Imagine giving driving directions to someone using the pre-GPS method of retailing landmarks for guidance:
You turn right at that place where the vape shop used to be … No, the other one. You know, the one next to that store that used to sell scrapbooking supplies. And baseball cards before that. Just down the street from what used to be the outlet mall …
The stories about vaping (or e-cigarettes) that have appeared in the last week are public health and government regulation stories, but they’re also stories about retail space and developments.
It probably hasn’t escaped your notice that there sure are a lot of vaping-products stores around. The Smoke-Free Alternatives Trade Association (you might think of vaping as a relatively recent phenomenon, but it’s been around long enough to grow its own industry trade group to lobby for its interests) estimates there are 15,000 to 19,000 vape-specific retailing establishments in the United States.
How many there will be in another five years could hinge on what happens in the next five months, or even the next five weeks.
The pace of news stories on vaping has accelerated dramatically in the last five weeks, with reports of respiratory illnesses linked to vaping. The Food and Drug Administration and the Centers for Disease Control are investigating, and Congress is getting involved. Walmart has decided that, “given the growing federal, state and local regulatory complexity and uncertainty regarding e-cigarettes, we plan to discontinue the sale of electronic nicotine delivery products,” according to a widely reported internal memo (although, critics note, it will continue to sell conventional cigarettes). The Trump administration has proposed a ban on the sale of flavored e-cigarettes. Juul Labs, a major produce of e-cigarettes, is also under investigation, and its chief executive has just left.
That’s a lot of turmoil for one business sector to deal with, with that turmoil generated by fundamental questions such as: Is vaping truly a less harmful alternative to cigarettes? Does vaping entice underage consumers to take up the habit? Are the health problems the result of the product itself or what happens when people start adding other substances to it?
If the regulators crack down on some or all vaping products, that might put an end to most vape shops. On the other hand, if Walmart and other major retailers decide the bad publicity associated with vaping isn’t worth the sales generated by those products, that might push more business to the vape shops.
There’s another outcome possible for the vaping emporiums, one which would follow the pattern established in lots of other, unrelated types of retailing — a period of rapid growth, followed by oversaturation and contraction, as the public loses interest and moves on to the next thing.
That may have already occurred.
According to an entry in a Wikipedia article on the subject, in 2014 the association had estimated there were 35,000 vape shops in the United States, more than triple the number a year earlier. We’re hesitating on drawing a trend line between the 2014 and present numbers only because it’s difficult to tell if comparable outlets are being counted in each.
The story of retailing is one of constant change in where, how and what Americans are buying.
The big downtown department store was clobbered by the suburban shopping mall, the discounters and the big-box retailers, and all of them got clocked by Amazon and online retailing. Netflix and streaming services killed the video store. At the dawn of the personal-computing era, chain and independent retailers of hardware and software abounded (anyone remember the Bellevue-based company Egghead?). Those mostly went away, too. The news that Nordstrom Rack will be moving into the remodeled Tacoma Mall, where there’s already a full-line store, is an indication of just how far the concept of the outlet store, once the out-of-the-way place for manufacturers and retailers to unload overstocked, discontinued and imperfect inventory, has evolved.
Then there’s the subset of retailing consisting of merchandise categories and consumer interests that are boiling hot, then cool off rapidly. Sports cards, memorabilia and collectibles were a huge deal, until they weren’t. Collectors were chased away by a glut of pricey inventory. Scrapbooking was a subset of a subset — the hobbies and crafts segment — that for a time seemed to have enough of a population to justify specialty stores catering specifically to it.
Certain retailing fads do prove enduring. The fast-food hamburger chain was a new concept when McDonald’s created it. Americans don’t seem to be losing their taste for burgers, as evidenced by the emergence and expansion of new market entrants (Five Guys, Shake Shack, etc.). It looks as though the coffee shop in its modern, Starbucks-created model, will stick.
Vaping establishments won’t be the last to go through the emergence-contraction cycle. Even though it’s a regulated retailing segment, the category of marijuana dispensaries looks to be ripe for a shake-out period, with at least some of the proliferation of outlets not making it to their 5- or 10-year anniversaries.
But even as that happens, somewhere there is bubbling and brewing a new product category, a niche interest, preparing for its mainstream moment, its catch-fire, everyone’s-doing-it flash of excitement.
As with stock picking, identifying what that next big retailing thing will be is tough. Even tougher: identifying the peak of hype-fueled growth and knowing when to get out ahead of the inevitable collapse and the empty storefronts awaiting the next wave.