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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Ideas for Retailers including Borders and Whitcoulls

As I mentioned last week, I am speaking at the  Mobile Marketing Forum in Auckland next month. I’m going to share some good practical business ideas there that smart retailers and destination businesses can implement. You might catch the odd one on #NZSoMo on Twitter, but I’d recommend if you want to get into and ahead of the wave of new social media and location based mobile marketing, you should invest in attending this event.

Some time ago I talked about the situation with Whitcoulls and Borders. I said I had lots of ideas about how they could run their businesses more profitably without sacrificing their models. I’m happy to share some of my ideas, but not all of them, because I am thinking that maybe there is an opportunity to partner with some local developers or entrepreneurs to commercialize some of my ideas, seeing as the people in these businesses can’t see the wood for the trees.

I’m happy to share a few concepts to get things started and to show I’m not just full of hot air.

First is basics. Whenever a business starts falling by the wayside, the smart ones go to consultants or mentors. Often the business has gotten so busy they forget about what made them great stand out businesses in the first place and often they have forgotten good business practices.

A key one is stock turn by category. Some of the books I saw in the sales were going to struggle at $1 a book and should never had been stocked. How did Borders NZ decide what to stock in each category? Did they liaise with the people who read the books or just on what the publishers told them.

Back in the day the late Shaun Joyce of Sounds Music used to consult my daughter on which albums he should bring in for the big teenage market. She was big on music and researched amongst her friends which meant they got what they wanted and Sounds stocked what the segment wanted and it moved.

Shaun Joyce

I haven’t explored retail in the US for a number of years because it was no longer relevant to my current business environment, but that is changing, partly due to a new solution that GeoSmart is launching soon called BIonaMAP or Business Intelligence on a MAP. More on this in the near future but it is very exciting for lots of businesses including retail chains.

I fell in love with Borders in the USA. Shame they may not be there much longer.

They were innovative in lots of ways. there were 3 that I particularly liked (I’m not writing a book here folks!).

1. They had book signings and meet the author every week (I’m talking about big city stores here). The ones I liked best were autobiographies, for example imagine going to a store, watching BB King play Lucille and sing a couple of songs, having a chat and then personally signing his new autobiography.
2. They encourage you to read in the store and have a cafe you can take the books to. My first thought was, they will damage the books. My 2nd thought was now I can check a few books to find out which is the one I really want, especially for me technical or music related books. I very rarely go to a book store and buy only one book. This year I have bought at least 20 books from local stores and another 8 from Amazon.
3. They have massive range, width and depth. If I want to buy anything other than a top 100 book (I’m not generally in the demographic for many of those).

I will come back with some advice and would love some feedback from you dear reader because part of the fin is coming up with the ideas.

My best business read this year has been Jeff Jarvis “What Would Google Do?” My first recommendation to whoever ends up owning and managing Whitcoulls and Borders (if they don’t just shut them down) has a mandatory read of this book. If they don’t come up with at least a dozen innovative, exciting and compelling ideas as a result, I’d suggest they resign from their jobs because they are stuck in the track of “This is how the book trade works, this is the way we have always done it”. Folks this is the way the book industry crumbles instead of making itself relevant. And no hanging a discounted eBook reader off a hangsell rack is not a modern way of doing business.

I will share some more ideas with you for those who need some sparks to get their thinking juices started, but I’m really keen for some participation here, so for each idea, I might also throw out some questions.

What do you think Borders and Whitcoulls can do better that would make you want to go to their stores and spend money?

I visited Borders on Saturday. They were having a stock take yesterday and I would expect some more sales coming up. Not much worth buying but I did get a copy of the 2010 book Kiwi Rock Chicks, Pop Stars and Trailblazers down from $49.95 to $5! They probably could have sold it in volume to the record store next door:(

Footnote, while I believe it is a long time before eBooks totally rule, but Amazon has announced that they have for the first time sold more eBooks for Kindle than printed books. Of course one issue and opportunity is the cost of freight, especially to NZ, but then that is compensated for by much cheaper books as long as you buy a few at a time.

