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Avoiding The Bankruptcy Pitfall
Toys R Us filling for Chapter 11 bankruptcy marks the latest casualty in the retail death knell. Like so many other retailers who have gone before—Blockbuster, Circuit City, and Borders—this announcement was met with a mix of sadness but little surprise.
It still isn’t clear if Toys R Us will be closing stores or what this means for toy makers who account a percentage of their sales to the retailer—11% of Mattel’s and 9% of Hasbro’s. But with the ubiquitous rise of e-commerce, niche industries are scrambling to assemble the right tactic.
There are a few things that brick and mortar and traditional retailers can do to anticipate and mold to the changing times.
The Obvious Suspect
The announcement of the filing was met with a wave of nostalgia and emotion. And with so much public reaction, you would hope a different fate for the toy store that for so many years provided happy memories for children everywhere.
Toys R Us faced debt hurdles and a vastly changing retail landscape, but there are two areas of growth and focus that the retailer should have capitalized on: physical stores and digital fronts.
Provide a Service They Can’t Refuse
The common assumption is that brick and mortar simply cannot compete to the easiness and readiness of online shopping. But as Harvard Business Review pointed out, we are giving way too much credit to e-commerce. Stores like Warby Parker and Apple started out in an online space, but once big enough, moved into actual stores. The problem then isn’t so much physical locations, but how that space is used to enhance, reward, and support the in-store buyer.
Nordstrom had the right idea with their recent announcement of new stores that, rather than stocked with clothes, would provide personal stylists, curbside pickup, and manicures. While this might sound nouveau, Apple has been using this model to successfully incentivize customers to come to stores for years.
Most brick and mortar stores are slowly coming to the agreement that they are no longer simply just providing a product but an experience.
Digital Comes First
Most analysts point to Toys R Us lack of digital investment as a reason for why their climbing debt could not be consolidated anytime soon. They failed to allocate money to places that should have been considered a priority years ago.
In industry surveys gathered by Forrester, eMarkter, and Shop.org, they found that retailers prioritized their mobile efforts at 59% and their digital business at 41%. The report indicated that the importance of mobile was undeniable and most industries saw significant growth in sales due to their e-commerce efforts.
What Leading Industries Get Right
There is an organizational paradigm shift that must occur for businesses to thrive in the age of disruptive markets. Complete overhauls of industries that enjoyed longstanding market shares demonstrate just how ardent competition is.
On Think with Google, they referred to this age as WWW standing for “What I want, when I want, where I want.” Consumers now expect the most seamless and personalized experience and the most hopeful part is that new technologies make consumer sentiment easier to access and understand.
Social logins and digital platforms mean that more is known about the consumer than ever before, but that doesn’t equate to clearer or easier to understand consumer data.
This is where market research investment and buy-in from C-Suite level executives is vital to growth and market domination. Market research is no longer just a commodity or an afterthought, but the vein that pumps life into an organization.
Read our blog on how online communities helps with VoC efforts.