Inside This Issue - Opinion
New retailing order emerging
June 10th, 2013
by David Pinto, Editor
Where have all the retailers gone? Where’s the excitement? Where are the retail companies competitors fear, envy — and attempt to emulate?
The traditional leaders — Walmart, Target and such traditional supermarket leaders as Kroger and Safeway — show signs of struggling to keep up, while their legendary ability to innovate, create, depart from the norm and churn out new experiences has all but vanished.
Retailers that once produced monthly sales gains that approached double digits are now satisfied, or so they say, with increases in the low single digits. Companies that once rolled out new and exciting formats are now apparently content to reproduce what were once breakthrough concepts but have now morphed into the ordinary.
What excitement does exist — and excitement remains the key to retailing success — now resides in a relative handful of innovative retail companies that insist on pushing the boundaries of innovation. Against that definition, here’s a look at the best in American retailing, at the moment:
• Costco. To all appearances, Costco has not changed much over the past decade or so. A closer look, however, reveals that Costco is constantly changing, sharpening its merchandise assortment, adjusting its pricing to provide greater value while encouraging customers to buy more and spend more, introducing new services, and honing the dazzling customer service that the best employee organization in all of retailing consistently provides. Those are merely some of the reasons why Costco is today what it was a decade ago: the most successful mass retailer in America.
• Whole Foods. Observers have grown accustomed to critically evaluating Whole Foods for the very things it does well: providing quality merchandise to consumers willing to pay a premium for that quality. Isn’t that, after all, what retailing is all about? Whole Foods is constantly improving. Today’s stores are more exciting, more innovative, more successful than those of a generation, or even a decade, ago. More to the point, Whole Foods knows its audience — and never fails to market to that audience. So successful has it become in relating to that audience that competitors that once dismissed the grocery retailer are now rushing to copy it even as they criticize it. And food retailing is better for the competition.
• Walgreens. The inevitable by-product of success in retailing, it seems, is scorn. So it is that, while Walgreens’ new generation of flagship stores, having debuted in cities from New York, Boston and Washington, D.C., to Los Angeles and San Francisco, are changing the definition of chain drug retailing in America, critics still grouse. The stores are too big, too crowded, too committed to superfluous (for a drug store) merchandise, too undisciplined, too unwieldy. Never mind. Walgreens has rewritten the definition of a chain drug store while transforming the drug store experience into a daily living experience. Along the way, America’s largest drug chain is reinventing and expanding the drug store experience for millions of its customers.
• Dollar General. Under some of the most talented managers in all of retailing, Dollar General has redefined the dollar store experience much as Walgreens has redefined the drug store experience. Largely as a result, the dollar store is no longer a niche channel, and its customer is no longer a fill-in shopper drawn exclusively by price. With dramatically bold marketing of an expanded merchandise range, Dollar General — and Family Dollar as well — has created a new retailing category. Along the way it has given mass retailers a new, and daunting, competitor.
• The Hispanic supermarket. Almost unnoticed, supermarkets dedicated exclusively to Hispanic consumers have sprung up throughout the country. The best of them are as impressive as any grocery stores in the nation, combining as they do an acute understanding of their core customer with a knowledge of just which products and services will attract that customer. By now it’s old news that the Hispanic consumer is the fastest-growing segment of the total U.S. population. Until now, most attempts to attract that consumer have fallen short, primarily because they have been tried by grocery retailers unfamiliar with the market. That’s changing rapidly — to the point where supermarkets geared to an Hispanic consumer are reshaping the grocery store industry in America.
Certainly there are many other exemplary retailers in the United States, companies that arouse envy and imitation. The point is, however, that the old order is changing — and, more significant, that the mass retailers a generation of American retailers and consumers have automatically accepted and responded to as the inevitable way of things in U.S. retailing will now have to adjust their thinking and rearrange their priorities — for a simple reason: A new retailing order is emerging.