Comparison Shopping

Comparison shopping on mobile devices has been around for a long time. I first saw apps pop up for Palm many years ago even before I had Bluetooth connectivity. Today things are even easier because of devices like iPhone and Android.

A couple of weeks ago I was listening to a Harvard Business Review Ideacast podcast with John Donahoe , which was refreshing  in itself because John had a refreshingly clear vision and understanding of what eBay is as a business, which is not about selling stuff on eBay. Have a listen for yourself. Any business should understand what it really does in order to be able to do it well. For example if you think a grocery store is there to sell groceries, or a car lot is there to sell cars, then you need to listen to this interview.

Anyway, he was explaining why eBay bought the company Red Laser, which reads bar codes through the camera on your iPhone or Android and lets you see information about the product and compare pricing at both other retailers and websites, such as Amazon and of course their new owner eBay.

This is really exciting, especially in countries like New Zealand where items such as books, which I buy a lot of, are really expensive, so shopping around makes a lot of sense. In that area, I have to say that locally I buy on impulse, when I see something I really want or when its on special. They are just too expensive otherwise. Of course if I had an iPhone or an Android, I could check in real time and see if it is worth buying now or paying the postage from the US.

It was really sad to hear that Borders is likely to file for Bankruptcy this month. They really are my favorite bookstore by far, even though I have complained that in NZ since Whitcoulls bought the local franchise, they are slowly turning them into bigger versions of Whitcoulls which pretty much defeats the purpose, although this situation may vindicate them.

One of the arguments sited for Borders’ woes is their failure to prepare for the growth of the eBook market. This may be true to some degree and it is inevitable that print media will follow the music industry. I’ve blogged about this before, which you can find if you dig into my tags. Print is expensive but there are lots of things that you can do. eBook readers is one, but for Borders I would have thought a great opportunity would be Print On Demand, because this can still  be done via the store and allow access to massive stocks without worrying about the costs of shelf space and aged stock.

Whoops, off on a tangent again. I was talking about comparison shopping. Yes there are loads of applications available, I’ve only picked on one. Mashable has a huge number of blogs on this topic if you want to find more.

So have a look at the Red Laser site, to see what what they are all about and watch the short video below from DizzyDougTV to see how cool this is. You don’t need a bar code reader, just the camera on your SmartPhone. Damn I do have to get an iPhone or an Android soon! Maybe I should set up a website with a PayPal (another eBay subsidiary) link called by Luigi a Smartphone:) Would you donate?

Footnote, a lot of people think of Smartphone apps as being the domain of men, but for women who love sales and special deals, this is one for you. I’ll leave the last word to CHIP Chick.

The Future of TV

I was watching a TED Video recently. Unfortunately I can’t remember who was talking, but a couple of statistics resonated. The speaker said that by the time an American student (in most western countries probably the same) gets to university they will have spent 20,000 hours watching TV and another 10,000 hours playing video games.

What’s really amazing about that is generally (especially this time of year) how crappy TV coverage is. I have written in blogs previously that I believe IP TV is going to change things massively, but of course that will spell the demise of TV as we know it unless broadcasters get on the bandwagon. If they don’t, they will be singing the same song and laying off loads of staff in the same way as the music and newspaper industries are.

One thing that will make a difference is interactivity and in NZ we are way behind on that score, although I did note during the T20 Cricket match between Pakistan and New Zealand on Boxing Day on Sky TV, you could vote for your man of the match via your remote control. Normally you have to text and pay a premium, so that’s a start, but NZ is way behind the 8-ball when it comes to TV interaction.

In the December issue of The Futurist John M Smart of Acceleration Future Studies came up with some insightful comments on where TV will go, which should be compulsory reading to broadcasters.

Interactivity was one of those concepts. Two areas he covered were collaborative rating social viewing. Both of these happen independent of TV already, but are not embraced by the broadcasters. For example, kids send each other SMS messages via their mobiles all the time when they watch TV. This has been happening for years. The only way the media has taken advantage of that is for competitions and voting on programs like American Idol, which recorded 178 million votes this year. It’s hard to find out what revenue they got from that because it depended on how you voted and who your carrier was, but you can be certain that signifiucant revenue was made, but I digress.

