Retail Apocalypse aka The E-Commerce Thread

Qhue · Dec 26, 2017

US mall operators must buy into e-retail and new use of space

Toys R Us Teetering on the Brink of Collapse, UK Retail Sector Crisis Perfect Storm :: The Market Oracle ::

Sears Strikes Second Deal With Amazon as Core Business Continues to Collapse

As we exit the holiday season I can't help but think of the 'retail apocalypse' which has long been prophesied and which now does seem to be well underway. The main culprit has long been the rise of mega-discount retailers like Wal-Mart which are able to have a stranglehold on the market and thus dictate terms to manufacturers, but clearly Amazon has an enormous role to play as well.

I personally purchased every single x-mas gift online this year, almost all of them from Amazon, this is not terribly unusual I feel... what IS worth noting is that I set out a couple weeks in advance intending to only or at least mostly shop at brick-and-mortar retailers, ideally ones that were locally owned. At every turn I found myself stymied by a combination of lack of inventory and incredibly poor physical implementation.

In one instance I found what I was looking for at a physical store but there were exactly zero carts available (it was a very awkward shaped box ill-suited to lugging across the store). After searching around in vain I thumbed open the Amazon app while standing in the entranceway of the store, saw that Amazon could have it delivered in 2 days for 30% less than I would pay at the physical store and said 'fuck it' and tapped buy now.

In another instance I found the item I wanted, moved to the front of the store and saw incredibly ridiculous long lines with only 4 cashiers working. Given that the store was fairly empty I figured this was just a temporary density surge and went to wander around other sections for a bit. Returned ~15 mins later and the lines were even longer! I got into the line corresponding to what looked like the more competent of the retail employees and proceeded to wait... and wait... finally I measured that the woman was taking upwards of 5-6 mins per transaction, saw that I was more than 10 people back in line and decided life was too short and left.

I don't understand what the hell is going through the heads of the people running the retail industry. Surely to god they can do the basic market research necessary to determine what sorts of products benefit most from having an in-person sales decision and thus warrant increased diversity of inventory and which require just having more quantity of staple items. In the case of the massively long line it wasn't for lack of employees... I actually saw 10 other employees standing within sight of the check-out area doing various other tasks and yet only 4 out of 16 lanes were open.

Maybe its best that the old giants like Macy's, Sears, Toys-R-Us, etc. just die off. I have to imagine that someone will be able to decide what sorts of products can best benefit from a physical showroom and build a more modest 'department store' based around just such a concept while retaining a robust online presence for the sales and distribution of products which require no in-person consideration.

Araysar · Dec 26, 2017

Its not a collapse of retail, its a collapse of poorly run companies. Sears alone has been mismanaged basically for this entire century (almost 20 years) and Toys R Us had lousy management too.

Retail is booming. B&M retail is not as hot as used to be, but retail by itself is the best its ever been.

Cybsled · Dec 26, 2017

It wouldn't surprise me if the retail check outs you experienced were because of attempts to upsell high margin fluff items (warranties/credit cards/random shit). I recall having to push staff heavily on that and we weighted their performance on how much they successfully pushed long ago.

Hour budgets for employees is also one of the first things they gut

Kiroy · Dec 26, 2017

Araysar said:
Its not a collapse of retail, its a collapse of poorly run companies. Sears alone has been mismanaged basically for this entire century (almost 20 years) and Toys R Us had lousy management too.

Retail is booming. B&M retail is not as hot as used to be, but retail by itself is the best its ever been.

As someone in retail this is correct. Niche BM "boutique" retail (when done right of course) is absolutely killing it right now.

It's mostly big box that's getting buttfucked because even if they had competent leadership (most don't) the majority are far too large to pivot within a reasonable timeline.

Araysar · Dec 26, 2017

Kiroy said:
As someone in retail this is correct. Niche BM "boutique" retail (when done right of course) is absolutely killing it right now.

