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Wednesday, 21 March 2012

Traditional Retailing - Is this how the dinosaurs became extinct?

Ok... before I get going, watch this Coles Advertisement and judge for yourself if it inspires you to rush down to Coles and buy some produce.

With that out of the way... onto this weeks topic
Should we feel sorry for retailers like David Jones, Myer, and Harvey Norman who have continued to deliver bad trading news this week?

Reading of their woes, three things are obvious to me: 1) If you didn't know better, you'd swear we were approaching retail armageddon 2) It is everyones fault but theirs 3) They still only see the internets  potential as a threat rather than an opportunity.

If you get a moment watch this clip of Gerry Harvey... Heck, what happened to the entrepreneur in him? Rather than adapt and succeed, he now looks for the excuses for why things don't work anymore . To a budding online entrepreneur this is nothing but encouraging...

There are many reasons why traditional retail is failing (you could write weeks worth of Blogs about it) but for the sake of brevity, lets focus on two key contributors that relate to the customer revolution. You see one of the many problems facing traditional retail (aside from a failure to reinvent, modernise and adapt) is that there has been a power shift towards the customer. The internet has empowered the customer and smart entrepreneurs are working with that power shift instead of complaining and waiting for the Government (or someone) to give it back to Gerry and friends.

Traditional advertising is failing
Traditional advertising is no longer relevant. Sure there are some entertaining adverts out there but the role that advertising used to play is no longer as relevant as it used to be... Here's why:

Advertising used to be our source for: Finding new products, seeing what everyone else was doing, seeing what cool people were doing and determining which products were better than others.

An ad used to for example be able to show or convince us that not only was everyone drinking Coke, but that cool and fun people were really into it AND it was such a great product, that they were all having the time of their life. (The Coles Ad above, does none of this by the way :-))

These days, we can find out for ourselves. We are so connected now we can see what products our friends use and like. Through rating and comparison sites we can see which products are the most enjoyed and rated by real people and we can compare price and specs easily and quickly.

We have the facts now and we are prepared to share them and use them. 

However, like someone looking in from the outside Executives are catching on and demanding "Social Media Strategies" from their Marketing Departments or paying big bucks to agencies to help them build "Social Media Strategies" - "Go out and build us 10K likes on Facebook!", "But how much is a 'like' worth" "Doesn't matter just do it!"

(as a side note) I can't confirm this, but a birdie at Woolworths told me they spent over a million dollars getting their App onto peoples i-phones! I wonder how they measure the return on that spend?

Generally these "strategies" have ranged from disaster to ineffectual (here's a couple of disasters for fun Eg Qantas and Eg Woolworths) and here is what I think the problem is:

Instead of developing a "social media strategy" to get people talking about their brand... they are better off investing in actually delivering a product and service that is so good, people will talk about them anyway.

You see while Woolworths were patting themselves on the back for the success of their app, they were getting smashed on Facebook for failing to do the most basic elements of customer service Big W ruins Christmas.

The old rule of "Through Advertising (now Social Media) we can influence/manipulate consumers to think the world of us" doesn't work... you have to commit to delivering a service that actually makes people think the world of you!

They're ignoring the customer and trying to manipulate the revolution like a cheap dictator

They could use Social Media to their benefit!
Stop listening to your buyers, agencies, strategy suits and industry guru's!
Just ask your customers and then deliver what they want. Make your customers your buyers! Make your customers your merchandisers! Make your customers your agency!

Through social media you can reach them and you can empower them and you can get them to deliver the feedback for the change your retail business needs. Don't try and get them to buy into your strategies... Make them a part of your strategies

Here's the proof:

Click here and read of the incredibly successful business model that is If you have a short attention span, then just jump to the business model and Company culture and core values sections... should be enough to inspire you.

That's why online sales are impacting traditional retail. It has very little to do with the GST threshhold and everything to do with the fact that we can conveniently and quickly find our own truth on the internet and have it delivered to our door. Then we can rate, review and comment to help other consumers make the right decision. Businesses capitalising on this, don't need expensive buyers, strategists and agencies... they don't even need high cost celebrities and classy stores and as a result tend to be able to offer a better price (even considering delivery) and a more dynamic range.

And on DJ's and the like... well, maybe this is how the Dinosaurs became extinct :-)

So the two steps of the Consumer Revolution so far are:
1) We can join together to get a better deal for all
2) We have each other and we don't need you to tell us what to buy or what a good deal is

For the next one - I'll make sure it's shorter... Promise!


  1. Both great articles! It's amazing how the idea of retailers actually considering the needs of their customers hasn't been thought of yet! When's the next post?

  2. Hi Superlumious... thanks for the comment!
    Well since the last post, I have been bunkered down getting a new venture started. I figured, you can either sit on the sidelines and comment or try and do something.
    Sooo next post is being written now for upload next week and as such will be about my attempts at igniting the consumer revolution