Retailing Is a Transaction, But Also an Art
April 21, 2017
- Author: Steve Smith
March/April 2017
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Covering electronics retailing over the decades, and its close cousin major appliance retailing, I have learned that when a retailer begins to go downhill financially there are few instances of the chain making a comeback.
These dealers often lose their original vision and begin to make poor decisions before the critical financial crisis hits. Those decisions could be overexpansion, ineffective merchandising, increased competition, losing touch with customers or expanding the customer base, not understanding new categories, or a combination of these mistakes, along with many more.
Some, or all of that, has happened to three notable retailers involved in electronics recently, Sears being the highest profile name. In writing about Sears, one hopes that maybe with the resources available, management can turn it around.
But when a retailer — or any company — tells the public as Sears did this month, "Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern, it is a bad sign, even if it is following SEC guidelines in its annual 10-K report."
Sears, whose biggest strengths over the years have been in electronics and appliances, as well as power tools and car parts, is a 131-year institution and a U.S. retail icon. It is not overstating the case to say that Sears helped build this country in terms of selling goods to its citizens for a good price, providing top-of-the-line service and employing, directly or indirectly, many Americans. But Sears' possible disappearance would not be unthinkable given the weak financials it has reported quarter after quarter for several years.
The most notable chain in electronics and/or appliance retailing that reversed a notable downturn in its fortunes during my career has been Best Buy. When Hubert Joly became Best Buy's CEO it had experienced several years of poor results and a corporate upheaval. Joly began the turnaround in 2012 and he was quoted as telling reporters a few weeks after its most recent financial statement, "I don't know about declaring victory, but this is meaningful improvement. Four years ago, it was about saving the company. We didn’t die: check."
Joly closed stores nationally and cut costs in others, invited major suppliers to open departments at its locations, added new categories, strengthened its online sales, and continued to set plans for future growth by reacting to the needs and wants of today’s consumers. But as Joly implied, any retail operation, especially in electronics and appliances, needs more work to be done because no one in retail can sit on their laurels or their brand name.
Often owners and executives of retail operations make the mistake of listening only to accountants and MBAs. They follow the dictionary definition of retailing, like Merriam-Webster’s: “The activities involved in the selling of goods to ultimate consumers for personal or household consumption.”
Sure, retailing is a business, and it is about transactions. (Profitable transactions I may add, which was an afterthought for many CE retailers I’ve covered over the years.) But retailing, especially electronics and appliance retailing, is also an art. As studies have shown in recent years like buying clothes, home furnishings and cars, it is a form of entertainment for many consumers fulfilling the wants, needs and fantasies of the public. Of course electronics retailers began providing entertainment and fantasies to the public ever since it began selling radio consoles in the 1920s.
But the art of retailing in electronics is finding out what the hot technology is at the moment and knowing customers — either by name, demographics, sight or data collection. To make shopping in the store, or online, an experience to be enjoyed and an enticement to buy is important and of course at a great price with service and installation to make the "transaction" painless and hopefully profitable.
Brick-and-mortar retail is no longer about the size of the building and the bulk of inventory. Or it shouldn’t be. So-called traditional retailers need a dynamic online, mobile and social media presence. Amazon and many other retailers, as well as suppliers, have learned the art of retailing via the web. They can explain, service and sell products efficiently online without dealing with customers in person.
Today’s millennials want to research online but go to local retailers, brick-and-mortar stores, and see, touch and feel the products they want to buy, and they also want good customer service.
I’m no millennial but I was a customer at two stores recently that have distinctly different backgrounds, the Apple Store in Williamsburg, Brooklyn and P.C. Richard & Son’s in Astoria, Queens, both in New York. At these two different stores I experienced the art of retailing, which has to give hope to anyone involved in this industry.
Steve Smith is a contributing editor of i3, was the longtime editor in chief of TWICE and is a member of the CT Hall of Fame.
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