Thinning the Herd
What’s wrong with retail?
With just about every economic figure working to its advantage—from lower unemployment rates to less expensive oil prices that are freeing up disposable income for consumers—one would think that retail would be experiencing its best times since the boom days of the mid to late 1990s.
Well, it’s not. In fact, merchants, from giants like Walmart, Macy’s and Bed, Bath & Beyond to small players like the independent vitamin store and pet store in my neighborhood that went out of business over the last four months, are suffering. Consumers are staying away in droves and that is forcing many merchants to rethink their merchandising strategies as well as invest more money into marketing.
Why? There are a number of reasons. The first, of course, is the growth of the Internet and its dramatic impact on traditional retailers’ sales, not to mention their overall business model. Amazon.com, all by itself, has forced many traditional retailers to revamp their pricing strategies to compete with the digital giant, which simply does not seem to care whether it makes money now or not.
Another is the fact that consumers are making fewer shopping trips. With more hectic and demanding lifestyles, many shoppers have cut down on the number of shopping trips they take. While they may get more done when they do go shopping, there is no doubt that fewer trips means less money spent in-store.
But the biggest reason for the stagnant retail community is the retailers themselves. The seeds planted by many retailers during the halcyon days of the late 1990s and the early years of this century have resulted in a dramatic over-population of stores through much of the country. The bottom line is that there are simply too many stores selling the same products, and that is hurting most retailers these days.
The pet category is right there at the top. A rush to build that only recently abated has caused an over-saturated environment for pet products. The retrenchment that is now taking place will make those survivors stronger, with better prospects for the long term.
Whatever the reason, it is important that retailers do all they can to separate their business model from the guy down the street. The survivors in this battle will be the merchants who make a difference in consumers’ minds.