The Changing Face of the Retail Industry
The Changing Face of the Retail Industry
The Changing Face of the Retail Industry
The quote is 2,500 years old and never more appropriate than today: "Change is the only constant."
And in few places is that more apparent than in the retail industry.
Retail as it is today faces a new kind of buyer, new kinds of competition, and higher and higher expectations. You would be hard pressed to find an industry facing more change.
Changing Sellers
For literally thousands of years, there have been only a few major changes in the retail industry.
At its simplest, retail is 1 person selling goods to another. As retailing evolved, it began to mean 1 person who buys something and then turns around and sells it at a profit.
While all manner of sophistication has come to the industrydepartments stores, advertising, malls the concept remains the same.
Today, however, sellers in the retail industry are changing.
On one hand, you have what we could call the Apple Model. This is where a manufacturer bypasses the retailer and becomes the retailer itself.
Following the success of the Apple Stores, many manufacturers are trying direct-to-consumer sales, including MicroSoft.
But a far bigger change in the retail industry is the advent of online retailers.
Often, these Internet entrepreneurs aren't bringing goods to customers, they are bringing customers to goods.
Many online retailers don't have inventories. They have relationships.
Their manufacturer/partner fills an order the online retailer created. This is a revolution in the retail industry.
Changing Buyers
But it's not just the selling side of retail that is changing.
The industry faces a new type of buyer today.
Forrester Research, a respected source on business trends, estimates that over 50 percent of retail customers will be influenced by online activity within 5 years. This means that half of all purchases will be made online or after the customer has researched the product online.
If you are in the retail industry today and don't have a Web presence, 1 of 2 potential customers will not find you in the coming few years.
Changing Expectations
The effects of both of these trends on the retail industry is to reduce the traditional customer loyaltyto one particular store or brandand to increase the value customers place on knowledge and service.
Think of big-box electronics retailer Best Buy buying Geek Squad in 2006 and refocusing the company as a customer-service enterprise that also sells products.
Did it work?
Well, Best Buy's main competitorCircuit Cityclosed its doors last year.
Because customers can get anything online, what they prize now is knowledge about products and service both during and after the sale. Expectations for those services have never been higher in the retail industry.
The changing face of the retail industry includes differences in the way products are being sold and also in the way consumers want to buy them.
And most of these changes are being driven by capabilities the Internet makes possible. Retailers who hope to be part of the industry in the coming years need to be looking online. Change is indeed the constant in the retail industry right now.
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