It's mostly big box that's getting buttfucked because even if they had competent leadership (most don't) the majority are far too large to pivot within a reasonable timeline.

Sears tried an Amazon type of approach, including point promotions called ShopMyWay or something like that but it was an unmitigated disaster.

I worked as an exec for one of the largest retail e-com companies in the world for several years, and then I owned my own multi-million dollar e-com retail operation for half a decade so I've been around the e-com business on every level for a decade now. Like Kiroy said, what you are effectively describing is the inability of the old B&M dinos to pivot around quickly enough to make those changes. They need to dump these hundreds of store locations to be more effective, they need to slash a lot of overhead and employees, they need to start OEM'ing more product in order to reduces their own costs and to sidestep price wars on common products, and more importantly they need to significantly improve their distribution models and systems.

pharmakos · Dec 26, 2017

a_skeleton_03 appointed a millionaire e-com CEO moderator? And he said he was going to drain the swamp...

Araysar · Dec 26, 2017

pharmakos said:
a_skeleton_03 appointed a millionaire e-com CEO moderator? And he said he was going to drain the swamp...

Why do you think I'm so good at "The Metrics"

zzeris · Dec 26, 2017

Good topic. Brosar and Kiroy have stated the new market and how it will function. Smaller, leaner companies that either offer specific exclusives, or provide superior product offerings will make a killing. Dinosaurs will die but understanding your customer base has always been the most effective way to 'win'. Walton understood this better than anyone and their move into groceries has helped keep them afloat until they adjusted.

We are almost past the point of needing poorly motivated and educated people in retail and fast food. Personally, I love it, but it's not only the dinosaurs that will have to adjust but their lazy, facile workforce as well. Baristas, unite..in the welfare line!

gshurik · Dec 26, 2017

My dad has been self employed for about 25 years now, and he's always managed to keep ahead of the curve.

He started selling toys (board games, Christmas gifts) before the internet boom and did well with it, but found it to be incredibly seasonal. He started selling video games about 21 years ago.

Back then new video games had no market. People were buying from high street specialists who could provide better prices due to being able to buy in bulk. We both started doing a trade-in system where you could part-ex your games toward another game, and we sold a lot of weird second hand titles. It was at that point that we realised that we could sell these, because nobody else was offering that service. Trading in wasn't a thing in the high-street yet and people felt like they could trade a game and £5 for a new title. They won because they got a new game, and we won because we had a new game to sell and a £5 profit.

About the time the internet and internet retail started to kick off, video games were massively tapering off. People were buying new for the same price as second hand on Amazon, and the only thing we could really sell at that point was specifically niche titles. It got so bad that the store nearly shut down so my dad decided to start another venture which is cell phones and he still does it now.

He's making more money than he ever has repairing, and selling cell phone parts. He sells his expertise on it rather than the actual product and that is a service you can't buy online with instant gratification.

The key thing I learned about BM retail is that you need to sell a service that is a lot more cumbersome online. You need to sell a service that nobody can replicate without learning a skill or teaching yourself something. I think retail as we know it will die, but I think there's an opportunity for small business to do well selling expertise.

Kiroy · Dec 26, 2017

zzeris said:
Good topic. Brosar and Kiroy have stated the new market and how it will function. Smaller, leaner companies that either offer specific exclusives, or provide superior product offerings will make a killing. Dinosaurs will die but understanding your customer base has always been the most effective way to 'win'. Walton understood this better than anyone and their move into groceries has helped keep them afloat until they adjusted.

We are almost past the point of needing poorly motivated and educated people in retail and fast food. Personally, I love it, but it's not only the dinosaurs that will have to adjust but their lazy, facile workforce as well. Baristas, unite..in the welfare line!

Walmart has a pretty good aquisition strategy to sort of game the behemoth attempting to pivot system. They are buying up the lean folks and letting them continue to do their thing fairly autonomously while keeping their assossociation as far from the consumer mind as possible.

