Retailer Shuts Shop – Why Retailers Fail

I was sad to read a story in my local newspaper, North Shore Times about a Glenfield hardware store McPherson’s Hammer Hardware, which is going to close in a couple of months. Firstly I as going to share a link with you, but the aforementioned newspaper has a system that requires you sign up to their digital version if you want to share a story, and likewise, probably if you want to read from a link. I do not provide links for my readers to sites like that.

I used to live in Glenfield and visit this story and I remember asking them how they stay in business. The owner, John MacPherson told me it was about community, having those little things that the big stores make you buy in bulk, advice on how to do things, friendly service, remembering people’s names, the little things that come with community retail.

The newspaper story goes on to quote that he has probably hasn’t been making a profit for 6-7 years, but hung in there. He points out that the DIY super-stores and Internet have changed the game and that even the major stores/chains suffer from sluggish consumer spending.

He’s not wrong, but the key word is change. I love the world of retail, I used to have the privilege go to the NRF in New York and FMI Connect in Chicago and bring back ideas to write about in retail magazines, share with my resellers and speak about at conferences around the world. This was important because many of our retailers couldn’t afford to go to those conferences, but learning new ideas, particularly from people who have proven experience, is how business evolves.

It doesn’t really matter what business you are in, you have to evolve to meet the demands and opportunities presented as society evolves. As John said in the North Shore Times article, “In Glenfield we had a haberdashery (incorrectly spelled in the newspaper, I had to look it up to find out what it was), greengrocer, butcher, it was a great mix”. It went on to say they were boom times.

So here’s the thing, it is still boom times for those businesses that want to keep up with the times. The problem that retailers used to tell me was that they didn’t have time to keep up with the times. They were too busy starting early in the morning cleaning the shop, doing stock takes, placing and chasing orders, talking to merchandising reps, ringing customers to say their widget had arrived, preparing the float and a myriad of other things. In hindsight, those retailers, from John McPherson’s Hammer Hardware in Glenfield, through to Borders and other retailers should have found the time to look at how some businesses were thriving, while others weren’t.

When they went on their holidays, they could have combined them with visits to businesses and conferences that showed how some retailers were managing in the new world of mobile and tablet, of connected customers. They could have seen new products that aren’t available in NZ, they could have combined bricks and mortar with online themselves. I appreciate how hard it is to run a business, I have run several businesses over the years and worked in companies from small to multinational and the common thread is that those who looked ahead continue to do well, those who looked to their original training and just repeated what they had learned, which may have been best practice in the 70’s or whenever, will have done well for a while, but aren’t there any more.

People still want to have experiential retail, they still want to see and touch, ask questions, they even want to see people like John McPherson stick around and stay in business, but they can’t advise him on what to do to stay in business and get back into the black.It’s tough, but the time to get ahead in business is when you are ahead and you have the resources to go and do some training, bring in a consultant, go attend a conference. I used to speak regularly at retail conferences in New Zealand and what was really frustrating was that the people attending were those that needed it the least, because they were looking ahead and staying up with the times. The ones that needed it the most didn’t go, probably didn’t read the specialist trade magazines, ask their suppliers for knowledge or go to the trade shows. They were too busy. Now they are either out of business or heading out. Is it too late, not necessarily, but it will be much harder, even to change the mindset. When things get tough, many go even farther back into doing what they used to do, even doing it harder. That’s not the answer.

Back when business was booming for people like John McPherson, Bob Dylan was singing The Times They are a Changing. He was so right. “You better start swimming or you’ll sink like a stone.” Listen to the lyrics, they are prophetic. But this is no different to 200 year ago. The times are always changing.

We are still buying all the things we used to buy and more. Some business models have been and gone, but others are growing in a big way. We are still a DIY country, that’s why we have the mega stores, but there is still room for specialists, room to be a community and have community involvement in business, there are so many opportunities. Whether it is classes at the back of the store teaching people how to do things, or a new section selling 3D printers and teaching kids how to make things, using location based mobile services to find people who are looking for what you have, supplementing your business by selling items you can’t afford to stock, online.

I’ll finish with a question. Why is it that I can buy a set of my favorite guitar strings online from a retailer in the USA, 75% cheaper than the same product in New Zealand? The local retailer will say that’s because the guy in the USA doesn’t have a shop to run. But the fact is they do, Elderly Instruments has a bricks and mortar store in Lansing, Michigan, they have bands playing in it, they have workshops for musicians, they just supplement that with online sales. I recently contacted them because I couldn’t get help from local retailers to fix a broken part on my Dobro. I had personal emails, just the same service that John provides in his hardware store and I’ve managed to repair it myself with the parts they sold me. Doing business with them was so easy. If I lived in Michigan, I would go and by from their store and I’d even be prepared to pay a little more, heck I’d buy more anyway just because I like doing business with them and they like what they do and know what they are talking about.

