A few years ago Canadian retailers were going out of business: Futureshop, Mexx, and Target in Canada went bankrupt.
In my city, Winnipeg, the big empty shell of the brand new Target store still sits empty, no one knows what to do with the big empty purpose-built building in prime retail space.
Warren Buffet just sold all of his stock in Wal-Mart, and this is just the beginning of the retail apocalypse.
In America, they have roughly 3 times the retail space per person when compared to Canada and with retail store closing all over America, there will be record levels of empty retail space.
Malls are abandoned and being bulldozed. There is an oversupply of space and now the market is correcting.
E-commerce, and Amazon are destroying retail businesses at record pace.
Free same day shipping, free one day shipping, free two day shipping. E-commerce is destroying the entire retail sector.
This is similar to how Netflix destroyed Blockbuster. Blockbuster had a worse experience for the customer, you had to drive, park, go in the store, walk around the store finding a movie, rent it, watch it, bring it back, get late fees and the whole experience sucked.
Netflix lets you order a pizza and watch your movie naked in your bed.
Blockbuster couldn’t compete and became extinct like the dinosaurs.
The retail experience of Blockbuster was WORSE than Netflix’s experience of going online and watching movies with one click of a mouse.
The retail apocalypse continues:
Circuit city closed, Zellers in Canada closed, Kmart went bankrupt, Sears fears it will go bankrupt.
Meanwhile, Amazon, the ecommerce giant, just bought Whole Foods.
Walmart and Amazon are going to war right now.
Amazon offers ultra low prices and free shipping, to compete Walmart, Amazon has introduced a new option online: “buy online and pickup at the store for less than free shipping”.
It’s a race to the bottom for the lowest price.
All markets start out with high prices and high profit and as competition becomes fierce, prices begin to drop, profits begin to drop and later become razor thin. The market will always force goods and services down to commodity status.
Coffee, sugar, bacon, wheat, bananas, chocolate, those are all commodities and consumers pay the lowest possible prices for commodities.
How can your business survive the retail onslaught that is happening across the world?
There is one way to build a moat around your precious business and protect it from raiders like Jeff Bezos and his tribe of Amazonians.
The one thing that Amazon cannot give you, and no ecommerce retailer can really bring you, is:
A fantastic brand experience
Excellent service
I recently bought a Visconti pen online through eBay for roughly 20% cheaper than I would have got it at a local retailer in the city.
A Visconti Pen is a luxury pen that retails for roughly $360 CDN and I bought mine online for roughly $300 CDN.
The pen showed up and was beautiful, authentic and was exactly what I wanted.
I am sad to admit that I shopped at the local retailer in the city, found a pen I wanted, then undercut the retailer by going online to save 20%.
Things were great until I dropped the pen and the resin barrel shattered.
This pen was a luxury fountain pen and retails for roughly $360. I wanted to send it back to ebay where I bought it from, but ebay offers no service and the seller on ebay surely will not repair my pen.
Ebay is the world’s biggest garage sale, you buy things “as is where is” for low prices. There is no service on garage sale items…
So I drove to the specialty retailer in the city today, they replaced the barrel of my specialty pen on the spot for $109, loaded my pen with ink and I was so grateful I bought a second pen, ink and accessories for a total bill of $530.
I didn’t mind paying the full $360 retail for my new pen because I knew I would have to come back to the store for service and parts later. I needed to start a relationship with the local store for the excellent after market service that Amazon or Ebay can never provide.
Amazon cannot offer on the spot service, they cannot offer a brand experience, there really are no people to interact with on amazon and although they give great price and delivery, anything requiring service, specialty or education to buy cannot be sold well on Amazon.
As of today in 2017, Amazon is for commodities.
The experience is something that can never be replaced by an online store.
As human beings we still have to touch, smell, taste, feel, see our products and we still crave to interact with human beings and feel good about our relationships.
Online selling is efficient and fast with no hassles, but as soon as service, experience and education for products and services come into play, Amazon and E-commerce cannot win.
I recently received this message below from David Thompson, my realtor who provides excellent service and a great buying experience:
“The Jimi Hendrix Experience”
The late great rock guitarist and composer Jimi Hendrix once fronted a band called the Jimi Hendrix “experience”.
In naming the band that, he may have wanted his fans to not only remember the melody or the lyrics of his songs but the “feeling ” they got or the “experience ” of listening to his music and watching him perform.
For those that were there, watching Hendrix perform (and smash his guitar and light it on fire) at the end of his performance at the famous Monterey Pop Music Festival would describe the experience as electrifying yet most people won’t remember the last song that he played.
In fact in day to day life as well as in the business world we may often forget the specifics of the conversation between 2 people but we are much more apt to be able to describe the feeling or the “experience” of that interaction days later.
Ask someone who just flew Westjet as an example versus taking an Air Canada flight and most people while not being able to describe specifics will say that flying Westjet was a great “experience “.
When you interact with a friend or with a client in business,ask yourself after “what’s my experience “?or an even better question to ask is “what was theirs?”
The experience is something that I predict will never die.
Music is a business where the money is in the live shows and live experiences. Napster, Limewire, Apple iTunes, Spotify etc. will never be able to capture the real live experience.
Tonight I had a great dining experience on a patio, under beautiful summer weather, with great food, served by a pretty girl – the dining experience was great.
Restaurants provide dining experiences, not just food, the experience protects the business from delivery services like Uber eats or Skip the dishes.
Uber eats, or skip the dishes cannot give you that experience and as human beings we all want the experience.
Disneyland is an experience, the Apple store is an experience, Victoria Secret is an experience, Godiva is an experience, Marble Slab Creamery is an experience and the experience can never be replaced.
We still have horses and buggies, because of the romantic experience.
We still have books because of the tactile experience of feeling the paper and “collecting” and owning the knowledge.
We still have paper journals because of the tactile experience of writing things down is still better than digital technology.
We still have Lego instead of just video games because of the tactile experience of building something.
We still want to own the experience, live through our senses and touch it, feel it, taste it, smell it, and see it to feel like we are really living.
The experience is the way to protect your business from being forced into a commodity.
Experiences are special, unique, hard to replicate, cannot be replaced by a computer, and something that we as human beings will always want to own.
Respect The Grind,
Stefan Aarnio
