Luke Davis: Old business ideas come around again
Amazon recently announced its plan to acquire many vacant Sears and J.C. Penney department stores in malls across America to use as distribution centers to assist in speeding up product deliveries to suburban customers. While not publicly announcing this, it would not surprise me if part of this strategy will also involve the installation of Amazon showrooms in these locations as well.
If history has taught me anything it is that everything is cyclical and what was once old always becomes new again over time. In many ways, Amazon’s success has been based on a model of retailing remarkably similar to what made Sears a corporate behemoth 100 years ago. True, delivery times are faster, and, yes, digital pictures and videos on a website have replaced black-and-white pages in a catalog. Generally speaking however, what Sears did then is what Amazon does now.
This form of shopping does have certain disadvantages. As convenient as I find Amazon to be, I often want to see or touch an item before making my purchase. In these instances I have literally stood in a competitor’s store as I completed a purchase online once I was convinced from seeing the product in person that it met my needs.
Brick-and-mortar stores are not ignorant of this phenomenon known as “showrooming” and have put strategies in place to capitalize on these online shoppers entering their stores. Best Buy, for example, matches the price of any retailer that offers the same item online at a lower price. All you have to do is show a Best Buy salesman the lower advertised price on your phone. That is why I believe as e-commerce continues to thrive, a need for them to have showrooms is essential. It just makes sense for online retailers like Amazon or Wayfair to do all they can to keep their customers out of competitors’ stores.
In my opinion, the big-box retail stores’ heyday has come and gone. They cost too much to operate, and the experience for the shopper is less than enjoyable. Replacing it will be smaller retail locations with highly trained and knowledgeable employees who can answer your questions and help you quickly choose and order the items you want for prompt delivery. For many baby boomers this may harken back to what it was like when they went shopping with their parents as children.
It is not just the showroom that is seeing a resurgence. Another trend from a bygone era is once again becoming in vogue. Home delivery of grocery staples has also become quite popular in the wake of COVID-19.
As a child raised on old reruns of shows like “Leave it to Beaver” and “The Andy Griffith Show,” it always amazed me to see that at one time a milkman actually delivered fresh milk daily. While obviously part of the reason for this delivery system was the lack of refrigeration in many working-class homes, there was also an expectation of personal service and quality that for much of my life has not existed.
That too is changing, however. As the desire for farm-to-table products continues to rise, I believe you will see a renaissance of this type of food delivery in which the people who locally produce the food are the very people you buy it from. I have to admit the idea of actually having a dedicated butcher or produce man you know and trust appeals to me and probably many others as well.
In a world that can seem like it’s constantly chasing after the next new thing, the Book of Ecclesiastes provides some perspective. In it Solomon states that there is nothing new under the sun. I’m not sure he was thinking about our buying habits when he made this observation, but maybe he was.
(Past performance is no guarantee of future results. Advice is general in nature and not intended for specific situations.)
Luke Davis is the director of operations and compliance at Stewardship Capital in Independence.