I was talking about social interactivity. So kids text message each other all the time while they watch TV and with new media such as Twitter, the same thing crosses the age barriers. For example whenever there is a major sporting event on anywhere in the world, people are tweeting in real time and sharing their opinions and passion. I believe this will be huge during the Rugby World Cup in New Zealand in 2011. It will be happening concurrently around the world via mobile and internet. That would be a great opportunity for Sky TV in New Zealand, NBC, and others to get involved, but I doubt they have the foresight.

Another topic that John Smart covered was ratings. I don’t know how accurate the current TV ratings systems are, but if TV really wants to compete with the Internet, why not give all viewers the ability to rate what they are watching on TV and at the same time  what they are viewing by way of IP broadcast media.

A great thing about the Internet is that it can cater for every taste. I have around 60 channels on my TV, but I have access to so much more media online. Family overseas have access to hundreds of channels, but most of it is reruns of old TV series.

I regularly watch TED videos on my TV via my iPod connected to my home theater, but the interface is ugly and its a pain to connect my notebook to my TV. I don’t have an iPad as yet, but I can certainly see myself getting some sort of IP TV connectivity, whether it is a home media hub (so I can get internet radio as well as YouTube and other products around the house).

Today, according to Smart there are 20,000+ streaming Internet TV Channels including YouTube, Vimeo, Metacafe and Viddler. Boxee is an example of a Set Top Box that started off with an open source media software package. Unfortunately many of their services such as Pandora are not available in New Zealand. I’m going to give it a try and see if I can make it work downunder.

I’ll stop here and will come back to this topic as I am just grazing the surface. Leave your comments and bookmark this page if this is of interest to you. This is a very exciting and rapidly changing environment and it will be interesting to see who the winners and losers are in the next 5 years.

Boxee review suggests it has potential, but isn’t quite ready?

The Decline of the Radio Station

Auckland got a new radio station yesterday Big FM. I was interested to see how they will position themselves as unique, because in my humble opinion there is not much difference from one radio station to the next. My first impression was a cross between classic hits and classic rock, but I’ll have to let them grow for a while to find out what their identity actually is. The problem for me and for them is that I no longer listen to much radio.

In New Zealand we really struggle for variety. Pretty much everything is mainstream and the reason for that is that we have a small population, only a little over 3 million people over the age of 18 and a total of only 4 million. There is no venue for special interest music such as jazz, blues, country, world and alt on our airways. Cool Blue Radio was around fora while which had a mix of jazz, blues and country and no DJ’s, but this now only exists on the net, where it competes with every other radio station around.

Radio in some ways mirrors the ails of the recording industry. It does very little that is new and doesn’t even use much of today’s modern technology. Everything is mainstream, there are no thought leaders, visionaries or radicals any more. Back in the day we had pirate radio stations like Hauraki, Veronica and Radio North Sea which captured the rebel in us, played great music but also challenged the norms of society. The problem is that today everyone is PC, the challengers of the past are the conservatives of today.

There are lots of things that radio stations could do. Yes, some are showing webcams of the studio, most have streaming radio on the net and some go further with things like background or in depth coverage of news stories, but that is about as far as it goes.

In New Zealand there are less than a handful of radio stations that effectively use the RDS band. RDS is the text area on your radio, especially in your call that provides information such as the station identifier. In Auckland only Radio ZM uses this to tell you the artist and name of the song. Some stations like George FM have info about the DJ’s, a song or text in promotion, but that’s about it. I was dissapointed to see that the new Big FM doesn’t do anything more than the station identifier. There is so much that they could be doing to be more modern and in tune with the world.

A while ago I wrote about new technologies coming to your car including Satellite and HD Radio. Recent news is that there are (as usual) battles over which sort of satellite radio system to use and as to HD Radio, which is being test broadcast at the moment, and the concensus in the industry is that it will be a long time before these technologies become commonplace. I also wrote about the fact that record companies have been ripping us off for years and not giving us value for money which started as a post about Ringo Starr’s innovation with the Live 8 Flash Card.