So I’ll finish on a saying that is one that has killed many a good retail business. “If it ain’t broke, don’t fix it.” Have a look around you right now and ask yourself how many of the things you take for granted would be there if everyone had said that back in 1970, let alone 1870?

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On SNAKK Media, Derek Handley and Kiwi Entrepreneur Success

The Snakk Media AGM, appropriately held in the Sir Paul Reeves Building of AUT in Auckland last night, appeared to be a classic event, with typical investors, asking typical questions. However, in my opinion, it wasn’t, it was a meeting in a room made up of some of the finest minds in marketing and leading edge mobile technology.

SNAKK AGM

I was very proud to see entrepreneur, Derek Handley, on the stage surrounded by other Kiwi business leaders and visionaries including Tim Alpe, Max Flanigan and GM, Andrew Jacobs who I met for the first time last night.

I’m sure the media will cover the story, but here’s my take; on a tangent. I have always believed in Derek, his family and team from the day I met them, many years ago as they were preparing to found The Hyperfactory. They were the classic start up and I admired their passion and enjoyed their company, because they were driven and they were passionate about the same things I was, and still am. I love the company of positive, can do, will do people.

Snakk has allowed Kiwi investors to invest in a company that may never do a huge amount of business in New Zealand, which is really exciting, because it is not an opportunity that comes up often. As was pointed out, 2 years ago mobile digital advertising spend in New Zealand and the UK was 1% of the total spend. Today in New Zealand (where I have been trying to educate agencies on location based marketing and Augmented Reality, the percentage remains at 1% and in the UK is now 23%. In Australia they have the third fastest growth in the world (sic) of smartphone and tablet users, so it is appropriate for their head office to be in Sydney.

There was a lot of discussion about the threat to live TV with so many people now streaming to their mobiles and time shifting. Snakk didn’t mention all the technologies, but I am confident that they have a lot of tricks up their sleeves so that people like me who watch a reasonable amount of TV, while using my iPad or mobile, and MySky, will also be able to receive the messages I want. 

Here’s where I get excited. I want, and assume you will too, my TV. When it comes to advertising, I’m a marketer, but I don’t generally like watching ads. I guess the main reason is because most of them are not relevant to me, or at least not relevant to me at that time. I want them when I am open to buy.

So here are some of the things that I wanted to hear (and did either directly or between the lines):

• Profile. I want ads that match my profile. Having them appear on my third screen (my mobile or tablet) in conjunction with what I am watching, based on my interests is something I might welcome. If there is an interaction between my device and the TV program, then it may not matter if I am watching live or time-shifted, depending on my:
• Context. A lot of the future of mobile advertising comes down to an app on my device knowing things about me. What I am interested in, where I eat, drink, play, get entertained. What I am interested in at certain times of the day or day of the week. Market food to me at a time I am likely to be considering a meal. Then of course there is:
• Location. If my mobile knows where I am, there is so much more you can do. If I like coffee, I’m walking downtown and there is a cafe that wants my business, let them send me an offer together with a reward of free WiFi.

On another tangent, the awesome podcast from Asif Khan and Rob Woodbridge of the Location Based Marketing Association: This Week In Location Based Marketing mentioned that where a geofence is used for guerilla based mobile marketing, they get a 12% click through rate. Just to explain, imagine you walk into Burger King and your mobile bleeps you a notification offering you a free upsize if you go to McDonalds up the road and buy a Big Mac combo.

This is where people started to get excited and concerned about privacy and I need to mention the MAC, pun intended. Effectively it is possible for apps to learn about you and your behavior without having your personal details. Effectively they track your mobile, not YOU. It’s not quite that simple and that is why in the early days of The Hyperfactory (I didn’t actually work there, I suppose you could have called me a Hyperfactory groupie) we started to set up a Mobile Marketing Association, with the view of self regulating to ensure the Government didn’t over regulate. The key was around allowing people to know what information was held about them and giving them the right to revoke access to it.

This blog is getting way too long, so I’ll finish with a few quick thoughts on Foursquare. I wish I had paid more attention to Derek having shared an office with Foursquare, I think I made a mental note to talk to him about that, but I didn’t. Maybe I still will.

