Bricks & Mortar Retailers: A Survival Guide
Porter's 5 Forces Example
Traditional bricks and mortar retailers are feeling the pinch the world over. Some are blaming the internet for all of their woes – take Harvey Norman in Australia as an example. This brand is saying that the web is stealing their business, but they don’t even have a transactional web site and are operating an old model.
Leslie Clifford and Laura Moser in ‘Market Leader’ (Q1, 2012) wrote about their experience with traditional retailers and the web and how these retailers continue to survive today, mainly by being renegades! Using the Porters 5 Forces model these authors discovered why some retailers are thriving in the current poor retail environment.
Porters 5 Forces – Product
Having a unique product that can only be bought at a few physical locations bring customers to your store. What we are discovering is that customers want an experience when they shop, otherwise they can buy the product anywhere. Once it becomes a commodity then the only differentiator is pricing.
Nike, in Japan, have developed a way to customise your shoe instore. They have a NIKEiD Generator and a NIKEiD Studio that allow you to create a unique colour and style for their shoe that suits the customer. The Generator scans your clothes to create a personal colour shade, then the shopper takes this to the Studio to design their shoes, get a wallpaper for their phone and some stickers!
This can’t be replicated online, so creates a reason for a person to come into a shop, they will pay a premium and you get better stickiness to the brand.
Porters 5 Forces – People
Connecting with your customers and engaging with them is the key to have them returning time and time again. If the customers feel comfortable with your staff and brand you can get to a higher level of engagement.
Take Mercado Los Gavilanes in Oregon. This grocery store has converted an empty storeroom into a community hall/events centre that can hold up to 500 people. This room offers a stage, bar, toilets and a kitchen as well as a children’s room. It get’s used by church groups, teen nights and community events.
What this means for Mercado Los Gavilanes is that they have gone beyond just selling groceries to becoming a part of the community and customers have started to see this store beyond being just a business, but now a destination.
Porters 5 Forces – Price
Having a different pricing strategy can get you a competitive edge against other retailers as well as the web. Take TopShop in the UK as an example. In their fashion forward shops you can buy a piece of clothing for as little as $20 or as high as $800. You choose your price point within the store that you are comfortable to buy the product. Rather than just trying to appeal to the wealthy or the poor, TopShop can cater to all price points with fashionable clothing that the customer can afford and that doesn’t define them!
Another example is Panera Cares Café. They only have suggested prices at this bakery and around 65% of people pay the full price, some pay less and others nothing at all. However, the business trades at break even. This is demonstrating how consumers care about their communities and how businesses can play a role.
Porters 5 Forces – Place
Place has to morph as well to help cater for when customers want to shop or where they are. Addidas in Tokyo has opened an outlet in a park that is popular for runners. Shoppers who are about to run can come over to the store and do a real life test run! This extreme destination shop even comes equip with 16 shower cubicles and 248 lockers for rent for the public at large.
A Spanish butcher has taken place to the extreme as well. This butcher has put a vending machine in his shop’s window where people can purchase their steak, hamburger etc when it is convenient for them, not just when the shop is open. If you don’t speak Spanish that’s OK, it recognises multiple languages.
Retailers can satisfy the human need for here and now by changing where and when they place their shops. By being flexible you can get competitive advantage over the web nearly everyday!
Porters 5 Forces – Promotion
Normal retail promotions surround percentage off deals or short term sales to get customers through the door. But there are other ways to be a renegade.
The Waffle Shop in Pittsburgh operates a drive through window that specialises in food from countries that are in conflict with the USA. This way it helps to start a dialogue and to bring people from all different walks of life together over a common theme (food). This has delivered strong foot traffic and has been picked up by the local media. This type of activity brings in an element of community as well as doing something different to bring promotion to the business from a traditional and new media perspective.
Giving Without Expectations HubPages Link
How to be a Renegade!
There are five ways to challenge convention and to therefore challenge the web retailers if you are a traditional bricks and mortar retailer. They are:
- Make modifications to your shops to help your customers enjoy the experience even more. When I worked at Kleenmaid we used the ovens and cook tops daily so people could see how easy it was to cook & clean as well as filling the store with great smells
- Review your pricing structure so that it doesn’t limit you. Look to link the needs of your customers more strongly to your pricing structure. Once again at Kleenmaid we had budget priced ovens and top of the range ovens, but all had a 5 year warranty. That way we could still offer quality, but at a price point people could afford
- Does your retail shop give without expectations? How is it a part of the community, not just a business. I wrote a hub about this last week, especially how Lululemon Athletica gives back through offering free yoga sessions to the community.
- Do you foster and promote shopper to shopper links, cross generational ties or cross-cultural connections. By using the examples listed under promotion you can generate publicity and buzz around your brand because of what you offer instore.
- Zig when others are zagging. Be different! Renegades are open to examining multiple facets of their business, placing bets and making investments without guaranteed outcomes
If traditional bricks and mortars businesses are to survive then there is a responsibility not to whinge about have the internet is stealing your customers, but to become a renegade and find a new way to connect to your customers, community and even the globe. Cheers Michael
More by this Author
I was reading an article in Harvard Business Review recently by Kevin Plank, the founder of the brand, Under Armour. Under Armour is a newish brand in Australia and we are starting to see it become commonplace with...
Harry J Friedman book, 'No thanks, I'm just looking' In my current position I manage 22 Retail Shops, an 80 seat Contact Centre, a direct B2C sales force and a web sales team. My teams sell insurance, security, travel,...
In this hub Michael Kromwyk provides some insight into the ACER competitive strategy and how it is positioned against other brands in the PC and peripherals market. Included in the paper are some university level models...