- NullPrefix 8y ago
  I can't follow the point you're trying to make. Are you suggesting that retail employees could inspect the merchandise before giving it to the customer?
  - bunderbunder 8y ago
    Brick and mortar retailers use a supply chain that is much more resistant to adulteration with counterfeit products than Amazon's is.
  - rarec 8y ago
    Amazon has incredibly poor quality control depending on what you're buying. On the other hand, if you buy something retail, you can A. see it yourself first and B. have a physical store you can return it to.
  - luddaite 8y ago
    I ordered new electric toothbrush heads from Amazon about a year ago and ended up receiving a very obvious knockoff product. It might be my fault for not reading the listing carefully but this definitely would not have happened in a brick and mortar where I can pick up the product and see that it isn't some off-brand mimic.
  - wlesieutre 8y ago
    Because they’re shipping stuff supplied by random “merchants,” Amazon has no idea whether the products they sell you are authentic or fake. For a major example of this, Apple sued sellers over knockoff (and potentially hazardous) USB chargers being sold as official Apple chargers. “Shipped and sold by Amazon” and as far as customers can tell, it’s the real thing. https://www.theverge.com/2016/10/20/13343682/fake-apple-chargers-amazon-lawsuit https://www.theverge.com/2016/10/20/13343682/fake-apple-char... Best Buy’s supply chain doesn’t have this problem. This is common across all sorts of products. A shoe company (I forget which) stopped selling on Amazon because they couldn’t do anything about being mixed in with all the fakes, and fountain pens bought there (Lamy Safari in particular) have good odds of being Chinese knockoffs of questionable quality.
deleted 8y ago
[deleted]
no_wizard 8y ago
One could look at Apple and it’s retail stores of the exact phenomenon that is making retail stores important again with the caveat of the stores must significantly differentiate itself on some basis relative to competitors Stratechery has a great write up in this (albeit a few years old, it’s still largely applicable) It’s that last example that resonates when talking about retail especially. To buy a designer bag is an event: you’re greeted at the door, given a drink, have an attendant on hand at all times (who will model the bag for you, if need be); if you purchase it’s almost like a ceremony, complete with special packaging, congratulations (for them taking your money!), and perhaps a follow-up call a day or two later. Obviously given its scale an Apple Store isn’t quite the same, but it’s in the ballpark, especially relative to the buying experience for most electronics. Moreover, it’s the after-sale experience that is arguably the best part: you’re given help setting up your new device, transferring files, invited to classes to learn how to use your purchase, and assured that a genius is ready-and-waiting to take care of any problems that arise https://stratechery.com/2014/apple-stores-innovators-dilemma/ https://stratechery.com/2014/apple-stores-innovators-dilemma...
- scarface74 8y ago
  Apple isn’t selling low margin products and while its stores are very profitable, it has never been solely focused on profit and loss. It is almost a marketing tool. Tim Cook fired one chief of retail store operations within six months after he realized that the guy didn’t get that.
  - mprev 8y ago
    As an aside, that was a startling hire in the first place. Curry’s electronics stores, at the time, were the polar opposite of the Apple Store experience.
    - Marazan 8y ago
      John Gruber trying to convince himself at the time it was a great hire was hilarious. A completely inexplicable decision.
purplezooey 8y ago
More in their pockets from the tax cuts, eh. Yeah. ok.
jayalpha 8y ago
Many small retail stores are so far beyond. - Non-existent or rude service. - Sales flea market style - you can only buy things that you can see. No, we don't have this shoe in another size. No, we can not order anything for you. - Sales Tax reimbursement (20% in Europe)? We don't do this. - Closed on Sundays by law. Shopping is no fun.

87 points by gk1 8y ago

“These are big shifts,” said Craig Johnson, president of Customer Growth Partners, a research and consulting firm. “It is like turning around the Queen Mary. You can turn the rudder, but it takes time to gain a purchase.” To my mind, most physical stores ought to be like showrooms: innumerable products are hard to judge solely from pictures and text descriptions but easy to judge with ten seconds in person. Let online and off converge.

