Published on: May 30, 2012by Michael Sansolo
When everyone is turning in the same direction, it’s interesting to examine those doing the opposite. After all, there are countless business models - from the iPod, to the Prius or Southwest Airlines - where success came from a special company taking steps no one else was willing to take or able to see.
Last week it happened again, thanks to Warren Buffett, whose every move deserves attention. Yet this one seems especially interesting for retailers who wonder about community power and the future balance of stores vs. Internet based shopping.
In a letter to the editors of the newspapers owned by Buffett’s company, Berkshire Hathaway, Buffett announced plans to invest strongly in the newspaper industry. Buffett plans to buy new publications and give them the financial support they need to succeed, without imposing his personal political views on their editorial pages.
Think about that: the nation’s most successful investor is announcing his interest in an industry that seems more threatened by the Internet than any. Overall, newspaper readership is down and among young people it is practically disappearing. Either Buffett has lost his mind or he sees something others simply can’t imagine. Bet on the latter.
Buffett makes two critical points in his letter that merit the attention of every business because they outline the realities of competition in today’s world. First he addresses the issue of Internet by calling for newspapers to rethink their approach to web-based content. Placing content on line for free is unsustainable, he says, and needs to be replaced by a “blend of digital and print that will attract both the audience and the revenue we need.”
But his second point looms larger. Buffett explains that his optimism for newspapers comes from the strength of community. He writes:“I believe newspapers that intensively cover their communities will have a good future. It’s your job to make your paper indispensable to anyone who cares about what is going on in your city or town. That will mean maintaining your news hole - a newspaper that reduces its coverage of the news important to its community is certain to reduce its readership as well - and thoroughly covering all aspects of area life, particularly local sports. No one has ever stopped reading when halfway through a story that was about them or their neighbors."
That’s a powerful statement. (Also ironic, considering that it comes at the same time as the New Orleans Times Picayune
- a newspaper that distinguished itself in its coverage of the devastation of Hurricane Katrina - announced that it will now be published in paper form just three days a week.) Buffett makes it clear that he isn’t interested in the entire industry, just those newspapers that understand the changing world and approach it with a goal of excellence and importance. It is an important lesson for any retailer of any size.
Retail - like newspapers - at its best can be a supremely local experience. Shoppers aren’t thinking about ownership when they pick up a gallon of milk. They think about price, value, convenience and taste. The best stores are those that, like a great local newspaper, understand the community. A good owner or manager can do that in so many ways, whether it means having the right mix of locally loved products or hanging banners saluting the local high school sports team (something I’ve seen done very well even in Walmart Supercenters).
Community is at the heart of a great supermarket and though the nature of community constantly changes it always matters. Likewise, while we all talk about the importance of understanding competition from players like Amazon.com we need to heed Buffett’s advice. Retailers need find creative and unique ways to use on-line selling to improve rather than detract from what they do in stores. Otherwise the store become showrooms for Internet purchases (the Best Buy problem) or become drab fulfillment centers giving the customer no compelling reason to visit. (Check out the MNB TV video above for a discussion of precisely this issue.)
One last item, from a personal point of view: I began my career at a small community newspaper where everything was local. We ran national and world news, but in an area served by the New York Times
, my editor knew our limitations and our edge. Trust me, no one covered the school board meetings like we did.
Years after I left that newspaper its parent company - Gannett - combined the area’s nine local papers into a single regional paper for efficiency. It was a great move in theory, except the combined papers still couldn’t compete with the Times
and now the local edge was diluted. Circulation, as you might expect, is a fraction of what it once was.
If only Warren Buffett had sent them a letter, things might be different. Consider this a letter to you too.Michael Sansolo can be reached via email at email@example.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .