SAN FRANCISCO — Maintaining the status quo is a danger that most often results in stagnation and deterioration for businesses both large and small.
This pattern is well-demonstrated in the retail world that is currently undergoing a major transformation, with many players jockeying for improved market position.
There are some strong lessons to be learned from the successes and failures that have emerged. There is a serious game being played by the traditional and non-traditional retailers as they fight for customer attention, dollars and loyalty.
You may be thinking: “Why does this matter to me? I’m not a retailer. I provide a service.”
On the contrary, your business is directly related to this battle that is being waged by competitive retailers.
Last summer, Amazon.com purchased Whole Foods Markets for $13.7 billion to gain instant access to 18.2 million square feet of prime real estate in the U.S. and Canada (as well as the UK).
This move into the bricks and mortar business in perishables is a new direction from its core business, a move that ownership feels will keep the company growing at its historically-robust rate. The brand also gains expertise in the new category with the acquisition.
Once it masters the challenging category of food, will it then buy or open large-item brick-and-mortar stores like furniture?
Watch out for more of these mergers and acquisitions as other retailers partner or buy access to expertise, revenue and space.
Walmart’s recent $310 million acquisition of Bonobos helped the firm build upon its previous purchase of Jet.com and expand its e-commerce for menswear while bringing the company more expertise and advanced technology in the package. Walmart is trying to combat the incursion of Amazon.com into its retail base.
Other lagging retailers must now play catch-up to be competitive with these two huge (and other smaller, nimble) innovators. Notice the number of empty stores across the continent that have been closed by traditional retailers.
HOW YOU FIT
Dry cleaners can learn from and imitate the successful advances that are transforming the retail landscape. Warning: Avoid the pitfalls of the proven failures as well.
Consolidation — Bricks-and-mortar stores can be expensive to acquire and expensive to run. Location and access is crucial to running profitable stores.
Have multiple stores? Rank each of your locations on the basis of profitability. In what ways are the most profitable stores different from the least profitable ones?
Can you make changes that will narrow the gap? Perhaps you have locations that should be closed to free investment for better locations or other distribution channels, such as your routes or small 24/7 kiosks.
Partnerships — Who has the expertise or technology you now lack? Does a competitor have complimentary locations that would mesh profitably with yours?
Does a merger between similar companies provide an opportunity for economies of scale saving you operational expenses, such as accounts payable/relievable and other record-keeping?
Is there an energetic operator who could be your retirement exit strategy? Think about the immediate and the long-term implications of partnerships.
Acquisitions — Consider the same issues that are listed in “Partnerships.” Perhaps an outright acquisition is more favorable or preferable to accomplish your goals and the goals of your competitor.
Technological Advancements — Our industry has many players who love technology and try to stay cutting edge, but for most owners, this is neither a passion nor a current skill.
Technological advances are dynamic and continuous. For those who would rather use someone else’s programming or e-commerce skills, outsourcing, partnering or hiring are all viable solutions.
Whatever your choice, ensure that your tech provider has the resources and support to move as fast as the constant innovations.
Even if you know how to optimize customer analysis, communication, consumer reach and search engine optimization (SEO), do you have the time to learn the latest advances or actually do the tasks yourself?
Do you have “big-picture” uses for your time and leadership skills to take your company forward?
Take advantage of the opportunities available in the dynamic marketplace.
To read Part 1, go HERE.