The question was asked as to whether Foursquare was viable and the general answer from the panel was, not really. Derek was more retrospect and pointed out that the issue in New Zealand has always been one of scale. In New York City scale isn’t a problem, the population is over 8 million people. They can afford to have sales people in NYC and its easy to segment them.

In New Zealand there are actually a reasonable number of users, but Foursquare hasn’t really been interested in them because we are too small. I briefly became a Foursquare Ambassador and saw big opportunities for proximity based marketing. I saw a business model for myself with Foursquare, but they would not allow me (or anyone) to manage multiple businesses on behalf of customers. Each account had to be managed individually and for New Zealand that was a fatal flaw.

For those who think Foursquare is out, have a read of this story from Fast Company.

Did you go last night? What did you think? I think this is going to be a very successful global company and look forward to being involved somehow, if only only the sideline. I have watched and met many successful people over the years through my business network and Derek Handley is a Kiwi that remains underrated imho despite all he has achieved to date. In my opinion the shares are well undervalued right now. I’d recommend at least buying a few.

Footnote: I do not own any shares in Snakk Media. I do not work for Snakk Media in any capacity. I would seriously consider both though:)

Congratulations to Julie Landry, Vaughn Davis and the team for an excellent event.

A Lesson in Innovation For the Taxi Industry from Uber

Have you ever been short of the taxi fare and don’t have cash or credit on your card? Ever had teenagers coming home after midnight and had to get out of bed to pay the fare? Ever had a cab driver saying you can’t split the fare on multiple credit cards.

Let’s face it, the taxi industry hasn’t got the greatest rep and when it comes to paying, it can be a pain sometimes for the average person. Ever been out on the town and want to split the fare? If it’s cash its not a problem, but if its EFTPOS or Credit Cards, its likely that the taxi driver doesn’t want to know. It takes time and may involve extra fees and also paperwork for reconciling fares and tips at the end of the day’s work.

What about the stories of people who call cabs but don’t have any money. Perhaps they want to stop at an ATM or gas station on the way, which is likely to ring alarm bells for the driver. What about the situation where they say their parents, or someone at home will pay when they get there, also a bit of a worry. You can see why the industry has problems and understand the situation from both sides.

Uber on Mobile

Uber seems to have a lot of the answers which is possibly why a lot of other taxi companies don’t like them and some smarter ones are trying to emulate them.

As you can see on the image, you don’t even have to know where you are in order to hail a cab, just set the location on a map using the mobile’s GPS and they can not only confirm where you are, but they can also easily identify the nearest cab, not the one who is most keen to get the job.

In the latest upgrade, as explained in PC Mag, you can now split the fare with anyone else who has the Uber app and they will take care of the messy work of calculating how much that share is.

What I think is really cool about this is that the people sharing the fee can be anywhere. It could be friends, family or your boss. They don’t even have to be in the same town, your parents could be out of state on holiday and still pay for your fare.

What this reinforces to me is that businesses need to listen to their customers. They need to understand what it is to be a customer, that’s why shows like Undercover Boss are so good. Every manager in a business should be an incognito customer from time to time.

There are established companies who innovate, but it is much easier for companies to just do what they usually do, BAU and therein lies the trap for old players and the opportunities for old and new.

Even better, get someone from outside to look at your business, who has no legacy. Get them to look at it from the perspective of the key people in the business and their clients. But most of all, ask the tough questions of your customers and listen to the answers. They might just help you stay profitable.

If Uber was in my city, I’d use them. These are smart entrepreneurs who are disrupting a well established business model with ease.

It’s Hard For Retailers To Embrace New Mobile Marketing Technology

I’ve been engaged in a conversation in a mobile marketing group LinkedIn discussion where people involved in solutions such as mobile coupons are complaining that retailers are intellectually lazy and not looking to embrace new technology.

I argued that most retailers focus on BAU (Business As Usual), working in their business employing strategies and technologies they have used for years, which they understand and can deal with. They do not spend anywhere near enough time working on their business, including strategies to embrace new technologies.

Many retailers have been hurt by one-day deal companies, where they gave up 50% and more in GP in the hope that if they gave great service, they would win new loyal customers. Of course we now know that didn’t work and the only ones that made big money out of it were one-day deal companies. They didn’t have to invest in inventory or carry any risk to speak of.

