What’s old is new again. It’s back to the future. Mobile phones are the new stores.
These and many other metaphors reflect how the technology age is taking us back in time to century-old retail models. Living with technology on steroids will not only revive and make these models new again, but will also geometrically accelerate and propel those models through the next century.
And, not so surprisingly, Eddie (no vision) Lampert, CEO of Sears Holdings, doesn’t have a clue. I pick on him not just because I enjoy doing so, but because I have been doing so for some time based on his total lack of interest in retailing, except for lining his pockets with the “money-spewing machine” retail can be. I single him out more for his lack of understanding the strategic irony that Sears represented when he acquired it. Had he understood the potential (even with his total lack of retail acumen), he might have been able to save his sinking Titanic. Of course it’s a moot point now because we know that his acquisition objective was actually to financially engineer the sinking of Sears and sell off all the “deck chairs,” to add to his incredible personal fortune.
But I digress. What was the strategic irony that he and many others missed early on in this technology age?
It Began Over a Century Ago
In 1908 when about 60 percent of the population in the U.S. lived in rural areas, the only retail store most of them had access to was the Sears catalogue. In that same year, Sears published its now historic catalogue with 1148 pages, weighing 2.5 pounds. It included everything from the cradle a child was born into, to the coffin she would be buried in. It even included a complete home a customer could order and have delivered by mail.
The Sears “store” literally mailed its way into these rural folks’ living rooms and became a wonderful anticipated shopping experience for the entire family as they poured through the catalogue in the comfort of their own homes. This was the beginning of an era of the store going directly to the consumer.
The Seeds of Enormous Change
The year of 1908 was also punctuated with Henry Ford’s introduction of the Model T Ford. Incidentally, the sticker price at the time was $950, which would be roughly equivalent to $26,000 today. Fast forward to Ford’s historic innovation of assembly line production, ultimately providing affordable automobiles to the masses.
Fast forward again to 1956 when President Dwight Eisenhower’s signed the Federal Aid Highway Act, creating a 41,000-mile national system of interstate highways. Approximately 6.2 million cars were sold that year. Americans were going mobile. During the 1950s, an estimated 58 million automobiles were purchased in a country with a population of 178 million; that’s about one car for every three people.
Highways + Cars = Mobility = Lots of Stores
Along with the massive construction of highways, the mall was created with hundreds of shopping centers anchored by department stores and populated with specialty shops. They became the destinations for a newly mobile population. Shoppers left the comfort of their homes and the Sears catalog behind to feel and touch merchandise in these new meccas of consumerism. Now-mobile consumers went to the stores. Often and in droves.
Back to the Future and a New Shock-and-Awe Era
Fast forward again to the late 1990s when something crazy happened on the way into the new Millennium. Behind the leprechaun grin of Jeff Bezos was the brain of a genius. Wall Street believed in his vision enough to grant him a free pass on making profits so he could scale up Amazon fast. The Bezos mantra is that each day is day-one for Amazon with the objective to get “bigger faster.”
He has delivered on that promise. But more significantly, the Amazon phenomenon sparked the now-historic explosion of e-commerce and the innovation of stores going back to the consumers in their living rooms, offices, anywhere and everywhere.
Bigger Shock and Awe
An equally brilliant genius, Steve Jobs, presented the “next biggest thing” – the iPhone — at Apple’s MacWorld 2007. The smartphone changed the world and continues to do so. The iPhone was truly the “igniter in chief” of the entire technology era.
Every store, every brand, every product, service, entertainment and news media brand in the world, is sitting comfortably in every consumer’s pocket. So the world has not only changed, the world of retailing has been flipped on its head, from the store in 1908 being the center of the retail world to the consumer in 2016 being the center. The store goes to the consumer – wherever they are, with whatever they want it, and whenever they want it. It’s a 24/7 marketplace.
The consumer is the new POS – point of sale — and therefore also the point of distribution. So metaphorically, thousands of miles of highways, all the malls, stores, products and services in the world, and millions of automobiles are sitting in a two-by-four-inch device — the smartphone.
How many 1148-page Sears catalogues would fit into the smartphone? Ironically, in the early 1900s, Richard Sears and Alvah Roebuck were every bit as visionary as Jeff Bezos and Steve Jobs. These two pioneers figured out how to take the store to the consumers. And the rest is, as we say, history.
Full Circle – An Epilogue for Sears
Had Eddie (no vision) Lampert really understood this enormous strategic distribution shift early on, he might have patched the leak and more quickly pivoted to an omnichannel distribution process keeping his Titanic afloat. He could have taken back the power of the Sears brand as the pioneer in direct in-home sales to customers. Now it’s too late for Eddie. The sinking sound of gurgle, gurgle, gurgle is the real thing.