A few newspaper articles caught my attention in the past couple of days. These articles give some interesting insights into new trends affecting retail and business.
Trend#1-Bigger is Not Better.
The first was an article that outlined Home Depot's plans to build smaller stores. The plan is to create stores approximately 26,000-45,000 square feet compared to the 105,000 square feet required for a typical store. This certainly means they have to think outside the box and significantly adjust their approach.
This could spell trouble for the small independently-owned hardware store. After all, one of their competitive advantages is their size because it takes much less time to run in and pick up a few home improvement items compared to shopping at a Goliath like Home Depot.
Watch out Home Hardware!
Trend#2-Change Your Approach to Marketing
The second article focused on Proctor & Gamble's marketing ploy of opening a retail store in downtown Toronto. Called LookFab, its primary goals is to promote a variety of new P&G products. The store is divided into three makeover station and will showcase 6 beauty and personal-care lines. Consumers can get treated to a makeover, receive a free skin analysis, get simple beauty tips, and leave with a bag of freebies. What a great way to promote new products!!
A marketing professor stated that this could be much less expensive than creating a national television ad and I have to agree. An ad can cost as much as $500,000 just to create not to mention the expense required to air that advertisement. In all, P&G would likely spend several million dollars if they took they approach. Imagine how far a million dollars could go with their current approach, especially if they opened stores in major metropolitan areas in Canada.
BTW: The store will be open for less than a month.
Trend #3-Taking Care of Business
The bigger a company gets, the press it usually receives. And not all of that coverage is positive. In the last few years, Wal-Mart has had its share of negative press, particularly due to it perceived labour practices.
According to a recent poll, 71% of shoppers said they view the company "favourably" down from the 76% in 2005. Twenty-seven percent of the people polled said their perception of Wal-Mart has become more negative in the past year. And 11% said they shop at the retailer less because of concerns about the company's practices.
I'll be the first to admit that I do not shop at Wal-Mart. However, I do respect many of their business practices such as; just-in-time inventory, ordering systems, and their ability to command (dictate) terms of doing business with them if you are a supplier.
However, in my opinion, they could have done a much better job at managing this situation if they had taken of their less-than-favourable business practices the moment they came to light.
Trend #4-Utilize Technology
In recent years Starbucks has undergone a massive expansion and found, Howard Schultz, has plans to increase this even more. One of the challenges with this anticipated growth is maintaining consistency from store to store. In fact, I have personally seen a rapid decline in the consistency of their coffee drinks. What is a latte in one store seems to be a cappuccino in another, depending on the barista.
A few years ago I was in Manhattan, where, by the way, there seems to a Starbucks on every corner. I actually heard that there were over 1000 Starbuck just in Manhattan!! Anyway, every store had an automated espresso machine and every coffee I had was perfect. Now, the Canadian seem to adopted this approach. Plus, it also seems that their baristas have undergone an intensive training because virtually every coffee drink I have had lately has been consistently made. Technology works when it is ultilized properly AND when people are taught how to use it.
Take a look at these trends and consider how they affect your business. What can you do to improve your competitive advantage?