Here is some stuff I know, the “riffing off some retailing news” edition:
• Remember the big-box store? Of course you do. It wasn’t that long ago.
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The big-box store also went by the sobriquet “category killer” because its focus was one general area of retailing — such as home improvement or consumer electronics — as opposed to broader department stores that offered merchandise in multiple product categories. It also earned the name because of the devastating competitive effect the big boxes had through a combination of low prices (a function of scale), extensive selection and number of locations.
The big box wreaked havoc on small independents, and on some big department-store chains as well. In turn, however, the big-box movement got clobbered by the recession, the shift to online retailing and overcrowding and overdevelopment in retailing. Some big-box retailers went away (Borders, Circuit City, Linens ’n Things, although the last lives on in online form); others consolidated (Office Depot and Office Max) to stay afloat, others downsized (Staples) and still others continue to struggle (Barnes & Noble).
That’s the conventional story, anyway, and it’s a pretty good one, what with the bountiful real-world examples of how the trend has played out.
But it’s not universally true. For certain categories and specific companies, the big box is still a viable retailing model, as evidenced by a report in The News Tribune this past week on the impending opening of a 142,000-square-foot Bass Pro Shops. Hobby Lobby, meanwhile, is adding to its presence in Western Washington with a Tacoma store.
Neither the outdoor-recreation gear nor the crafts category would appear to be underserved at the moment. In addition to the national chains specific to those categories already here (ranging from Cabela’s to locally based REI), at least some of the same merchandise can be found in discount department stores and other types of retailers, and virtually all of it can be found online.
So why the interest in adding more square footage to those categories? Not every category is the same in terms of how customers prefer to evaluate the merchandise. A crafter in pursuit of the right materials to complete a project wants to see those materials in person in a way that no thumbnail illustration and one-paragraph description on a website could ever hope to match. An angler making an investment in a new rod wants a firsthand test of it, rather than relying on someone else’s description and having the hassle of a return or buyer’s regret when the product doesn’t live up to expectations.
The categories aren’t perfect matches — Cabela’s and REI appeal to different subsectors of the outdoor segment — and the competitors within them are constantly tweaking their approaches.
But the construction or conversion of existing retailing space of new big-box outlets suggests that retailing has hardly finished restructuring itself — and may never be.
• Remember the topic of consumer banking in retail outlets? Of course you do. We discussed it in this space back in March, the context being Fred Meyer’s foray into consumer financial services, and moves by other retailers such as Costco and Walmart to offer bank-like services without actually becoming one.
Now Walmart is taking the next step with a national rollout of a checking account, made available in conjunction Green Dot Bank, called GoBank; the retailer says GoBank doesn’t charge overdraft fees or carry a minimum balance requirement, and waives the monthly fee ($8.95) if a customer makes at least one $500 direct deposit per month.
Because of its size (4,900 stores of various formats, including warehouse, in the U.S. alone) and customer base, whatever Walmart does tends to attract attention, and followers. Within retailing, any signs that Walmart customers are taking to the new accounts and that the company is making a financial success of banking will compel other chains that see themselves in competition with it to up their presence in that category.
We’ll repeat the speculation offered last March, that as much as Google and Amazon seem interested in everything, it’s hard to imagine financial services not being part of their product and service offerings. Maybe Apple too, since it’s immersed in payment processing with its new iPhone.
The other response to watch will be from banks, those who want to continue playing in the consumer space anyway, and that includes credit unions such as Boeing Employees’ Credit Union that are increasingly important to that market segment. They’ll need to craft a strategic response, lest they wind up being the Borders or Circuit City of banking.
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Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at firstname.lastname@example.org.