What’s In Store for Stores?

To purchase a product for a bargain at a store is nice. But to find a product in a store and then purchase it even more cheaply online—often from a rival purveyor—is heavenly.

It’s a practice known as “showrooming,” and, as The Wall Street Journal explained today, the customers who practice it “have become the bête noir of many big-box retailers.”

Not surprisingly, these brick-and-mortar stores are scrambling to stave off the trend. Target, for instance, has “pushed its suppliers to offer it exclusive products that can’t be found elsewhere,” the Journal reported.

Whatever happens, showrooming is merely the latest phenomenon to roil the industry. “The retail store has . . . changed many times over the past 300 years of its existence,” Drucker pointed out in Managing in a Time of Great Change, noting that “new retailers” grasp that shopping is “no longer a satisfaction” but a chore.

Drucker made this observation in 1993, as new chains like Wal-Mart were growing fast. “Still, there are signs that theirs, too, may be a fairly short-lived success,” Drucker warned. “Retailers now talk of ‘shopping without a store’ through interactive TV.”

The potential of online shopping, in other words, was already visible (to Drucker, at least) two decades ago. “The technology for all this is available and is increasingly less expensive,” Drucker wrote. “And there are quite a few signs that a substantial number of customers are becoming receptive to it.”

As for what Drucker would advise traditional retailers to do now, we can’t say for sure. But he would probably have supported Target’s focus on exclusive brands, even if they aren’t moneymakers. “A store whose reputation rests exclusively on the brand names everybody else can carry has no reputation or identity at all,” Drucker wrote in Managing for Results. “All it has is an address.”

Photo credit: William A. Clark

And he may also have urged some of the retailers to reconsider their basic business model, as Sears did early in the 20th century. As Drucker recalled, Sears evolved “from a near-bankrupt, struggling mail-order house at the beginning of the century into the world’s leading retailer within less than 10 years” by altering its mission from serving the American farmer (through its catalogue) to serving the American family (through its stores).

If this kind of insight can transform a struggling mail-order house into a leading retailer, perhaps it can also transform a struggling retailer into a leading mail-order house (which, of course, is basically what Amazon is).

What do you think is going to happen to big-box retail over the next decade?