A few weeks ago I was approached to do a radio diary. You know the survey diaries they use to show marketshare of the radio stations by demographics and total listeners. I couldn’t do it because these days I hardly ever listen to the radio. I listen to podcasts all the time. Some of them do come from radio stations, but not local ones. I listen to Digital Planet from the BBC, The Music Show from ABC National Radio in Australia, Radio Free Amsterdam and the list goes on. As well as feeling like I have a relationship with the DJ, they use new technology, they are almost advertising free. On my Ipod I see images, have links to artist information and other enhanced services to go with these programs as well as in some cases also video.

A key thing with podcasting is that I can listen to pretty much anything I want. Every kind of music is available for free. Many people don’t realise the range of podcasts that are available and think they have to buy music if they want to use iTunes, but the reality is that if you have an eclectic taste, or just feel like listening to a particular genre right now, that you can do it. In the past I would have the radio on all day when I was at home. Today I rarely even listen to my CD’s, even though I keep buying them:).

We have lots of great artists coming to New Zealand for concerts this summer and I am trying to work out which ones I will stretch my budget to see. In the past I would listen to their promotions on the radio. Now I can go to YouTube and listen to dozens of tracks from all of these artists, including lots of live show clips so I can see if they actually put on a show which is worth spending hundreds of dollars on.

Even if I don’t watch the video clips I can effectively listen to anything I like and I have struggled to come up with any songs or artists I can’t find on Youtube, including myself. If I want to explore a theme, like Christmas, or pretty much anything, or listen to artists similar to a band I like, I can go to Ilike and have my very own personalised radio show, where I can rate the songs I listen to and it becomes more and more the station that plays ecactly what I want to listen to. If you want to hear other artists that sound like me you can go to Ilike and key in Luigi Cappel and you will hear at least one of my songs and then other artists of a similar ilk.

So if you are program director for a radio station, what are you going to do to compete with the Internet? How are you going to get me back to listening to the radio, so that you can sell advertising and put bread on the table? I have to tell you, you are doing a pretty poor job right now, The way you do things right now might do ok for breakfast radio, maybe drivetime (with real time traffic) and talkback, but beyond that, you are competing with products that are far better targetted and if you don’tdo something about it, you may have to look for a new job. If we do get Satellite Radio sorted (and the shelves of retailers in the USA are littered with receivers) consumers are going to have an international choice. They can find the stations that they relate to and I suspect that the percentage of people listening to local radio will rapidly diminish unless you wake up now. Don’t be like the record companies, hide your head in the sand and wake up one day wondering what happened!

While this blog is starting to get a good following, I would love to get more readers and encouraging me to keep writing. If you feel that my blog is interesting I would be very grateful if you would vote for me in the category of best blog at the NetGuide Web Awards. Note that the form starts each site with www whereas my blog doesn’t and is of course https://luigicappel.wordpress.com.

Thanks so much for your support:)

Talk about, Slot Music, Talk About

New York, Paris, London, Munich

Everyone’s talking about, Slot Music.

At least, it finally hit the NZ Herald today . Beaten by downloads affecting retail store sales, major record companies inlcuindg  Sony BMG, Warner and EMI have decided to make their music more accessible by putting it on 1GB Micro SD Cards.

They plan to still put them into CD cases and say that with the extra space, they can include the liner, liner notes and other information. They will be DRM free and you can even play your music on your computer by using the Micro SD Card with a dongle. The music will be in MP3 format at 320kbps they say on the info site, which they say is very high quality music. Really?

The say that hundreds of millions of phones, Personal Computers and in the future lots of car entertainment sytsms will be able to listen to this music.

Well hello! Do you think we consumers are thick? Let’s go back to the future and do a different thing in the same way and charge a premieum for convenience.

So here’s the thing. Back in the day we had audio casettes and vinyl. Audio casettes were cheap because they weren’t going to last long, especially on cheap walkman units that stretched the tape if they got dropped, got hot or for lots of other reasons. Vinyl was great, you got big liner art and photos, quite often big inserts with lyrics, interviews and more photos.

