Why brands and mass market retailers compete
Ask a true retail visionary how the online / offline shopping experience will evolve over the next three years, and you might not get the answer you expect.
Louis Borders, founder of the pioneering Borders Books & Music chain, as well as the Webvan grocery delivery service that came and went with the dot-com bubble burst of 1999, now runs Global HDS – an acronym for its “home delivery service” which uses robotics and a mass brand-centric mindset to reconnect retail.
While he said the advent of inventory management systems has allowed merchants like Walmart, Target and Amazon to grow beyond what would otherwise have been possible, he said the next wave of transformation – starting with groceries – will begin to threaten today’s retail titans as early as 2025..
“There is a war of the worlds going on, and it goes beyond technology,” Borders told Karen Webster in an interview. “It’s like a hundred year war between brands and mass merchants. Brands don’t like mass merchants, and I say this very politely.
Noting the habit of large retailers adopting fakes – and the brand’s reaction to limiting variety to fight back – he said he was seeing something new: custom, purpose-built platforms that only sell brands. renowned, without venturing into more lucrative (but less desirable) activities. -brand options.
Citing the famous business book “Crossing the Chasm”, which argues that 15% market penetration is the threshold at which companies and sectors can move from niche to mass status, Borders came back to Webvan’s time to make his point.
“Here we are 20 years later, and [grocery is now] at 15%, ”he said. “He’s ready to take the next step, but the technology isn’t there. There is no one solution specifically designed to provide customers with price, convenience and selection online.
While the world’s Amazons, Instacarts, and Walmarts would likely disagree, Borders said he believes these e-commerce giants can be overtaken by lighter competitors built from the ground up to meet the desires of frustrated consumers. aspects of electronic commerce, starting with groceries.
The PYMNTS data matches. According to the How We Eat guide, a Fiserv Carat collaboration, “The rise in online food and grocery shopping offers grocers and restaurants a huge opportunity to gain new customers, but much of it depends on their ability to deliver pickup and delivery experiences that meet the rapidly changing expectations of online shoppers. “
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Aim for price, convenience and selection
Saying physical retail “can’t just do a little better than what it does; they have to reinvent, ”Borders envisions a 2025 where physical stores are much smaller and act more as“ demo hubs ”for experimenting with goods that people will likely end up buying online.
As for his ideas on reinventing e-commerce, grocery shopping is the first step in the HDS Global plan, but Borders said he believes it takes more than food to ‘cross the chasm’ and adapt. to the size of the company.
“Mixed stores are what people want,” he said. “It’s more convenient. When Walmart became a combo store, it was the same size as Target. Then it added groceries and general merchandise, and it’s now seven times longer than Target. , the combined store wins, but nobody built it, still not today [online]. It’s incredible.”
Filling in the gaps that Amazon, Walmart and others have left open, Borders described the winning trifecta for a new e-commerce model.
“The way of thinking would be the dimensions of price, convenience and selection,” he said. “If you have a specially designed solution, it should be able to deliver at store price at no cost. You can even get better prices because the stores are expensive to run. We are now at 15% for groceries. If we can get in for the price, then 85% of the market is ready. But you have to give them the price.
On concepts like convenience, Borders said home delivery will still be a core proposition in 2025, but it will also mean bringing items into your kitchen or offering reusable containers during a brief meeting with a delivery guy who looks like to the milkman’s visits a generation ago.
Calling it a move towards “a very personal retail service,” he added that “it’s more of a ‘store of everything’ than Amazon in some ways because there are more branded products.”
Read the report: The economy of bring it to me
Connected simplicity will win
While he believes robotics, the lack of physical store overheads and a strict focus on established consumer brands will help grocery stores cross the chasm, followed by mixed merchandise, depends a lot on the support of the brands themselves. to beat the best in the business.
“If you walk into a target, you won’t see a single Nike shoe,” he said. “It’s fascinating to me. If you go to Amazon, you won’t see any L’Oréal products except counterfeits and affiliates. You can’t get the goods you want from mass merchants because as much as they can, [brands] limit what they sell to mass merchants. They need them, but they don’t like them.
As a result, Borders said he intends to be the first mass merchant who will not offer his own private label inventory, but will instead be in the “brand camp”.
Borders may be wary of mass merchants, but he’s optimistic about the future of so-called super apps and the growing role and opportunities they have.
“If you think of all the people you buy from as sellers, you probably have hundreds,” he said. “You face this incredibly complex life of managing all of these vendors. So anyone who can come up with a more complete solution will be a winner. Life is complex and people want fewer suppliers.
While Borders has said he believes the changes to large retail stores and grocery chains won’t happen quickly and will still be around in 2025, so will other issues plaguing currently the system.
“COVID shed light on the supply chain, [but] customers don’t care about the supply chain; they care when [goods] are on their doorstep, ”he said. “Now we have stockouts, horrible service levels, substitutions and high prices [on major eCommerce sites], and I think you’re going to see more and more of it. It’s not going to be fixed in three years.
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