I’ve presented at a number of conferences on the topic of mobile and location based marketing. What I found really sad was that of all the delegates, the number of retailers at these events could generally be counted on the fingers of one hand.

I’ve been looking at how I could help retailers, particularly in New Zealand and Australia with solutions available today in a cost effective way. I think I have come up with a solution, but its going to take me a fair amount of time and money to deliver.

I will start in the area of Travel and Tourism, largely because they are more focussed on customers who are actively looking for services and new experiences and the industry is used to investing to win new business. Their market is also tough and the traditional business services continue to largely support those who own the systems, ie reservation engines, directories, commissions to tour operators, rather than retailers themselves. These businesses are easier for me to access and easier to quantify direct ROI. Also the individual transactions often have a higher dollar value, so if I can demonstrably increase their cashflow and profit and share in the gain, I can recover my costs more quickly.

I was thinking about how hard it is to get retailers out of the shop to talk to them and from years of calling on owner operator retailers in the past, trying to talk to them in their own environment with customers in store, that’s all but impossible.

So I’m thinking retail readers, if there are any here, and would welcome your feedback on the best way to get in front of you and your peers. The problem is that most of them will never read this. The majority do not attend retail conferences, they don’t even participate in their own main-street organisations. They don’t even do something as simple as co-promote their neighbours. I remember years ago hearing Mark Blumsky (past retailer and Wellington Mayor) talk at the New Zealand Retailers Association conference about how he collaborated with his neighbours by giving away free coffee coupons at the next door cafe to people who bought shoes from him and the cafe gave discount coupons for shoes to their patrons. Leading retailers (because they were at the conference) all talked about it during the lunch and coffee breaks, but I don’t know if a single one of them ever emulated the exercise.

We have amazing free services such as Foursquare and people have probably used one of these apps to check into your store. They may even be your Foursquare Mayor, but you probably don’t even know what Foursquare is.

You need to embrace mobile technology and I want to help. But you’re probably not reading this, so you will have to wait until I have helped some other people first. If you are reading this, leave a comment, connect with me and others who want to see Australasian retailers thrive and grow in this exciting new world. Learn at your own pace, but please step outside of BAU and do something. One little step a day is 365 steps a year and that’s quite a lot.

Will Bitcoin Become the new Cash?

I’ve written a number of times about mCommerce and digital wallets. Now we have loads of companies offering services for electronic payment. These include the Apple Passbook, and many apps using NFC or other means to exchange money. The key thing that joins the hundreds of apps available is that they are legitimately tied to credit cards and banks. As such they provide audit trails and of course tie the world economy together as much as that is possible.

In the future I have postulated that actual paper money will decline and potentially phase out. I could see that happening in New Zealand faster than many other countries. We only have a small number of banks and clearing houses and as such were able to be the first country to mass adopt EFTPOS in the retail environment. Many people no longer carry cash.

However there is of course the grey market and one of the challenges there, is that people who do not want their money transactions audited. There is a global economy like this. People who are paid under the table for their work, people who deal in illegal activities such as drug sales, stolen goods and others. There are also people who just want to opt out of the system or at least flip it the bird. Cash of course can work around the system easily, there is money laundering and people will accept cash for most things as I experienced a few years ago when I watched a guy buying a used Ferrari with folding money he pulled out of his denim jacket pocket.

Much of this money circulates around the system but not through it and this is a challenge if hard cash currency ceased to exist. Or is it.

Yesterday I was on my way to a Microsoft Cloud presentation (which I will blog about on one of my blogs) either SoLoMo Consulting, or Imersia). I was a little early, so I sat in my car and read the latest awesome TNW Magazine on my iPad. Its a great magazine which I recommend you read if this blog is of interest to you, because it is the Money issue. There I learned about Bitcoin.

Bitcoin is “Bitcoin is an experimental new digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network. Bitcoin is also the name of the open source software which enables the use of this currency.”

Effectively here is no bank, no fees, no audit trail. There are all sorts of businesses, even retailers, who will accept payment in Bitcoins just as businesses accept payment in other forms of money, such as Bartercard Dollars. The difference again of course is that Bartercard still connects to the banks, has an audit trail and the Governments continue to collect their taxes.

Ultimately my question is, will Governments allow this sort of  “experimental currency” to continue? Can they stop it? It appears to already have a massive following. You can buy a coffee with it, you can play poker with it. There are sites where you can buy and sell Bitcoins such as Mt. Gox and there ar others too, although I noted that one of those has dissapeared and I noted a story there that Barclays had stopped allowing people to trade with them.