Then came the CD, which they said had far greater sound and extra space to put more information on. In the future, they said, they could include music videos, interviews, games, photos and much more. Of course we had to pay more for this amazing technology but it was going to be worth it. In many cases the quality was superior, even the nice ambience of the needle was no longer there.

But the extras? Well they are the exception rather than the rule. In most cases we got less liner information, because of the size. Inserts happened sometimes but not very often and the additional material? Sometimes there was a hidden track, that was fun. Occassionally someone would add a music video and a few like BB King, put out a CD ROM with interviews, games and lots more. I still have mine, it was cool. Of course I don’t play it any more, but I felt I got my money’s worth and was chuffed that an old timer like The King could do something so modern.

So here’s my take on this. I have large quantities of CD’s and DVD’s pressed, not of my music unfortunately, but for car navigation. I also have large quantities of SD Cards duplicated, also for car navigation. Firstly, even at volume pricing SD Cards are much more expensive than CD’s or DVD’s.

Universal Music is going to release about 30 ‘Slots’ to start with, from their eLabs Digital Music Unit. Sounds more like a test to me, but anyway, I do applaud them for trying new technology. I think it’s a good idea to try new technology, given that CD’s are losing ground rapidly to downloads.

Will they add extra information to the SD Cards? Maybe for some of those first 30, but then it wil be the same old story, new media for a premium price (for the convenience) and nothing more. If they had listened to people like me 10 years ago (Netguide wouldn’t publish my opinion), they could have reinvented a format giving loads of extra value, far more than people could afford to download and created a whole new generation of fans and collectors. But no, they just wanted to increase cash flow and profit. After all, they knew far better than we consumers, what was good for us.

In my humble opinion, they created the monster we have today where people download and share music for free. And it is a monster friends, because what is happening is people are downloading music for free and the poor songwriters and performers are getting ripped off.  Sure there are big bands making truckloads of money for themselves and their promotors, but they are the minority. Most of the people in your favorite bands have to work a day job in order to be able to write and perform music at night. This might not be the case if they got fair remuneration for their work.

I ask you this. Do you work for free? Do you expect to go to work and build widgets or whatever you do and expect other people to reproduce them for peanuts and give them to your mates? Will you accept a 90% reduction in your income because people have found a way to clone your products? I didn’t think so.

Anyway, after that minor digression, this is a storm in a slot. Sure they will make some of these. Then they will cry foul when people copy them (if they can be bothered). They will weep when these cards don’t get sold, except on eBay, Craig’s List or Trade Me after people have copied the music onto their computers and shared them with their mates.

I love new technology, but when I can go to iTunes and for a couple of dollars, buy the only song as a track that I like (because I am happy for the band to make some money from it), why would I buy a little SD Card that I will probably lose.

In my humble opinion, the music industry got this one wrong. Can they redeem it? Only if they figure a way to genuinely add value. They want to offer the music on iGB SD Cards. (Interesting that I struggle to even buy 1GB SD Cards anymore.) Why not do something smart and offer us real value. Do what you should have done years ago and you might find a couple of years of legs in this yet. Use 4GB cards. Load it with the music, the live performance video, the interviews, the music video, lyric sheets (the mechanical rights people can still get a share) and a personal spoken message from the band or artist. You could sell that for a premium and create collectors items that people will want to keep.

Of course when real broadband arrives, people are no longer going to buy music in hard copy. I’m sorry but they won’t. Why would you. The other day I sat down in front of YouTube an had a great afternoon watching videos and listening to music of my favourite bands of the past and the present. All it cost me was a bit of internet access (and I do have ADSL 2 from Orcon so speed wasn’t an issue.

I think the future will be:

New York, Paris, London, Munich, Nobody’s talking about Slot Music.

While this blog is starting to get a good following, I would love to get more readers and encouraging me to keep writing. If you feel that my blog is interesting I would be very grateful if you would vote for me in the category of best blog at the NetGuide Web Awards. Note that the form starts each site with www whereas my blog doesn’t and is of course https://luigicappel.wordpress.com.

Thanks so much for your support:)