Stay tuned, as this is just the beginning.
Retail marketing is beginning the sea change as more and more retailers are beginning to understand that the brick and mortar locations, once a positive equity to their bottom line, now look a lot more like the world’s most expensive billboards. Today, you are seeing it reflected in office supplies. But mark my word, the worm has turned and the customer has changed permanently.
What does all this mean? Well, it spells big trouble for everyone in retail from shoes, clothing and all the way to paperclips. Can Staples compete effectively with Amazon? Absolutely not. And here is why.
Amazon does not need to be profitable to succeed. It may come as a surprise to many that, in all of the years that Amazon has been around rewriting the retail landscape, it has NEVER turned a profit. Yet its stock remains one of the Wall Street Darlings.
Amazon is in a different game and is playing by different rules. It is not a business in the usual sense. It is a logistics company whose value is propped up by gamblers (read investors) who are betting the ranch and the dog on a pyramid scheme that continues to self-propagate as long as Amazon’s market share continues to grow.
It might come as a surprise to you that the CEO of a company called Stealing Share calls market share growth a pyramid scheme. But in this case, preference is simply not in lock step with that market share growth. All Amazon needs to do is grab more and more of the online business without regard for profitability and its fortunes will soar. Ask Staples what it means when profits lag. Ten percent of its stores close, that’s what.
Amazon needs to work on its brand. It needs to grab and hold onto an emotional place in our minds and hearts, and transition itself from an amalgamator of distributed goods to a more perfect alignment with our own self-definition as a 21st century shopper. Is “I got it on Amazon” beginning to mean something generic like “I bought it online?” The closer these two statements come together, the more Wall Street will love Amazon and the closer it comes to having its shell game come crashing down.
Poor Staples. It has to compete with a competitor whose feet are never held to the fire and whose success is judged by a different standard. A standard that unfairly favors the anointed.
You heard it here first. This is just the beginning. You are going to find banks, malls, retailers, specialty shops and gift stores all facing the same problem. What do we do with all of these LOCATIONS?