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Poor Retail

by in Telecom

SaaS, or Shopping as a Service is killing retail.

If there was one investment or model that I would have considered safe forever – say 20 years ago, it would be retail. If I had, I was sure wrong.

The Internet and sales tax laws are conspiring to make retail a thing of the past. I live between two fairly new malls in Boulder, and both are hurting. I think they are hurting, I never actually go there any more so I can’t be certain. But the seasonal Halloween stores seem to have anchor locations at both malls.

Best Buy had it made – CompUSA, Circuit City, Ultimate Electronics (local chain), and many more all died – leaving Best Buy the lone (major) survivior. A dream come true, except it is next. It’s a vicious cycle, local stores cost more because of inventory, staff, and location costs. The fact the local store costs more makes us resentful, so forget the option, just buy online unless there is no choice.

The mall used to be fun. I used to like the software stores, the shoe stores, the toy stores, and the gadget stores. All of that has pretty much moved to online now. Online always has more sizes and colors, and frankly it is just easier.  We just had to return an unused item at a local high end kitchen store. The store has been in Boulder for as long as I remember – cool stuff. But they were jerks about the return. I felt bad for them, their empire is crumbling. The one thing they had to offer (not price, not selection) was service and now that is gone. They insisted on store credit instead of a refund. I don’t have these problems with online stores – yes, I have to ship the returns – but I had to pay for parking at the kitchen store. I need to use my credit before they shut down.

Best Buy is currently pushing the Kindle. After Amazon announced the new Kindles that are to ship in November, Best Buy and Staples quickly added to the fanfare with their intent to sell them. It’s like a castastrophe in slow motion. Best Buy really can’t compete with the Apple Stores – so finally a hot consumer electronics item that it can sell. Something cool that can’t be downloaded. But the new Kindles are a fox in sheep’s clothing. These devices are really an Amazon cash register. The new Fire comes with a month of Amazon Prime. That’s Perfect: all the holiday shopping can be done at Amazon with free 2 day shipping thanks to Best Buy.

One of the Best Buy’s near my home is next to a Great Indoors – a Sears version of Home Depot without the building materials. It just announced it will be closing its doors soon. That will push that mall to +70% vacancy. Should be easy to get a parking spot at Best Buy – in fact, I think they are for sale.

There are only a few retails that are doing well. The cleaners are still needed, but as more of us work at home they are seeing demand drop. Grocery is in trouble – 3 major stores have closed recently near my home. People still buy groceries, but fewer grocery stores thanks to Costco, Super Target, and Super Walmart. Costco seems packed. The best category is coffee shops. They are riding 4 waves. 1) America loves coffee (this is a relatively new thing, most of the world laughed at what we called coffee pre 90s). 2) Home offices and distributed workforces make Coffee shops the ideal place for appointments and meetings. 3) The broadband wave – the hotspot in the coffee shop makes it a hot spot. 4) Ordering a hot drink mail order isn’t effective. Coffee shops seem like a safe harbor for retail, except there are too many. There was a Simpson’s episode where every store in the Mall was a coffee shop – too true to be funny.

All this shopping online should be good for delivery services. Unfortunately, the USPS is in dire straights. They just can’t accomodate packages as well as UPS and FedEx. Ironic really. Home delivery has never been more important and the post office completely missed it.

This is likely a swing of the pendulum. Retail is bound to come back. I don’t see it any time soon.

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  • http://qxork.com Fred Posner

    Here’s my 2 cents… I would continue going to the mall or big box stores if it offered any value. I don’t mind paying more if I get something out of it. When I go to stores lately, the customer “service” is horrible– even rude. Sales staff offer no knowledge about the product and “helping” you seems to be an inconvenience.

    There are still exceptions… small shops are that way… apple stores seems to break the mold… and the ones that embrace customer service thrive.

    Borders… every time I walked in I was treated as an inconvenience to the staff. To save money and have a better experience seemed like a no-brainer to many, myself included.

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