qualitative 8y ago
Okay, but there's the old Amazon's showroom problem. People go to the store, look at the thing, then, maybe buy it online anyway, for any number of reasons. Net effect, physical locations become showrooms that move very little actual product, and fail to close the expected number of sales.
- kreutz 8y ago
  They buy online because of the difficulty surrounding getting it home - with that problem fixed I imagine the Amazon showroom problem is no longer a problem.
- gk1 8y ago
  I think that's exactly what parent is suggesting: The physical store should be for letting people try and touch items, before they buy them from your website. Warby Parker, Bonobos, and (in some states) Tesla already do this.
  - scarface74 8y ago
    That’s fine if you are selling your own product in the store and online. Apple doesn’t care if you use thier store as a showroom and buy an iPhone from the carrier. That doesn’t work if you are Best Buy.
    - nordsieck 8y ago
      >> The physical store should be for letting people try and touch items, before they buy them from your website. > That doesn’t work if you are Best Buy. Apparently it does work if you're Best Buy. > we price match products shipped from and sold by these major online retailers: Amazon.com ... https://www.bestbuy.com/site/help-topics/best-buy-price-match-guarantee/pcmcat297300050000.c?id=pcmcat297300050000 https://www.bestbuy.com/site/help-topics/best-buy-price-matc...
      - travmatt 8y ago
        If I’m understanding your comment correctly, you believe the fact that Best Buy has been forced to price match as a way to stop losing business is evidence that they’re not losing business?
        zeta0134 8y ago
        Nah, it's that Best Buy doesn't make most of its money on the items they price match. Their big sellers are their mobile department and all the accessories folks like to pick up with their new purchase, which are very often store exclusives and have incredibly high margins. They make a killing on chargers, adapters, phone cases, you name it, but actually make tiny margins on a lot of their "core" items. The big ticket item they price match is often kicked back by the vendor anyway, so the store doesn't lose out when they do it. Their goal is just to get folks in the door, and let the momentum of a good sales interaction close the deal. (Questionable on the "good," they're admittedly not very good at screening / training, but in aggregate this strategy works well for them.) Best Buy price matches because it gets people in the store. I don't believe for a second that they did it in response to losing business to online storefronts; rather, I think it's far more likely that they did it in response to other retail chains doing the same. Their customers came to expect it, so they obliged, as a marketing tactic to make sure their retail competition didn't have that as an edge. Their price match policy is also pretty strict; they won't match just anything on Amazon, it has to have some degree of verification and be from a trusted seller. (Especially for things like iPads / common fake listings, etc.) Last time I checked it had to be "Sold and shipped by Amazon" but that might have changed, it's been a while. (Source: I worked at a Best Buy store for about 4 years.)
  - gedy 8y ago
    That doesn't work if Amazon, et al can charge less than you can charge to "showroom" them for. People don't pay for expertise, etc online, they buy the cheapest.
    - bobthepanda 8y ago
      Chain stores are like car dealerships; you don't actually need them to sell branded products, they're just a middleman that makes it easier if you don't care about that type of stuff. The rise of Amazon, and the rise of brands that 100% own the physical display of their wares and don't use Amazon (e.g., Warby Parker), are putting the middlemen out of business. Unless you offer some customer service experience that is hard to duplicate (independent bookstores and their curation, Sephora with its makeup gurus, etc.) your middleman store is going to have a rough time.
- lozaning 8y ago
  Sounds like someone needs to Start-Up a showroom for electronics. Im imagining that the model would be to charge flat rate fees to device manufacturers for floor space on the showroom. If you remove the need to drive revenue from end user purchases it wouldn't matte where they actually buy.
  - swimfar 8y ago
    They have a few stores like this in the Bay Area. I think it's a great idea, but I haven't been to one yet. https://b8ta.com/ https://b8ta.com/
    - ihartley 8y ago
      They're interesting. The one by me feels like a sharper image with 20 products, but they're fairly high quality/price. They seem to have about 20% turnover of new products every time I drop in which is maybe every two months or so. The products seems somewhat split between things I'd want to see before I bought, some of which made me not want to buy them, and things I wouldn't: I do want to see digital picture frames to see they still haven't gotten the resolution high enough, and I liked being able to try bone-conduction headphones without having to buy them, but I don't need to see wifi routers in person before I buy one.
  - deleted 8y ago
    [deleted]
- luddaite 8y ago
  I've recently started doing the opposite. I'll search Amazon to see what products are recommended and see if I can find those (or something similar) in local stores. This is particularly true when I am buying something that I don't know much about. I basically use Amazon as initial research to discover what properties I should be looking for in an item.
  - SyneRyder 8y ago
    Same here. I was looking for items on the new Amazon Australia, then noticed one of the stores selling on Amazon is just a couple of train stops away from me. It made me realize I should check their own website, and they'll sell it to me for $50 cheaper if I don't go through Amazon ($65 if I include the shipping).
- technobabble 8y ago
  Sears, despite their bumblings, had a half-baked solution to this. At some of them, you'd pick the product on a showroom floor, grab a ticket (like for a meat counter), then, at a waiting area by the entrance, you'd have your fridge/washer/air conditioner wheeled out to your car.
- ppseafield 8y ago
  Best Buy for instance does price matching with Amazon, so if you're already there, you can buy it now vs. waiting on a package.
dpeck 8y ago
And that is a lot of what Best Buy has transformed itself into, a brand showroom, and its thriving.
kalleboo 8y ago
I recently bought a 4K monitor in a physical store. I was worried about how 4K over USB-C, HiDPI scaling etc were going to be supported with my Mac. At the store I was allowed to plug in my own laptop to their display model and give Xcode a spin to see how the display looked in my regular workflow/text size/etc. The price was the same as Amazon once you discounted their loyalty card earnings.

rossdavidh 8y ago

So, one thing I didn't know for a long time was that grocery stores charge the producers of packaged goods for shelf space. Grocery stores buy the produce, around the periphery, but in many cases just rent the shelf space to the manufacturers of the finished products. Presumably this is not always the case, I'm not expert in that sector. But I wonder if the solution to the "Amazon's showroom" problem is to imitate the grocery store model. I note that Amazon felt compelled to buy a grocery store chain, in order to get a purchase in that sector.

