Archive for April, 2017

Yesterday I wrote about the abysmal state of retail affairs and I wrote mostly about my personal experience but I also wanted to cover another topic on why I think retail is suffering.  A few years ago, I cut the cord and switched most of my TV viewing habits primarily to three mediums: Netflix, Hulu, Amazon Prime.  I frequently alternate between HBO and Showtime when new seasons of my favorite shows start so that’s technically a fourth.

Initially, my wife and kids mostly watched Hulu but begged me to get rid of the commercials so I paid the extra money to avoid commercials.   It didn’t occur to me then but it did hit me recently with this thought.   As my kids began watching commercial free TV, they also demanded less and less products.    Over the last three years, I can’t think of a single thing that my kids have asked for me to buy them aside from Apple products.    Long gone are the days where they watch a TV commercial and say, “I want one of those.”

It’s not just my kids though, I too  haven’t seen too many commercials either.   And I not only avoid commercials on TV, I also have numerous ad-blockers on my computers and electronic devices that I rarely see an ad.   I mostly listen to Spotify now and it is also commercial free – no more radio ads for me.   I recently got a new computer at work and it did not come pre-loaded with ad-blockers and I was shocked to see so many ads on web pages!    I was even tempted to buy some items that were deeply discounted but they disappeared as soon as I loaded the ad-blockers!

Yesterday, I wrote about the retail “ecosystem” and it occurred to me that the “ecosystem” also includes advertisements but in this case ads are an inverse reaction to successful retail.   Combine the horrible retail experience with ad-blocking TV, Music, Internet and it’s not too hard to figure out why retail is suffering tremendously.

I am going to share a secret with you, it has been over 3 years since I’ve set foot in a traditional retail store.  I do almost all of my shopping on Amazon and the only two other places that I visit occasionally are the grocery store and Costco.   The grocery store I visit almost weekly however Costco I now only visit about once a month at best.

So what’s wrong with retail?   Let me tell ya!

Problem #1 – The Experience

The premise of the retail store is to go out and acquire something you need.   Perhaps the retail experience long ago was also a way to socialize but I wouldn’t know because that must have been decades and decades ago.   So what kind of retail experience exists now?   Well first I have to get into my car and drive to a retail store.  With an ever increasing number of cars being added to the roadways, this means I have to sit in smog for a good 20 to 40 minutes depending on which retail store I am headed to but that’s not the worse part.   Next, I spend quite a bit of time driving around looking for a parking space.   I know what you’re thinking, I’m the kind of guy that waits for a nearby space so I don’t have to walk far but that’s wrong.   I usually take the first parking space I see no matter how close or far from the store but lately there are no parking spaces anywhere near retail shops except of course Sears.  After wasting time in traffic then at the parking lot, I then waste even more time walking down aisles looking for what I need.   I don’t bother shopping for clothes anymore at retail stores because they never have anything in my size – NEVER!    What ever happened to the promise of being measured once then having custom clothes made for you and delivered to your door?    If I do find something I need, I then have to wait for a cashier to ring up my purchases and there is almost always someone in front of me arguing with the cashier about a coupon, rebate, discount, or some other dumb items that will save them a couple of dollars on some stupid item they are purchasing.

 

Problem #2 – Crime

If you live in a big city, you know that on any given day your chances of being robbed or shot are better than winning the lottery.   Nothing is a bigger magnet to criminals than retail stores because criminals know people that are entering these shops likely have money or credit cards worthy of stealing.   Why should I risk my life to go buy a shirt or pair of pants when Amazon can deliver them to my door in a couple of days?

 

Problem #3 – Retail has become Lazy

When was the last time you saw any real innovation at a retail store?   Sure Starbucks offers free WiFi but why hasn’t every retail store setup WiFi hotspots?   Why do retail clothing stores prefer to stock items that may or may not fit people well instead of investing in scanning/measuring technology for custom built clothes?  It can’t be that hard to put a shirt or pants together can it?    Do you want to know where I get my clothes from now?   I had a tailor come out and take measurements then he flew to Hong Kong, had my clothes made then brought them back.  I paid $100 for each shirt and a few thousand for some suits.   Everything fits great so why can’t someone bring this to a larger scale?   It’s amazing that I ended up sending $6000 to Hong Kong when I wish I could have spent that money in the U.S. but retail is clueless!

