Stores will never die

I had the good fortune of attending a retail conference last week in Chicago. The Friday morning keynote was Barry Schwartz, author of The Paradox of Choice. The book is phenomenal and I highly recommend it. However, the best part for me was talking to the author after the show.

The book's subtitle is "How the culture of abundance robs us of satisfaction." Mr. Schwartz explained how having 40 toothpastes, 175 salad dressings and 275 cereals in the store leaves us paralyzed, unable to make good decisions, and ultimately feeling less satisfied with the choices we make. I couldn't agree more; our grocery stores carry an average of 30,000 items and enough is enough.

While I was having my book signed, a woman approached Barry Schwartz and said she was from eBay. She asked, "eBay carries millions of items. Are we perpetuating the culture of abundance?" And he thought about it, and said, "No. Because when I go on eBay, or Amazon, or any other website, I know what I want. Amazon might carry a million books, but for me, it only sells about 7. And I want all of them."

What a neat way to think of it. We don't have to know about all those other choices - we've deselected them the moment we type into our search boxes. Amazon isn't overwhelming because I typically know what I want, and I can find it easily.

But what if I don't know what I want? Well then, shopping online is a little harder. Can you really ever "window shop" online? You can view pictures and read descriptions, but if you haven't met the item face-to-face, it's a little harder to Buy It Now. People do, and sometimes it works out, but sometimes it doesn't, and they feel skeptical the next time around.

Personally, if I don't know exactly what I want, I need brick-and-mortar stores. I need to meet, shake hands and get to know my product. Maybe it's a blouse or some lipstick or a set of speakers or a lamp - but I want to decide in three dimensions before I buy in two.

So my theory is this: websites are better when I know what I want. Stores are better when I don't.

It's not that you can't browse online, or go straight to your product in a store. They're just not that good at it - yet. But what if we consider the implications of each, encroaching on the other's territory? What if stores were more like websites, and websites were more like stores?

Well, imagine if I walked into a store and was able to beeline it for the exact item I wanted? I suppose I would be shopping inside a physical version of Amazon. And wouldn't that be neat - I walk into a giant warehouse, tell them I want black strappy sandals, and am transported via a series of superfast moving sidewalks to the black strappy sandal section, where 7 pairs of shoes await my consideration?

Or the opposite case - what if I was browsing on Bestbuy.com, but could don virtual reality goggles which allowed me to type in "Sony video camera," and then suddenly "pick up," "turn on" and "use" 7 different Handycams? You heard it here first, people!

But seriously, smart folks have been predicting the death of retail for years. Saying that one day, physical stores will crash and burn because you can get anything you've ever wanted from the internet. Ultimately, I believe this is not true, for one simple reason: humans will never be able to know what they want, 100% of the time. There will always be moments of indecision. And even if we think we know, we will never be out of new choices. Sure, we settle into routines, and we know we like Tide detergent, Apple computers and size 32-28 jeans from the Gap. Perhaps we can just order these things, online, forever. But what if new jean styles come out? How will we know what kind is best? We better head to the mall to try them on.

I don't think that physical retail will ever die. Unless my crazy versions of the future come true (which they could, I suppose), people will still get in their cars and go to the store when they don't know what they want. Web shopping is still growing, and I don't think we've reached equilibrium yet, but it will come. We'll learn how to use both channels effectively to manage our levels of choice. If stores culled their selections and improved wayfinding, they'd inch ahead in the race. If websites got better at sensory experience somehow, they'd inch ahead. But I say, stick with your strengths. Let stores be GREAT at browsing, let websites be GREAT at beelining, and let us all finish our shopping and go outside to play.

The beauty of focus

So there's this fruit stand in my neighborhood called Stanley's. Rather, it used to be a fruit stand, when it opened 39 years ago. Now it's a small fruit palace. A mecca for produce lovers. And isn't there a little produce lover in all of us?

Stanley's is focused on fruits and vegetables. They don't tell me that, I just know. It's all they sell. No need for ads, inside or outside the store. And Stanley's loves fruits and vegetables. The love is apparent in everything they do. Look at the way they arrange the asparagus. Look how carefully those oranges are stacked. It's small, clean, bright, cheap and busy. In fact, it's darn near perfect.

Stanley's success is indicative of a new (but actually old) trend called cross-channel shopping. You get your pasta at Jewel, your frozen foods at Trader Joe's, your meat at Costco, and your produce at Stanley's. Why do you do this, when so many stores carry all of these items? Because some places are more focused on certain things. As much as every store wants to be the sole provider of all your family's nourishment, they can't possibly do that well. They're not focused enough.

And how could they be? Stores have buyers. A typical grocery store will have a buyer (or three) for produce, for deli, for dairy, for snacks, for whatever other categories they divide their store into. Each of these buyers would love his section to be like Stanley's - his products glorified, given room to breathe, and properly attended to. But things get in the way, big-company things like operational efficiencies and SKU proliferation and staff allocation. Individual categories get trumped by "the whole store." Suddenly you have yesterday's apples getting bruised, 24 kinds of ketchup being carted in on palettes, and frozen foods jailed inside canyons of freezer doors.

So some stores focus, and others diversify. Then what happens? Word-of-mouth happens. People start talking about Trader Joe's, because the whole store is cool, and all, but really the frozen foods are the best thing there. And hey, we just got a Costco membership, did you know they have really good meat? And here, have a strawberry, they're from Stanley's. Yeah, it's amazing, have you been? People like to talk about their good retail experiences, and they like to classify things. If you tell people about TJ's, that's cool. But if you tell them about TJ's frozen foods, you are passing on even more valuable knowledge.

And so I find that a store with focus, with specialty and expertise, will get talked about more. People talk to me all the time about their great retail experiences, and often the more specialized, the better. After hearing about Stanley's for the umpteenth time, I finally decided to make the extra trip. And now I'm hooked.

I'm hooked because I feel that apples bought at Stanley's are special, nay, superior to those from the grocery store. They seem more loved, more expertly picked and more carefully delivered than those at Jewel. The store has focus, and it shows. I'm now a believer, spreading my own gospel about the little fruit stand that could.

In a world where everyone sells everything, I'd like to commend the stores that stay focused. We notice, we return, and we tell our friends.

The long tail of retail

I visited this magazine shop the other day called the Chicago-Main Newsstand. It looked like a newsstand. But it was not. It was a newsstand on steroids.

My boyfriend was planning a trip to the Big Apple, and he wanted a copy of Time Out New York. I was like, "Why would they sell a local magazine, which tells you about events happening in THAT city, in THIS city?" He was like, "Just you wait - they'll have it."

We step inside, and a tidal wave of magazines seems to be crashing down all around us. So. Many. Magazines. So many categories and subcategories. I counted 29 titles in the Aviation section alone. They had a pets section which, beyond just your standard cat, dog and bird publications, had one for people who raise alpacas! There were two copies of this magazine, leading me to believe there are at least two individuals in the greater Chicagoland area who have an interest in these llama-like mammals!

This store had the wide selection, the obscurity, the long tail, if you will. Stores with this type of niche product can usually survive because they have high margins - think super-posh maternity clothing boutiques like Belly Dance or super-quirky rare and beautiful toy stores like Rotofugi.

But on the other hand, magazines aren't high-margin. What do they cost, three bucks? The shop's proprietor can't be marking them up that much. How in the world is this guy still in business?

Well, if you don't have margins, you have to have sales. But selling lots and lots of cheap things is not a guarantor of success. You could never have a niche store like this survive if it were selling other cheap items, like gum or pens. How long would a pen store be in business? Well, how often do you buy pens?

Then it hit me. Magazines are of a time-based nature. New ones come out on a regular basis. For this guy to own real estate in Evanston, and to ever turn a profit, he must have customers who are using his store like a subscription. Coming in every day, week, month or quarter.

And still, I thought, this is the type of business that the internet will render obsolete. You can surely get all of these titles from magazines.com. But then I realized an even greater element of magazine shopping: it's all about browsing. You stand in there and scan. You pick up. You glance through. You read. People were standing around in this store, and by standing around I mean STANDING AROUND. They looked like they lived there! It's fun to go to a place like this, because no matter your interest, you will find an abundance of cool stuff to check out. And you can definitely get lost in there for hours if you want to.

Good luck, Chicago-Main Newsstand. Your business model is based on the nature of your product, and I'm glad to see you're holding out where others have failed.

Oh by the way - they had Time Out New York. And Time Out London.

The science of price

My colleague recently shared with me a slightly disturbing story. She was grocery shopping with her 15-year-old son. The boy took the cart up and down each aisle, and when the sign said "10 for $10," he automatically put ten of the item in the cart.

She finally noticed what he was doing. "Honey, you don't have to buy all ten." "Yes I do, Mom. It says ten for ten." "No you don't, you can buy as few as you want and still get the deal."

At the checkout, they confirmed that Mom was right. But is this always the case? A quick call to my local Jewel confirmed that indeed, a "ten for ten" can also be nine for nine or three for three. It just means the items are a dollar each.

My friend's son was confused. On the drive home, he asked his mom, "Why don't they just say 'A dollar each'?" She told him, "Because then you might only buy one or two. They want you to buy all ten." And then he said, "I see. So they are training us to buy more than we need."

Wise words, young shopper. I wonder how many people this fools. Did you know that "five for $8.00" means that the items are really just $1.60 each? Would you have bought all five? I always buy two orange juices when the deal is 2 for $5. I don't really need two cartons of OJ, but somehow the lure of a deal, a special promotion, is too good to pass up. I'm too impatient to do the math in my head, and sometimes I see a twofer and just assume it's cheaper. That can't be smart.

Pricing is a fascinating science. Why do you think everything is $19.99 instead of $20.00? Because $19 is still in the teens, it feels like a lot less than $20. Um, it's a penny less. But that "price point" theory prevails in almost every type of retailer there is.

What's most fascinating to me is how easily manipulated we are. How many times we are seduced by the "buy one, get the second one half off" deal. That second one is still costing you money! You are not literally saving any money - more is leaving your wallet! And rationally, you know this. But shopping is never fully rational, whether we admit it or not. In a desire to break the monotony of picking up milk and bread, we get excited by a deal. We feel we are "beating the system" when we discover ten for $10. We get emotional, and we grab ten items. Then we rationalize it later by masking our extra purchases with the word "savings."

And stores are definitely complicit in this process. By simply omitting information, such as "You do not have to buy ten of this item to receive the discount," they are tricking at least some people. They aren't conveying lies, and no one would win a court case against them, but they are only selling half the story.

You can't blame a store for trying to sell more product. It's their raison d'etre. But sometimes you have to keep that in mind when shopping. You may like the store, and want to support them, but buying more than you need usually means a waste of money, product, or both.

My colleague's son is still young - plenty of time to un-learn these strange habits that retailers have trained us all to have. But unless stores start owning up to their items' true prices, and practicing a little more honesty, he too will grow up having to watch out for ten for ten.