So what happens if the authorities stop Bitcoin? (assuming Google or someone else don’t buy them, but Bitcoin does seem to have an anti-establishment feel to it, but it could be all about the money).  Well there is also Dwolla,  LibertyReserve, and a host of other systems. I suspect that as cheap smartphones gain mass adoption in the blue collar world, there will be more interest and demand for ways to continue to do ‘cash deals’ without cash.

Futurists are talking about the Local-Global Duality with shifting borders and changing geopolitical landscapes. The one thing keeping us together as countries, or pulling us apart is money. Financial institutions and Governments  are struggling to maintain a status quo that will keep countries running. As countries grow deeper in debt after the GFC people rush to take their money out of the banks for fear of losing it altogether, which in turn intensifies the crisis.

Farmville Tractor

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I’m not saying I agree with currencies like Bitcoin. I still want my roads and infrastructure, order and safety in my community. I believe that one way or another money from illegal activity still works its way back in, like the guy I watched buying a car for over $30,000 in folding. I do suspect however that we will see a proliferation in ‘currencies’ like this in the future. I also suspect that the criminal elements in our societies could be the ones with the most to gain from them, but also that there will be many scams which will be developed to trick people in giving up real money for virtual currency which they will never be able to repatriate. Silly really, when they can legally create computer games and sell virtual stuff and pay tax on legally earned activity with much less risk.

Smart Wallet Coming from Google

The Smart Wallet is coming says the Herald this morning.

I’m sorry but I have to laugh. A number of us have been trying to convince Vodafone and Telecom in New Zealand to do this for years. All I used to hear was ARPU and its not core business, while I was saying imagine having half a percent of the revenue. It’s a ubiquitous device people, your mobile is the only thing you always have on you, perhaps besides your wedding or engagement ring.

Ericsson had a proof of concept drinks vending machine in Auckland where you could  text for a drink at least 15 years ago. New Zealand used to be a centre of excellence for Voda back then. NZ was the first to mass adopt EFTPOS in the world, many other firsts, but then we fell asleep. ARPU doesn’t just have to be about data and voice revenue people. Ask eBay what business they are in, its not selling products, its financial services and transaction facilitation, I’m sure they say it better.

Sometimes its hard getting people to listen at the bleeding edge, but imagine if you had listened way back then, which was before Google sets up workspace in Susan Wojcicki‘s garage!

I remember loads of coversations with people like Adam Clark at M-Com, going back even to our days at Advantage back in the late 90’s, along with other members of the Wireless Data Forum where we worked hard to try to drag people into the future such as in this Herald story from the turn of the millenium.

Sorry folks its soap box time. We have so many clever people in this country and yet our leaders don’t recognise the opportunities to cash in on their expertise and knowledge. Years ago we lead the world in many ways including banking  and financial systems, EFTPOS, retail barcode scanning and much more. We still have the expertise, but we seem to have dropped into a spiral of this is the way we do business, its prudent, reliable and safe. Or perhaps they are saying that ots too late because Google is already doing it. But guys, we told you to do it before Google existed. Google isn;t forever and it doesn;t mean that noone can get great ideas of the ground.

If you follow publications like Harvard Business Review, Futurist Magazine and other forward looking publications, they will tell you that your greatest assets are your people, your staff. When was the last time you sat down and asked them what they thought, right down to the intern who’s pushing the mail cart? Why do so many people leave their companies because they feel they can do it better? Recent surveys say half of Kiwi workers want to leave their jobs. It wasn’t all about pay as the following quote shows:

“Asked what they most wanted to improve about their workplace, employees’ top gripes were “systems and processes” (41 per cent), communication (39 per cent), and rewards and recognition (38 per cent).”

There are those who make things happen, those who watch things happen and those who wondered what happened. There are also those who said it would happen but couldn’t get people to pay attention until after it happened. Of course being first doesn’t mean being best or being dominant.

Now as to testing with NFC. I watched a demo with NFC in the Netherlands in 2009 and it was cool. There were 2 phones in Europe at the time that had NFC, both from Nokia. Now that Vodafone is going to have a look at NFC in NZ, how many models of phone do we have that support the technology today? How long would it take before an early majority of people had a capable device? Just because Google is looking at NFC, does that make it the best technology? Are there alternatives? If we were best placed to implement mass adoption of EFTPOS and bar code scanning, could we be well placed for m-Commerce on mobiles? Ask Rod Drury or Adam Clark.

I’m just saying……………