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End Of The Big Box?

4/12/2012 02:04:00 PM

Bloomberg.com recently weighed in on CE retail with an article whose title summarizes the reporter’s contentions regarding the future of Best Buy, Walmart and a few other companies that do business in large stores (”The Era of Big Box Retail is Coming to an End“).

So what’s next?

Bloomberg cut to the chase in the first sentence of the second paragraph of their article, saying, “The new mantra is small box.” That might suggest to all of you going to work in smaller retail stores that you are about to get your just due.  But I wouldn’t rush to install larger entry doors to accommodate the expected increased store traffic just yet.

When it comes to explaining the reasons that stores will be smaller, the authors of this article, and many similar, appear tied up in their dangling modifiers.  The Bloomberg reporters went with the tried and true: Baby Boomers are empty nesting, having raised kids who are now themselves marrying later and delaying having their own children.  All of which is meant to suggest that no one needs a new home AVR, I suppose.

But, curiously, they then refer to what they call the shoppers’ “stampede” to online retail, suggesting people are buying CE, just not in big-box stores.

My radio alarm clock died on Saturday, and Sunday I went looking for a replacement, first at Target, followed by stops at Best Buy and Fry’s.

Once I had walked from the back of an almost completely full Target parking lot, I not surprisingly found the store to be very busy.

And similar to Target, both the packed parking lot and the 30 or so people in the checkout line at Fry’s, did little to support the notion that big-box retail is on the way out.

Only Best Buy was, to be kind, easy to navigate after a short walk though an almost empty parking lot.

This describes the “what” of my weekend CE shopping trip but not “why” that “what” is as it is.  I have my hypotheses but will spare you that here.  However, there is one thing I do want to clarify.

The size of the “box” has little or nothing to do with it!

Apple retail succeeds not because they are in small locations, but because they offer what many consider to be a state-of-the-art CE/tech retail experience.  And the crowds I encountered at Fry’s are certainly not only there to admire the big box in which that company chooses to do business.  While at opposite ends of the “box” spectrum, they both do well because they developed and follow retail strategies that work for them.

To be sure, Best Buy knows they need to change things, but if whatever they come up with does not improve their performance, it won’t be solely or even primarily due to their “box” size.

When considering the future of your business, be careful not to develop your business model based on the “analysis” you generally find in your daily newspaper or weekly (non-CE) business magazine stories addressing the future of CE/tech.

While those who write those articles will know it when they see it, it is also true that they won’t until they do.

And, as of today, they don’t.

William Matthies is the CEO of Coyote Insight (www.coyoteinsight.com) and can be reached at wmatthies@coyoteinsight.com or at (714) 726-2901. Visit Business Wisdom at http://businesswisdom101.blogspot.com/

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