Published on: January 26, 2012
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Hi, I’m Kevin Coupe and this is FaceTime with The Content Guy.
I’ve been giving a lot of thought to a couple of stories that appeared recently on MNB, how they connect and what they mean.
First, we had the story about how Target was circulating a memo to its suppliers, essentially saying that it needs a new strategy as it faces off against a wide range of competitors, especially online retailers. The big problem, Target seems to feel, is what is known as “showrooming” - where consumers go into stores, check out merchandise, and then order it online for a lower price. And so, from my reading of the memo, it seemed like Target was looking for help from its manufacturers ... mostly in terms of equivalent pricing and differentiated products.
Seemed reasonable to me.
At pretty much the same time, we heard from several manufacturers that Amazon also was circulating a memo among its grocery suppliers, demanding an incredible discount that will both lower its prices and help its own margins, to the extent that at least some suppliers, big and small, are walking away from Amazon.
Which seemed pretty unreasonable to me.
Now, I was pretty content with this assessment ... but then I read a piece in Retailing Today, which I was immediately attracted to because it made a movie reference. Just as Tom Hanks said “there’s no crying in baseball” in A League of Their Own, this piece said that “there’s no whining in retailing.”
The thing is, I’m not sure that Target was whining. (Anyone with kids knows what whining is, and this wasn’t whining.) What Target was doing was recognizing a new reality, and grappling with what to do about it. That’s not easy, and it is all new territory.
That’s how it is these days. Brick-and-mortar retailers are competing with online retailers, and everybody is looking to manufacturers for whatever help they can get. They’re not on a level playing field - they’re often not even really playing the same game. Everybody is looking for a differential advantage, trying to figure out what they can bring to the table that will make the difference in terms of where people shop and what they choose to buy.
Is Target whining? No. It is searching. To use another movie metaphor, it is trying to make sure that it does not make the same mistake as the guys in Jaws, who face off against the shark despite the fact that they really need a bigger boat. The guys at Target are trying to figure out what kind of boat they need and what kind of ammunition to use.
Same goes for everybody. Walmart. Best Buy. And yes, Target. And because these are brick and mortar stores, they have certain legacy systems and traditional priorities that are hard to shake. They want to embrace online shopping, but old ways of doing things keep getting in the way.
Meanwhile, Amazon - which does not have those legacy issues - smells blood in the water. Just like any good shark. But because it is a shark, all it knows how to do is move forward, eat, poop and make little sharks. Which is why it apparently has decided to put pressure on suppliers.
How does one compete? Beats the hell out me.
You can’t whine. You can’t complain. You can’t retreat. And you can’t really play Amazon’s game, in the same way that retailers competing with Walmart can’t really play Walmart’s game.
You have to play your own game.
You have to find those differential advantages - those products and services - that you can deliver in inimitable style, and then you have to do it again and again and again, while all the while seeking the next advantage and the next one and the next one, knowing that all advantages are assailable.
Can suppliers help? Sure they can. But they can’t do it all, no matter how much pressure applied to them.
These may be unreasonable expectations, but it is an unreasonable world.
That’s what is on my mind this morning, and as always I want to hear what is on your mind.
- KC's View: