retail news in context, analysis with attitude

by Kevin Coupe

The Wall Street Journal has an excellent story about a specific industry - movie theatres - that provides an apt and Eye-Opening metaphor for retailers.

The piece makes several important points.

Rather than blaming technology when your business starts to look obsolete, "Thales Teixeira, a former Harvard Business School professor turned consultant, has a better response … Blame the customer. If your customer was happy with your service or product, they wouldn’t be so quick to embrace the new technology."

That's what happened in the cinema business over the past few decades, as streaming services provided an economical and quality alternative to movie theatres that were seen as expensive and not all that pleasant to patronize.  Why go to the movies when you could watch Amazon Prime Video, Netflix, or any of the other streaming services that have emerged?

(The Journal story doesn't really talk about one element that has contributed to the emergence of streaming services - their willingness to invest in quality product.  Meanwhile, a lot of movies weren't all that great.)

Which meant that movie theatres - whether national chains or regionals or independents - had to invest in better seats, digital screening technology, and quality food and beverages that would make the theatre experience more compelling and attractive.  (They still need better movies, but that's another issue.)

The Journal writes:

"One of the tricks for a business disrupted by the streaming trend is to think less like Wall Street and more like a viewer. Theaters with recliners, for instance, lose at least 50% of their seating capacity. That’s a problem if you’re only operating during Christmas, New Year’s, Thanksgiving or Memorial Day, the peak moviegoing dates. But if you’re thinking about the rest of the year, when a cinema’s capacity utilization goes as low as five to 15%, you’re seeing the bigger picture."

And, it goes on:

"The anxiety felt by movie-theater executives in the face of disruption is similar to the pressure felt by grocers and retailers, taxi companies and hotel operators, sports-franchise owners and newspaper publishers. Technology allows groceries to be delivered to your door, sneakers to be bought online and advertisements to be skipped."

Like I said.  An Eye-Opening metaphor.

Be the customer.  Offer a more compelling experience.

One other thing.  Because movie theatres don't actually make movies or own studios, they can't really control the flow of product;  they're at the mercy of Universal or Disney or Paramount or whoever.  If the movies aren't good, it may not matter how comfy the recliners are.

But that's not the case for retailers, especially food retailers, which have far greater control over quality.  The time for lowest common denominator product may be passed, because people can get that anywhere.