Published on: April 27, 2017
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Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.
It seems like every week - indeed, almost every day - I read stories about this chain or that one is closing stores. Just the other day, there was a report on CNN about how Credit Suisse estimates that it's possible "more than 8,600 brick-and-mortar stores will close their doors in 2017." That's four time as many as in 2016 ... almost twice as many as in 2015 ... and 2,000 more than in 2008, the worst year for closures on record.
The Wall Street Journal also had a piece the other day that reflected the larger dilemma that bricks-and-mortar retailers face. I thought one sentence the Journal used pretty much captured it:
"Legacy retailers are trying to play catch-up, but they’re saddled by huge fixed costs, investors who prefer dividends to innovations, and CEOs incentivized to focus on the next quarter, not the next decade."
Is there any wonder that Amazon is having such an impact on the retail landscape?
Retailers complain to me all the time about how Amazon doesn't play fair because it doesn't seem to have the same financial constrictions that they do.
That's not true. Amazon just prefers innovation to dividends ... and if you invest in Amazon, you'd better walk in with that understanding. This isn't unique or original to Amazon, of course. Costco, under Jim Sinegal, made the point for years that it was more important to manage for Main Street than Wall Street, and that eventually Wall Street would catch up ... and that, in the meantime, customers would be satisfied and employees would be happy.
I think that Amazon doesn't just focus on the next decade, but the decade after that.
This is tough for a legacy retailer to do. There are too many fires to put out, too much temptation to seek short term gratification even at the expense of long-term viability. And complaining that Amazon doesn't play by the same rules isn't going to change their ability to play the game more effectively.
The thing is, the situation isn't going to get any better. Walmart clearly has decided to play the game, though it is coming at it from its own direction and creating its own rules.
That, I think, is what everybody has to do.
You have to know who/what you are, who your customers are, how you are going to be relevant, targeted, and compelling, and what your differential advantage is.
Short of that, I'm not sure you have any shot at all.
You can be one of the survivors, or one of the more than 8600 stores that close this year, and who knows how many close next year and the year after.
That's what's on my mind this morning. As always, I want to know what's on your mind.
- KC's View: