The Competitive Edge of Specialty Retailing

What makes "specialty retailers" special? 

The special shopping experience they deliver.

It doesn't matter what a retailer is selling – tires, hardware, electronics, books, apparel. Or, how big or small they are; Nordstrom, after all, is a specialty store!  

A specialty retailer's distinctive competitive edge is the special value they add to the shopping experience. 

See above for some quick examples of the difference between just "customer service" – which, increasingly, is customer self-service – and the specialty store retail experience. 

The Internet for Retailers: "The Arab Spring of the Commercial World"

There's a major sea change affecting retailing right now, whether we're ready for it or not.

Sea changes have hit retailing in the past, of course.

• Department stores once ruled retailing. Ah, but they didn't die. Instead, they went horizontal. They became known as Wal-Mart, Costco, Target, etc.
• Then "big box" stores, like Circuit City, Borders, Toys R Us, etcetera, stole the thunder from malls.
• In fact, there was a time when malls essentially had no vacancies. Now, they are being "re-purposed". Retirement homes, anyone? Charter schools?

But the current upheaval affecting retailing may be the most game-changing of all: the Internet. It continues to dramatically change the retail industry, at an increasingly fast pace. It's the Arab Spring of the commercial world! 

All those things that specialty retailers prided themselves on delivering in-store, in-person, are now available on-demand, 24/7 to the shopper via their smartphones.

No matter which consumer segment you target, they are increasingly web-reliant. They depend on the web to give them product information, shopping recommendations, price comparisons, store reviews, and more.

For hints of the future, watch the Millennial Generation. Yes, the "Digital Natives". The ones we know only from the tops of their heads, as they are busily texting.

That group now is larger and more influential than the storied Baby Boom generation that drove so many adjustments during the last 50 years. Watch every shopping decision they make: how, where, when and what they shop.

But don't stop there. All other consumer segments are being affected by the sea change as well. Grandmas buying off tablets? Baby Boomers checking prices from INSIDE a store on their smart phone?!

In fact, the fastest growing group of Facebook users is now the over-50 age group. So much so, that the teenagers are deciding to move away from Facebook. Where will they land?

So, which will it be for you?
There are three kinds of retailers:

1. Those who make things happen.
2. Those who watch things happen.
3. And those who say, "Uhh, what happened?!?"

Don't let the internet - the Arab Spring of the commercial world - turn you into retailer type #3.

Big Box Store's Dilemma: Great Customer Service...for Amazon's Customers?!?

Ironic, isn't it? Big Box stores are being morphed into specialty stores.

Not so long ago, shoppers were using the specialty stores and their knowledgeable staff as their source for knowledge about the newest products...and then buying from the Big Box stores! The specialty stores were the "showrooms" for the Big Boxes, who as low-cost providers, could offer lower prices.

This is a long-standing "specialty store dilemma": hire, train and keep a knowledgeable sales staff who can educate the consumer about new products (aka "great customer service"), only to lose the sale to the lower cost, lower-priced competitor. This has been long known to specialty retailers in all retail segments, whether audio/video products, art supplies, power tools, whatever.

But now, look what's happening to the Big Box stores. Customers go there to see, hear, and touch the latest products (think Best Buy), so they can decide which one they want to buy. Then - customers being customers - they buy it at a lower price from online providers (think Amazon)!

The Big Boxes have become the "showroom" for the online retailers of the world! In their efforts to provide better customer service, the Big Boxes incur added costs (both in-store for people as well as robust web sites chock-full of more information) only to lose sales to the new low-cost providers of the world.

What goes around, comes around.

Or, consider the impact of category killers like Barnes & Noble and Border's Books on independent bookstores. Now these "category killers" have become dinosaurs themselves. Increasingly, more books are bought online, and/or in digital form, for a lower price at greater convenience.

Retail Darwinism at work.