Anyone familiar with modcloth? Probably not, but if you are i betcha you didnt know walmart owned them. Bought em out a year or two ago for an estimated ~50 mil.

Araysar · Dec 26, 2017

I think softlines B&M will still endure for a long time, so there is still lots of opportunity for people who sells specific, unique lifestyle clothing, etc. but as far as hardlines go, its fucking over.

pharmakos · Dec 26, 2017

How is Best Buy doing these days?

Frenzied Wombat · Dec 26, 2017

Methinks that the big box stores need to turn into pickup depots for orders placed online, rather than having multiple large sq-ft stores across the city. Maintain one large central location store where consumers can see/touch the items, then multiple depots across the city where items can be picked up, or issue deliveries from. This is the only scenario I can think of where I might favor a Best Buy over my Amazon Prime membership that delivers almost anything next day, and a lot of things same day-- a situation where I can see/touch what I want, and still have it available the same day.

Ironically, back in the '70's in Canada there was a store called "Consumer's Distributing". Their storefront was nothing more than a bunch of counters and paper catalogs filled with thousands of items, some paper order slips and pencils, a cashier, and a conveyor belt where your item would come out. As a kid I would spend *hours* pouring through that catalog and circling everything I wanted. In any case, this allowed them to maximize stock while minimizing floor space and employee headcount. Something similar today, except you do the ordering online, sounds to be the only cure to the big box store problem. Amazon Prime is really fucking hard to beat all around.

Araysar · Dec 26, 2017

pharmakos said:
How is Best Buy doing these days?

Serious question? Theyve done well in past few years but cost cutting and massive stock buyback played a heavy role in that. Overall they have growth, but its anemic considering what Walmart and Amazon are doing.

Dashel · Dec 26, 2017

It's just a huge paradigm shift from big box to online. I sell on Amazon, I love competing against big brands because they do not understand Amazon yet.

They are catching on so it's getting a tiny bit more difficult. However they can't be nearly as nimble and their customer service is non-existent.

In the past the challenge was getting past the gatekeepers of a Sears or Target or whatever else. You get in as 1 of a small handful of that product, and people who were in the store had that limited choice. Here are 3 water bottles, pick one.

Now it's who gets ranked higher in search, who has features people want, who has good reviews, who has a good story and is well branded.

These big brands are enormous and it will take time to try to shift to the new model.

In the mean time, retailers like Sears... I just don't see how they compete. They need an advantage of being able to see the products in person. A reason people will go there. Why go when shipping is fast and free, infinite choices, you can see reviews online, and get it for the same price or better without leaving your home?

Maybe they can restructure as a more personalized retail experience. You can try on items, see and try gadgets in person. Or be Wallmart and just be a huge price discount I guess. Maybe have some services that really tailor things to your specific needs that you would have to show up in person for.

Araysar · Dec 26, 2017

Dashel said:
It's just a huge paradigm shift from big box to online. I sell on Amazon, I love competing against big brands because they do not understand Amazon yet.

They are catching on so it's getting a tiny bit more difficult. However they can't be nearly as nimble and their customer service is non-existent.

In the past the challenge was getting past the gatekeepers of a Sears or Target or whatever else. You get in as 1 of a small handful of that product, and people who were in the store had that limited choice. Here are 3 water bottles, pick one.

Now it's who gets ranked higher in search, who has features people want, who has good reviews, who has a good story and is well branded.

These big brands are enormous and it will take time to try to shift to the new model.

In the mean time, retailers like Sears... I just don't see how they compete. They need an advantage of being able to see the products in person. A reason people will go there. Why go when shipping is fast and free, infinite choices, you can see reviews online, and get it for the same price or better without leaving your home?

Maybe they can restructure as a more personalized retail experience. You can try on items, see and try gadgets in person. Or be Wallmart and just be a huge price discount I guess. Maybe have some services that really tailor things to your specific needs that you would have to show up in person for.

