Whats the future of retailing? What impact will the Internet have on my music store? Will the consumer stop shopping in stores?
These are very important questions, and I hear them being asked over and over again. They remind me of the concerns and discussions weve been having in this industry for the past 10 to 15 years regarding the impact of mail order and catalogs on retailing. The biggest difference between the newer perceived threat of the Internet and the older threat of catalogs is the relative cost involved. With the Internet you eliminate the huge printing and mailing costs, as well as much of the production expense associated with traditional catalog/mail order operations.
The fact is, anyone can sell on the Internet. So what are you to do?
The Chinese Restaurant
As I ponder these questions, something comes to mind that helps me put these issues in a better perspective: Chinese restaurants. (I often find it is easier to see objectively if we step outside our own industry to look for the answers.) When you dont feel like cooking, you can always have Chinese food. Most Chinese restaurants offer three options. First, you can dine out when you want to get out of the house and have a relaxing experience. Second, when you are in a hurry and have a busy schedule, you can pick-up take-out. Third, when you want to relax at home, you can have Chinese food delivered to your door.
How does this relate to the music retail industry? Simply stated, were creatures of habit what works well for us in one scenario is often applied elsewhere in our lives. As consumers, we approach shopping in much the same way that we go about getting food from Chinese restaurants. When we want to spend some time, browse, and really experience the products, we head for the in-store experience. This is similar to dining out. When were busy, shopping becomes a line-item on our to-do lists an errand. This is the equivalent of ordering Chinese food on a take-out basis. Well make a quick stop at the store, grab or "take-out" the few essentials on our list, and move on. Finally, when we want to relax at home, we might pick up a catalog or get on the Internet to browse the product offerings, place orders, and have the desired items delivered.
In short, we get our consumer goods in the same three ways we get our Chinese food. We have three choices for the way we shop, just as we have three choices for the way we buy a made-to-order meal.
"We Gotta Get Out"
Lets face it, people dont want to stay in their homes 100 percent of the time. Remember the predictions that large numbers of companies employees would soon be working at home and telecommuting? It was quickly discovered that the employees missed the interaction with others at the office. The prediction didnt come true. Futurists dont always get it right. Remember the promise of the paperless office? That didnt happen either. To the contrary, offices use more paper now than ever.
The same sorts of predictions have been made about catalog and online shopping, saying that these options would soon virtually replace retail stores. Has it happened? No! In fact, many of the companies that started as catalog operations now have retail locations. That includes The Sharper Image, Brookstone, Eddie Bauer, and Crate & Barrel, to name just a few.
Shopping has always been a national pastime a way to get out of the house and mingle with others. In days gone by, people would stroll down Main Street window shopping when they needed to get out of the house. Today they go to the mall! The location has changed, but the activity, and the need for the activity, hasnt. Just as dining at a restaurant will never be totally replaced by take-out and home delivery, in-store shopping will never be totally replaced by Internet and catalog shopping.
Wanna Be All Three?
Can you be all things to your customers? Can you offer them all three shopping options? Yes, you can. Chinese restaurants do it. So can you. Your store is hopefully already providing consumers with a good in-store experience so they can "dine out." Now you can focus on the other two consumer buying styles.
For the times when customers with busy schedules and long to-do lists become "errand shoppers" and want to order "take-out," you should work on your in-store presentations to make commodity items fast and easy to find. And you should streamline your checkout procedure to help these types of customers get out the door as fast as possible.
When your customers want to relax at home and browse online, you can offer them a Web site on the Internet. This gives you a tremendous opportunity to provide much more product information than can easily be covered during the in-store experience.
A good argument for the need for having plenty of good information is illustrated by my last car-buying experience. I spent a considerable amount of time on the Internet studying and comparing different models and features. In the past I would have had to drive to the various dealerships collecting brochures, or buy a bunch of consumer report-type publications to study. Once I had brought myself up-to-date on what was available, I was ready to visit the dealerships for the sensory experience that is so necessary to selecting the final product.
When your customers are gathering information about what they want to buy, wouldnt you rather have them explore your Web site than your competitors sites? I believe that in the not-too-distant future, having a Web site on the Internet is going to be a virtual necessity for all business, just as todays businesses need Yellow Page listings and other forms of promotion.
Do You Have to Be All Three?
Lets go back to the restaurant scenario. Many Chinese restaurants choose to offer all three choices. Others do not. Many restaurants have determined that there is enough market share to offer only one or two of the choices. A fine dining establishment may feature only the eat-in experience. Some fine dining restaurants will also offer take-out. Some restaurants have determined that there is sufficient consumer demand for just the take-out and delivery options. Recently, companies have appeared that provide the delivery service for restaurants in the area that do not offer that option.
The choice is yours. If you can determine that there is enough market share to offer only one or two of the options, fine. For instance, for the "errand shopper," very streamlined satellite locations could be established throughout the community with teaching studios, repair drop-off service, rentals, and commodity products such as sticks, strings, reeds, etc. Remember 7-11 convenience stores? They pioneered a very successful marketing concept that targeted this type of "take-out" shopper.
Yes, I believe that there will be some very focused, successful Internet operations in our industry that cater to consumers who choose the home delivery option, just as there have been successful catalog operations in the past. And yes, as Ive pointed out, there will always be a market for the in-store experience. As the Chinese restaurant scenario suggests, if you want to, you can successfully cover all three of the options or just one or two. Its up to you.
Anyone for Chinese?