Retail in Turmoil

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I had a great conversation this week on a podcast with my friend and co-author, Michael Dart, who is also a partner at AT Kearney. We solved the world’s problems, of course. Well, if not quite all of them, at least we touched on many of the major issues in the world of retailing, and even opined on some solutions.

We discussed the rise and imminent fall of Sears. On the future, we agreed that the words “retail” and “store,” in fact, the actual physical existence of both, will disappear. They will be replaced by lifestyle marketplaces/communities in which there are experiences of all kinds: streets of shops, salons, wellness clubs, services, social gathering events, and on and on. And all of those old “retail store” buildings full of stuff will also be converted into similar lifestyle, experiential destinations. Those who do not will disappear.

Another strategic and structural shift that we discussed, that is being implemented by a few of the major legacy brands, is the concept of “platform sharing” (described in our book, “Retail’s Seismic Shift”). For example, Amazon is not a retail store, but, rather a platform upon which anything and everything in the world can operate, including competitors. And now we are beginning to observe some of the old- world legacy retailers who have erased the mental barrier of being in the retail store business and replaced it with owning a platform upon which they can facilitate the operations of anything and everything. A great example is Kohl’s. They invited the “devil” competitor himself, Amazon, to operate on their platform as Amazon shops, selling devices, serving as pick-up and return spots, and even sending personnel to consumers’ homes to educate about the integration of smart devices. Kohl’s is also teaming up with Aldi, the huge German grocer, to operate on Kohl’s platform. This is a synergy strategy biggie, and for sure, will accelerate across the entire old retail sector.

We talked about the emerging young consumer culture and how they see two worlds: an old and a new. And as can be expected, they are rejecting the “old” and all the “stores” and brands and stuff in it, as not cool, or “that’s for my mom and dad.” They are creating their own new world. Our book describes the new world as de-massified (chapter on the “Great Fragmentation”), in which the mass and homogenous markets of the last century are fragmenting into thousands of small tribes or communities, of like individuals, even within the biggest cities. Likewise, this phenomenon is forcing the old massive structure of commerce to be shattered into thousands of smaller brands, retailers and services to serve the distinct desires of each of the small tribal communities. Essentially the landscape will consist of an infinite number of finite market niches being served by an infinite number of finite brands and retailers. Does this sound like the return of the “mom and pop” shops? We say so.

Please listen in. You’ll enjoy it. And we would love your feedback.

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