Sears is over. I worked for them when I was in high school as a salesman, and then ironically enough I had them as an e-com marketing client ~15 years later in 2014. This company is beyond buttfucked. At this point they are selling off their real estate and core brands (they just sold Die Hard batteries and Craftsman tools) just to come up with cash.

Eddie Lampert drove it into the ground.

Chukzombi · Dec 26, 2017

i think clothing stores are going to collapse first, if they havent already. people go into a clothing store, try on the clothes, leave without buying them and then go home and order the same thing they liked in the B%M store online for much less the cost. when the clothing stores are gone, people will be stuck buying items that dont fit them properly. i know some places have return policies where you can send back the item for a better size, but its a pain in the ass. when i order my hats they dont always fit right. i tend to buy larger than usual because if i buy too small i'm screwed. if my hat is too big i can at least bend them down inward for a tighter fit.

Araysar · Dec 26, 2017

Chukzombi said:
i think clothing stores are going to collapse first, if they havent already. people go into a clothing store, try on the clothes, leave without buying them and then go home and order the same thing they liked in the B%M store online for much less the cost. when the clothing stores are gone, people will be stuck buying items that dont fit them properly. i know some places have return policies where you can send back the item for a better size, but its a pain in the ass. when i order my hats they dont always fit right. i tend to buy larger than usual because if i buy too small i'm screwed. if my hat is too big i can at least bend them down inward for a tighter fit.

Here's a guy whom you should never let manage your store.

Frenzied Wombat · Dec 26, 2017

Chukzombi said:
i think clothing stores are going to collapse first, if they havent already. people go into a clothing store, try on the clothes, leave without buying them and then go home and order the same thing they liked in the B%M store online for much less the cost. when the clothing stores are gone, people will be stuck buying items that dont fit them properly. i know some places have return policies where you can send back the item for a better size, but its a pain in the ass. when i order my hats they dont always fit right. i tend to buy larger than usual because if i buy too small i'm screwed. if my hat is too big i can at least bend them down inward for a tighter fit.

Maybe mass generic clothing stores, but definitely not female centric clothing stores or anything remotely designer.. Women like to try shit on, like going, and seemingly love buyer's remorse and the ability to exchange/return something the next day. I can count the number of clothing items I've returned/exchanged in the course of my life on a single hand, but women exchange/return clothing *constantly*.

Cutlery · Dec 26, 2017

Cybsled said:
It wouldn't surprise me if the retail check outs you experienced were because of attempts to upsell high margin fluff items (warranties/credit cards/random shit). I recall having to push staff heavily on that and we weighted their performance on how much they successfully pushed long ago.

Hour budgets for employees is also one of the first things they gut

It's also because every fucking retailer you go to now has a rewards program and every single fucking person out there feels they need to sign up for every one of them, but can't remember which phone number they used to sign up for it, so every transaction ends up taking 3 minutes longer while they look up pointless shit.

Do you remember when we used to be able to exchange cash for goods and services? I fucking swear that was a thing. If I come up to your register with one item and cash in hand, I do not have your shitty perks program, and I do not want to sign up for your shitty perks program. Nor do I want to fill out a fucking survey or donate to charity or anything else. I want to BUY THIS PRODUCT NOW.

If I wanted this product tomorrow or 2 days from now, I would order it online. But I don't, I want it now. Streamline your fucking service to give it to me now. How hard is that?

The other problem is the credit card chip. Do you remember how long a swipe took? Absolutely nothing, no time at all. Transaction approved. Now it's insert the chip, wait around for a cashier to press a button, wait around for another 30 seconds for the transaction to process, then sign on a pad where your signature is never even close to legible, then wait for the cashier to push a button to accept it, then get a mile of fucking receipt tape printed.

There's nothing inherently wrong with retail, they've just made it completely fucking aggravating to purchase anything. Make it so I can get what I want in a reasonable amount of time and I'd be happy to shop there.

Retail Apocalypse aka The E-Commerce Thread

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