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Bye-Bye Big Box, Hello Digital!

on 08 Nov  Posted by Admin  Category: Internet Related  
by Gord Hotchkiss

My friend Mikey (who you may remem­ber from the “Mikey Mobile Adop­tion Test”) and I were recently dri­ving through our home­town, past a long row of new “big box” retail loca­tions that have recently sprung up.
I, some­what exas­per­at­edly, said, “Who the hell is going to buy all this stuff?”

Our town’s pop­u­la­tion is only 120,000 but we seem to have a huge over­ca­pac­ity of retail space, with more going up all the time, thanks in part to a devel­op­ment hun­gry First Nations band with plenty of avail­able real estate.

Mikey replied, “Well, the town isn’t get­ting any smaller and peo­ple need to shop somewhere.”

That, and a recent arti­cle by Medi­a­Post reporter Lau­rie Sul­li­van, got me think­ing. Do we? I mean, do we need to shop “some­where” as in a phys­i­cal store location.

I paused, and then replied, “I’m not so sure. I buy a lot more things online.”

“Really?”

“Really.”

A few days later, I was in a pre­sen­ta­tion where some­one showed dig­i­tal mar­ket­ing growth pro­jec­tions for local adver­tis­ers on a slide. The growth over the next few years was rel­a­tively mod­er­ate – about 5 to 6% year over year. This despite the fact that the cur­rent pen­e­tra­tion rates were well short of 50%.

Put it all together and I can’t help won­der­ing whether we, col­lec­tively, are “sand­bag­ging” our local dig­i­tal growth poten­tial. Mod­est growth pro­jec­tions assume fairly lin­ear trends in the future. We use past adop­tion and extrap­o­late these into the future. Sta­tis­ti­cally, it’s prob­a­bly the ratio­nal thing to do, but what it doesn’t take into account is a dra­matic shift in behav­ior. For exam­ple, what if we’ve reach­ing a tip­ping point where, as Sul­li­van notes, it’s just a lot eas­ier to shop online than to actu­ally hop in your car, drive across town and then try to nav­i­gate through a 25,000 square foot mas­sive retail location?

That’s the way things tend to go in real life. We don’t incre­men­tally change behav­iors, we change en mass. And when we do, we trig­ger mas­sive waves of change that decon­struct and recon­struct the mar­ket­place. I sus­pect we’re get­ting close to that tip­ping point.

Per­son­ally I, like Ms. Sul­li­van, find the phys­i­cal act of shop­ping a royal pain in the tuc­cus.  Recently, my wife and I decided to go buy some coast­ers, those lit­tle squares that go under cups on your cof­fee table. Indi­ana Jones has embarked on less daunt­ing quests. When we finally found them I reckon that, account­ing for my wife and my time at fair mar­ket value, those coast­ers cost some­where around a thou­sand dol­lars. All this for a six dol­lar set of coast­ers that I don’t even par­tic­u­larly like (don’t tell my wife)!

We’re to the point now where shop­ping should be pain­less – a search, click and buy, then relax and wait for FedEx to deliver. Even local shop­ping can become mas­sively more effi­cient through mobile tech­nol­ogy. At some point, we have to real­ize that going to huge retail stores that are built to max­i­mize per visit sales rather than enable you to find what you’re look­ing for is a hor­ri­bly inef­fi­cient use of our time. And when we do, the cur­rent retail par­a­digm is flipped on its pointy lit­tle head. The net impact? Those mod­est growth curves sud­denly shoot for the sky!

And all those big box stores that Mikey and I drove by?

Per­haps bowl­ing will make a sud­den come­back. I know sev­eral great loca­tions for an alley.

Orig­i­nally pub­lished in Mediapost’s Search Insider Novem­ber 3, 2011


Biography / Resume : Gord Hotc