jsiepkes 8y ago
I wonder how much that really matters. In the end a brand has a certain amount of money it can "give" the grocery; They can give this money by buying shelf space, lowering purchase prices, giving marketing money, etc. But it the end the size of the bag of money is still the same.
- rossdavidh 8y ago
  True, but the division of that bag of money between the showroom and the shipping department could be different.
thaumasiotes 8y ago
> Grocery stores buy the produce, around the periphery, but in many cases just rent the shelf space to the manufacturers of the finished products. Presumably this is not always the case There's an interesting balancing dynamic there. Brands really like to be at or below eye level. On the other hand, if I went to a grocery store and the store didn't carry Oreos, I would have a pretty negative opinion of that store (and I don't even like Oreos, personally). Based on that, I assume famous brands have a good amount of market power relative to stores. But I care very little about what shows up in the toilet paper aisle; I would guess payment-for-placement is more significant over there.
- bobthepanda 8y ago
  You may not shop there because there are Oreos. But Oreo is not negotiating in a vacuum; they have to fight off the Keeblers and the Chips Ahoy and the Pepperidge people for that same shelf space. You don't want to wind up in a situation where your competitors have better placement than you (e.g., Uber ads being shown above the fold in a search for Lyft).

mjevans 8y ago

Physical stores also SHOULD have a benefit that Amazon seems to have no will to address. Quality control. If you do have an item through a retail store with a physical presence, not only should (common) items be there at any time, they should also be of actual durable quality.

NullPrefix 8y ago
I can't follow the point you're trying to make. Are you suggesting that retail employees could inspect the merchandise before giving it to the customer?
- bunderbunder 8y ago
  Brick and mortar retailers use a supply chain that is much more resistant to adulteration with counterfeit products than Amazon's is.
- rarec 8y ago
  Amazon has incredibly poor quality control depending on what you're buying. On the other hand, if you buy something retail, you can A. see it yourself first and B. have a physical store you can return it to.
- luddaite 8y ago
  I ordered new electric toothbrush heads from Amazon about a year ago and ended up receiving a very obvious knockoff product. It might be my fault for not reading the listing carefully but this definitely would not have happened in a brick and mortar where I can pick up the product and see that it isn't some off-brand mimic.
- wlesieutre 8y ago
  Because they’re shipping stuff supplied by random “merchants,” Amazon has no idea whether the products they sell you are authentic or fake. For a major example of this, Apple sued sellers over knockoff (and potentially hazardous) USB chargers being sold as official Apple chargers. “Shipped and sold by Amazon” and as far as customers can tell, it’s the real thing. https://www.theverge.com/2016/10/20/13343682/fake-apple-chargers-amazon-lawsuit https://www.theverge.com/2016/10/20/13343682/fake-apple-char... Best Buy’s supply chain doesn’t have this problem. This is common across all sorts of products. A shoe company (I forget which) stopped selling on Amazon because they couldn’t do anything about being mixed in with all the fakes, and fountain pens bought there (Lamy Safari in particular) have good odds of being Chinese knockoffs of questionable quality.

deleted 8y ago

[deleted]

no_wizard 8y ago

One could look at Apple and it’s retail stores of the exact phenomenon that is making retail stores important again with the caveat of the stores must significantly differentiate itself on some basis relative to competitors Stratechery has a great write up in this (albeit a few years old, it’s still largely applicable) It’s that last example that resonates when talking about retail especially. To buy a designer bag is an event: you’re greeted at the door, given a drink, have an attendant on hand at all times (who will model the bag for you, if need be); if you purchase it’s almost like a ceremony, complete with special packaging, congratulations (for them taking your money!), and perhaps a follow-up call a day or two later. Obviously given its scale an Apple Store isn’t quite the same, but it’s in the ballpark, especially relative to the buying experience for most electronics. Moreover, it’s the after-sale experience that is arguably the best part: you’re given help setting up your new device, transferring files, invited to classes to learn how to use your purchase, and assured that a genius is ready-and-waiting to take care of any problems that arise https://stratechery.com/2014/apple-stores-innovators-dilemma/ https://stratechery.com/2014/apple-stores-innovators-dilemma...

scarface74 8y ago
Apple isn’t selling low margin products and while its stores are very profitable, it has never been solely focused on profit and loss. It is almost a marketing tool. Tim Cook fired one chief of retail store operations within six months after he realized that the guy didn’t get that.
- mprev 8y ago
  As an aside, that was a startling hire in the first place. Curry’s electronics stores, at the time, were the polar opposite of the Apple Store experience.
  - Marazan 8y ago
    John Gruber trying to convince himself at the time it was a great hire was hilarious. A completely inexplicable decision.

purplezooey 8y ago

More in their pockets from the tax cuts, eh. Yeah. ok.

jayalpha 8y ago

Many small retail stores are so far beyond. - Non-existent or rude service. - Sales flea market style - you can only buy things that you can see. No, we don't have this shoe in another size. No, we can not order anything for you. - Sales Tax reimbursement (20% in Europe)? We don't do this. - Closed on Sundays by law. Shopping is no fun.