By Seth Weisblatt, AVB/BrandSource
No matter your business model, your marketing savvy or your dealer smarts, retail is more difficult now than it was five years ago – which was radically different than five years before that!
One thing that hasn’t changed is the focus on the customer. In 2003 I was placing Yellow Pages advertisements because that is how customers found local businesses. Today, we’re still placing ads where customers find local businesses, but how they shop has been influenced by so much more input and choice. Amazon’s model is fueled by convenience and selection, and as local brick-and-mortar stores we excel at service and quality. The difference between the two strategies is striking and does not provide a clear path forward to the winning model.
So,what will retail life be like in the ’20s and how will furniture retailers fare? Housing will continue to drive growth in the furniture industry, and the fuel that is pushing our economy forward is a combination of factors: an incredible labor market; costs of production being reshaped by trade and technology implementation; and consumerism.
That said, while the economy continues to move forward, so too does the distance from the last economic correction. I’m a believer in the lessons of the past and am certain an economic adjustment will be in our future.
Here are a few questions I often ask myself when considering the future of retail:
- Will our disposable income continue to be spent on technology and devices? Or will the annual incremental improvements start to wane, making consumers reconsider the cost to replace?
- How do brick-and-mortar stores create experiences to drive back store traffic, sales and repeat business?
- What will happen with malls, big boxes and real estate? Will our stores simply become distribution centers, or will they be the focus of creativity, innovation and discovery?
- Are we ready for fewer cars, less time stuck in traffic, fewer parking spaces and artificial intelligence? Last year Tesla’s Model 3 sales were higher than all BMW sedans combined! As more cars powered by computers and AI enter our roadways, the closer we are to a reality of automated transportation, traffic-free commutes and a decline in auto ownership. My prediction is that this will be the biggest factor affecting retail in the next 10 years.
In the meantime, while all this plays out, here’s a radical thought: Retailers – including all AVB/BrandSource members and all brick-and-mortar stores – need to understand this basic fact: We all need to offer free shipping!
There, I said it. Now hear me out: offer it on our terms. Free shipping does not mean you give it away or it eats at your margins. Use it as a way to grow your business! What is your average ticket today? Say it’s $799. Then offer free shipping in an x-mile radius for orders of $1,199 or more. Whatever your target is, offer it as an incentive. As an example, Nebraska Furniture Mart (NFM) offers free shipping, but delivery in the home with setup is additional.
The customer’s expectation is that they can buy online and not have to pay additional shipping charges. Be competitive with their expectations. We must stay relevant with the customer.
Seth Weisblatt is Director of Furniture at AVB/BrandSource, publisher of YourSourceNews.