At least Walmart is trying to change and bringing some minor innovation about 10 years too late but they still want you to go pick up items at their stores which doesn’t solve Problem #2.

The Solutions – THINK ECOSYSTEM

The most successful companies think in terms of ecosystems.  Apple sells iPhones but then sells music to play on iphones, then sells apps to use on iPhones, then sells movies to watch on iPhone, then sells laptops and ipads to view/use your content on different platforms.

Retail stores need to think of their customer as an iPhone.  Take my measurements then make custom products around what I need.  If you make me a custom shirt and pants then you can sell me a belt, then shoes, then socks and underwear.  But why stop there?  Now that you have my measurements, why not sell me a backpack or suitcase that fits my needs and size?   If you know that I like to play tennis, why not extend those sales to sports clothing and sports gear?   Why not then sell me luggage that can fit all of my clothing items?   All of these items eventually wear out and I need to buy them again so this means repeat purchases – GASP!

What’s that?  Your retail business model is to sell shoes only and not the “ecosystem”?  Well good luck staying in business because your main competitor right now is Amazon and I can pretty much buy anything there and it  has a fairly large ecosystem.   I’m just waiting for Jeff Bezos to send someone to my house to take my measurements so I can order custom clothes, I know it will happen someday.

If you haven’t seen the brutal video of a passenger on United being beaten to force him to give up his seat then you must have been hiding under a rock but that’s not what I want to talk about. I’ve read countless twitter posts, articles and opinions on this issue but no one has pointed out the simple and obvious solution to this problem to avoid it from ever getting to this point. What is that you ask?

All United needs to do is to add a simple tick box to their site when booking a flight that asked the question, “Are you willing to give up your seat for compensation if we are overbooked?” If no one had ticked the box, United would know that this is a full flight and no one is willing to give up their seats WAY BEFORE anyone shows up to the airport or boards the plane! The gate agent and flight crew would have PLENTY of time to figure out alternative arrangements for their employees and even other standby passengers.

Let’s face a simple reality here, some passengers have critical events or activities they are traveling from point A to point B for and simply can’t miss that flight (weddings, funerals, graduations, etc). I am one of those people that would never give up his seat for compensation as I fly mostly for business. I get paid about $200/hour so if I’m delayed 4 hours, the delay costs my employer $800. Delay me 12 or 24 hours and that cost escalates from $2400 to $4800. The $1300 cap on compensation automatically puts me OUT of the running to give up my seat. I imagine the doctor in this incident also falls into that “high earner” category and the $800 meant little to nothing for him as it does to me. Eight hundred dollars is 4 hours worth of work for me, why would I give up my seat for this? Of course there are plenty of people that would jump at the chance at getting $800 or $1300 but this may have been a scenario where perhaps many high earners were on board and simply wanted to get to their destination. Contrast this with a minimum wage earner making $8/hr that would earn $32 over a four hour period, the $800 is a very attractive offer.

Perhaps United should use credit scores or net worth of its passengers to ascertain who is likely to want to get bumped. If they knew this about me, they would know not to bother asking. Why can’t United data mine from Facebook and figure out that Sally in seat 10B is going to her sister’s wedding in Louisville and won’t give up her seat? Or that Grandma is seat 11a is on a once in a lifetime vacation and can’t give up her seat?

In a day and age when we have iphones and apps for every conceivable scenario it is remarkable that airlines still can’t figure out that a flight is full and people on that flight aren’t interested in giving up their seats way before the flight even boards!

If this tick box existed on booking of this flight and someone had selected it then United should have known exactly who to offer compensation to right off the bat. Actually, United should get really smart and start letting people pre-bid on getting bumped – I’d put my self on the list for $7500 and up for a domestic flight and $20,000 for an international flight. So if I’m flying from New York to London and United wants my seat, they can come to me when they’re ready to pay 20k for that seat.

I know what you’re thinking..it’ll be too expensive to implement all of this but considering that United at one point today lost $700 million in market value, I don’t think they can afford not to do it!