The Branded Pantry

Add another retailer to the roughly 200,000 stores which have closed down since the beginning of the “downturn”. 

In January, at the FMI Midwinter Executive Conference, Tres Lund CEO of Byerly’s reported to a somber group that 200,000 stores had closed out of a market consisting of about 1.1 million “doors.”  While sobering in its own right, the number becomes a bit more meaningful when it is on your own street. 

The ShelfSnap offices are located in the bucolic suburb of Libertyville, 30 miles north of Chicago.  Our office is just north of downtown.  The downtown area has been quite vibrant traditionally, with lots of community activities, bustling traffic on Saturday mornings and Friday noon, summer concerts in the downtown park for business owners and town folk alike.  

Usually, there is one storefront or another that has gone dark at any given point, only to start up a few months later reincarnated as something else.  However over the last 18 months we have seen five shutter their businesses, the latest on this past Saturday.  Only one business has started anew in that time, in one of the empty storefronts.  Thankfully, it is a booming bakery with an impressive inventory.  Hopefully the crowds we see there are enough to keep them in cupcakes (we are certainly doing our part!) 

The store that announced its “final sale” was a women’s clothing store that I had not noticed much about.  Seemed to be high end inventory, and always had a nice display in the window.  A person was in the store the morning I saw their “final” banners so I wandered in and pretended to look at the sparse inventory.  I asked about the reasons for closure.  She teared up a bit, and then said “parties and banks.”  She said her store always had a loyal customer base due to the quality of her merchandise and the quality of the store’s service.  The downturn had affected the number of parties people were throwing which impacted her sales.  She said that has happened many times over the years, and on each occasion the owners buckled down, find new exciting clothes to entice their customers for other less formal needs and tap their credit to last out the recession.  This time their bank, of 20 years, said “no” and closed their line…..and their way of life. 

Clearly, there is much we do not know about this little store and the bank that refused to support it.  What we do know is that 4 more people are now in the job market from the store, the suppliers to that store have one less outlet to buy their goods and the customers will have less unique merchandise to select from when the parties return.  Oh, and there is one more darkened store, peering out from main street in Libertyville.  

You are the CEO.  Ten years ago a competitor emerged creating a new distribution channel.  You eventually followed that competitor into the channel, but not until they had claimed a very substantial chunk of business…a chunk that continues to nibble at your market share.

Now that competitor has opened yet one more channel.   Industry pundits discount the competitor’s self reported  

progress for the new channel, claiming that the product lines delivered through this new format are not full price product and therefore might not represent true impact.  Still, the delivery method has grown from 10% of sales in March of 2009 to 60% of sales in January 2010.  From whom do you take your advice?

Peter Drucker “the most important work fo the executive is to identify change that is already happening.  The challenge is to exploit these changes and to use them as opportunities.  Far too few businesses are willing to slough off yesterday and as a result have too few resources available for tomorrow. ”

The product line in question here are books, the statistics Amazon’s percentage of sales on books “kindle ready”.  The trend is real, rapid and irreversible.  The game is afoot, has been for some time.  Traditional book sellers have already lost with Borders reporting holiday sales off 14% from year ago.   Next year the book source brands people will be talking about for the holidays will be Apple, Google and of course Amazon.   Borders may well be a division of B&N and most probably there will be more empty retail space to add to the over 200,000 retail doors that have closed since the beginning of this downturn. 

I bought two Kindles for Christmas ‘08.  One for my very tech savvy eldest, who travels extensively and reads voriciously.  One for my tech-aphobe wife whose relaxation depends on books.  One week after my daughter left from her Christmas break and went back to work in Texas, my wife still had her head buried in the Kindle and had “improved” the design by adding a battery powered reading light.  The game was clearly well underway at that point. 

What change that has already happened am I failing to exploit?  What game is already afoot, in which I am not engaged?