RadioShack and now Staples: Five steps for retail businesses in the Internet Knowledge Economy

That Staples will close 224 stores by the end of the year is shocking just after the news that Radio Shack is closing 1000 stores. Shocking because a way of life in American strip malls and malls is changing- just as a Dollar Store replaced Circuit City a few years ago at our nearby Mall.

Staples CEO Ronald Sargent said in today's earnings call transcript:

"Our customers are using less office supplies, shopping less often in our stores and more online, and the focus on value has made the marketplace even more competitive."

The Staples CEO at least recognizes the Internet knowledge onslaught that is hitting the brick retail model of "expert knowledge -young store associates." Unfortunately Radio Shack is in the exact same denial mode that saw Encyclopedia Brittanica Executives ignore the free  CD-ROM encyclopedia disc at the turn of the millennium. According to BusinessWeek,  RadioShack executives  still believe in:

“knowledgable store associates who live and breathe technology.”

The trouble is that an 18 year old  store associate with a high school qualification will never be able to match the power of Google that the casual shopper checks on her smart phone when comparing laptop reviews and prices.

Here are some steps if your business or industry has a knowledge content that you try to provide at the point of sale. Knowledge content being expertise about the product being sold, its use, its maintenance or its service. The steps are:

  1. Assume that the consumer has already checked online before coming to your store or even restaurant. The restaurant visitor might be safely assumed to have read reviews on Yelp, might infact be carrying that Groupon deal you are running. Some impolite customers actually walk out of the restaurant after they start looking at the menu and poor average reviews.
  2. Acknowledge your online reputation instead of pretending that it is not there. Thus, if a particular sea food dish is highly rated online at your restaurant and the customer is asking for fish recommendations – suggest it and say so.
  3. Do not try to create artificial information assymetry ( the salesperson knows more than the customer can find out online). Some stores have computers but still don't allow Internet access. Instead, let the customer and sales associate work together to solve the customers problem.
  4. Reduce your retail space. It's far better to have two small store fronts than one massive store, you save costs on heating and cooling and encourage people to buy online…preferably right from your store.
  5. Move online…not as an afterthought like Barnes and Noble, but as core and fundamental strategy like Amazon.

Beyond office supplies, even high knowledge services like Doctors are not immune from the hyper-informed patient. But more on those high knowledge occupations in a later post. Contact StratoServe.

%d bloggers like this: