Retail is Imploding

Some time ago I wrote about the retail sector (in America and elsewhere) being on fire – and unfortunately, the people running it didn’t seem to grasp that fact. For the record, I don’t believe that the retail sector will ever fully go away until we reach a post-scarcity economy or invent Star Trek-type “replicators” – not that there’s much of a difference between those scenarios. No matter how universal acceptance of e-commerce becomes, there are always going to be those people who want to physically pick up and examine a product before they buy it, and those products that cannot be shipped from a centralized warehouse without raising their price too high to include a profit margin. But just because the industry itself isn’t likely to fold any time soon, that doesn’t mean that individual retailers won’t go under in the meanwhile – and if they actually start charging people just to try out merchandise, it’s likely to be sooner rather than later…

You can check out the original story from Adelaide Now online if you want to, but apparently retailers of specialty merchandise in South Australia are getting fed up with people trying on clothing, testing out high-end camera equipment, getting fitted for wetsuits, and so on – and then leaving without making a purchase because they can get better deals online. Some of these merchants are talking about charging a “fitting fee” or assistance fee of some kind to make up for the lost time and effort, and possibly to replace some of the sales they’re losing to the online competition. The difficulty I foresee with this strategy is that if you start charging people who never intended to buy anything from you in the first place for assistance in figuring out what size, type, features or other characteristics they want, it will not make them any more likely to purchase anything from you…

Now, one could quite reasonably argue that the retailers in this story are effectively being taken advantage of by these online shoppers. After all, the retail stores have to pay their employees to assist these freeloading comparison shoppers, which means that the online shoppers are effectively getting a service for which they are not paying. This is especially true in cases like the wetsuit customers, who will require up to 30 minutes of assistance in order to find the correct specifications, or people who are actually trying out digital cameras, who can take even longer. But while I agree that this is a definite drain on the finances of the retailers, my point here is that imposing this type of fine will not encourage this type of shopper to either purchase anything from your store or pay you your assistance fee; it will only encourage them to find some other way of gaming the system. Meanwhile, this type of fee will almost certainly cause existing customers to stop shopping in real life and start looking for their needs online…

Reading through this story, the thought that came to my mind is that the retailers who are considering this strategy seem to be missing the point – which is to say, they seem to be basing their approach on the assumption that online retailers are some sort of historical aberration, and if the online stores would just go away, everything would be grand once again. At the risk of stating the very obvious, online retail isn’t going anywhere, any more than human greed and self-interest are; if real-world retailers want to succeed in this electronic age, they have to base their competitive strategies on the conditions that exist, not the ones that they wish existed. This can mean moving online themselves, lowering costs to compete with the online retailers, offering services that an e-business can’t, or concentrating on the immediate gratification of taking something home the moment you buy it – which won’t be possible with an online purchase until teleportation devices or the aforementioned replicators become available…

It might even be possible for a real-world retailer to reverse the concept of a “fitting fee” and start offering customers an actual real-world shopping service – come in and we’ll show you all of the features and options available, and even hook you up with the best place to purchase what you want. But just trying to block people from using you to get better deals online will just make things worse…