On the heels of many in the retail flooring industry now learning about Amazon’s installation services push (see here and here) I thought it would be a good time to revisit this subject. There are a few key areas where we have seen specialty retailers come up short which is what makes this such an existential threat.
The number one theme: retailers think about themselves first, and their customers second. Interestingly, I read an industry article on this which proved out that theory in a way. The entire focus of the article was on saving installers from going to Amazon, not on making it as easy for the customer to buy as Amazon does. That’s where the Amazon’s of the world are killing it – they always ask themselves how do we make it easier for customers to buy?
Lack of Leadership
We’ve talked about this before here but we consistently see ownership and management struggling with their own staff – as we call it, we see the inmates running the asylum. It doesn’t matter if it’s inventory technology, a mobile POS, CRM or some other change initiative, ownership and management is by and large not in control. Everything comes down to “my people won’t do X”. While people are important, customers are more important since you can have all the 25yr+ veteran salespeople and staff you want, but if you’re not selling where customers are and how they want to be sold, you won’t generate the revenue to pay those people.
This one has always been strange to me, even having worked for franchised automotive dealers. Vendors have historically provided significant assistance to their dealer network in the form of rebates, marketing programs, and so on. As a result of this, many will sit and wait for a vendor to “give” them something to solve the problem in their own business, rather than taking charge and doing what’s needed to evolve on their own.
Tools Which Magically Solve Problems Without Any Work
We see this a lot. Whether it’s a product rack or a new piece of technology, many owners think buying something alone is enough and don’t account for any process improvements that need to occur. That’s why half-baked solutions like syndicated social media publishing in place of original content have taken hold. People aren’t willing to put in the work.
So What’s Next?
At this point, it’s highly likely vendors are going to be heavily evaluating going direct to their end consumer. This model has been a massive success for many brands, and for customers it ensures you’re getting the genuine product straight from the source. When I said that, a friend of mine balked and immediately asked, “Don’t you think retailers will revolt?” This goes back to the vendor dependence above, it’s given retailers a false sense of security. I answered that sure, they may, but consumers and commercial customers alike won’t. They want to buy this way. And if Yelp reviews are any indication, it’s very obvious the issue retailers are facing is directly related to their sales process not keeping their installers.
The world revolves around the market, and at the end of the day the market/end customer probably doesn’t care about XYZ carpet’s newspaper ad and 40 year history in the neighborhood. They care about getting what they want, how they want it, when they want it. We all answer to the market. Trading on what worked up until today is not going to get any of us to tomorrow.
The overall situation is summed up very well by this quote from Gary Vaynerchuk in the below video (at 7:35), who took his family’s $3MM/yr retail liquor store to $60MM/yr with e-commerce:
You’re basically the owner of four very good book stores in your town the day before Amazon decided to get serious. Your entire life regardless of industry over the next decade will be eaten up by technology.
I think you deserve to go directly out of business if you don’t put in the work. If you’re wrong about what’s about to happen, and you’re not willing to put in the work, you deserve to lose.
The good news: this problem is easy to solve for any retailer for wants to compete and solve it. It’s just a matter of looking around at how people are buying, and lining up accordingly – you’re going to have to do the work to get there though. Otherwise you’re dead and you don’t even know it.