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| The big squeeze |
   
Posted Date: 15/01/2012
By Dennis Price
This time of the year there is much navel-gazing resulting in posts containing predictions. This is not one of those.
Recently I had reason to look for something in an old presentation I remembered giving at a Sensis Marketing Conference. In that presentation I made a series of predictions. I have saved one slide as an image here – and you can read all 19 predictions I made in March 2008. (You will see how many prediction I got right/wrong when you scan the image.)
But one ‘trend’ in particular is transforming retail at this very moment – and it does not get much air time. I variously refer to it as the ‘dumbbell’ effect or the ‘big squeeze.’ More technically would be the term ‘channel compression’.
In effect, what it means is that the middle-ground (of anything) being squeezed out of existence.
In retail it means the small, authentic and unique will survive along with the mega big, mega-cheap – and very little else.
In shopping centres it means convenience centres and regional/super-regionals will survive (albeit after some transformation) – and very little else.
In movies it is Multiplex or Art House – and little else.
In e-commerce the enduring trend is the long tail. I would go so far as to say that anybody wanting to make a fist of anything would have to apply ‘extreme niche-ing.’
The existence of the ‘long tail’ was first conceived by Chris Anderson of Wired magazine – and this phenomenon has shape e-commerce and (possibly because of the influence of multi-channel retailing) the effects are now being felt in traditional retail as well.
What does this mean in practice? If I am right, it means that:
It is highly unlikely that Harvey Norman (for instance) will succeed with the current iteration of www.harveynorman.com.au. They would be much better off creating a site for (e.g.) TVs –and sell TVs and nothing else. Let’s face it, when was the last time you went online to buy a TV and bought a sofa on the spur of the moment? The site selling sofas is one click away anyway.
It is highly unlikely that the www.westfield.com.au shopping portal will ever reach the heights envisaged. If it does, it will be despite a powerful trend that only seems to getting stronger and stronger.
If you are a retail entrepreneur wanting to start or grow a business right now, your best option is to find a point-of-difference that will be attractive to a niche market – and attack that market with all your resources.
If nothing else, the dire economic forecasts will enable the brave and reward the strong – which is not such a bad thing after all.
And speaking about the brave; I would like to extend an offer to readers of this blog. To stimulate my grey matter I teach occasionally at University of Wollongong; and starting early February 2012 I am running a Retail Management subject for the MBAs and post grads. As part of the program, I am opening up all the tutorials to readers of Inside Retailing – for free.
If you are interested, email me (contact details on my website) and I will send you more info. But note in advance that you will not be formally registered and you will receive no accreditation and it does not include invitation to the actual lecture days. It is done completely via e-Learning (online). I am doing this because I think the students will benefit from having practitioners in the online forum – and you may benefit from getting to test the waters to see if this is something you may actually enjoy.
Have fun
Dennis
Dr Dennis Price consultants to the retail supply chain to effectively acquire and grow their presence in retail with the right skills, strategies and systems. |
Monday, January 16, 2012 by richard moorehead
In this new-world the likes of Mirvac and Stockland (sub regionals) will be belted. Go the Regionals.
Monday, January 16, 2012 by Dennis
@Peter - Haven't given it 'deep' thought, but I will. Readers views too...;-) My general view is that in service the Dunbar Principle is especially important but I may come back and give a more considered response later.
Monday, January 16, 2012 by Peter Mansourian
Would be interested in hearing your views for services industries
Monday, January 16, 2012 by Dennis
Correct. (I thought it was relevant to the reading audience as an example that has historic credence.) The idea is that we all think about OUR category and consider how it might apply.
I would be keen to hear some examples...
(For example in Training, MIT is releasing MIT-X which will be free to all comers. They are bound to become a global powerhouse in education - and the industry will resolve itself along these two lines.)
And I may as well mention it now, because someone is bound to comment. There are ALWAYS exceptions to the rule - and Amazon may well be one. (Thought it is interesting that they are keeping Zappos as an independent brand.)
Sunday, January 15, 2012 by Martin White
The rationalisation of shopping centres into Convenience and Regional/Super-Regional was predicted as long ago as the mid 1980's as it wa at this time that segmentation was occuring. With the passage of time this prediction has gained currency with the only "blip" when a new residential development was taking place as in North Lakes/Mango Hill and Springfield in SE Queensland. Initial retail development was Local shopping which progressed into Community-based centres and will move upwards with the increase in population. This aspect is unlikely to change in the foreseeable future.
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