In the 1980’s, I was happy to pay around $30 for an album on compact disc (upwards of $80 in today’s money), from my local record store. Great sound quality, easier to play than vinyl. That was good.
Then along came JB Hi-Fi and I found I could buy a vast array of the latest artists on CD for under $20. Great range, great price. That was better.
Then I discovered Apple iTunes, and I could access and download the same music for about $16.99 an album, and store and play thousands of songs on my iPod/iPhone. Affordable and portable music. That was the best.
And now along comes Spotify (www.spotify.com.au). For $10 a month, I can choose from millions of songs (pretty much any music you can think of), play it on any device, and build and share playlists with my friends. An infinite, instantly accessible, sharable music library? That is better than the best. And it’s no wonder that Maxwell Wessell headlined a blog post on Harvard Business Review: “Why Spotify will Kill iTunes”, and why the popular European-based song-serving service is figured to be worth at least US$4 billion.
The point of this story is that there is always a new idea, a new business model waiting in the wings to make your brilliant concept suddenly irrelevant and out of date. And as customers, it’s surprising how quickly we lose our ardor for an idea or format we once raved about. The little local record shop is no more and frankly, we don’t give a damn. JB Hi-Fi is facing tremendous headwinds as its core products digitize, and many music consumers have moved on. And if my purchase patterns are any indication, iTunes better watch out too.
How do you as a retailer insulate yourself against being displaced by a shiny new offer? Change before you’re forced to change. Act before you have to react.
Best-in-class retailers are constantly evolving and innovating what they do. Mickey Drexler from US apparel retailer J. Crew told the Westfield World Retail Study Tour attendees just last month that “it’s about constant reinvention…not once, it’s constant.” Every week Drexler goes into his stores and asks, “what can we do better?”
This week in Sydney at the Australian National Retailers Association (ANRA) lunch, I heard Bunnings boss John Gillam reinforce that point of view. “We plan for tomorrow,” said Gillam. “We’re always about trying to make our place even better…you’ve got to be looking for something that you didn’t know was coming and react as quickly as you can…you also have to be very innovative…and take customers to something that is even more exciting. That’s how your business will continue to thrive.”
The quick litmus test for any business is to ask the question: “what would the world miss if we weren’t around tomorrow?” If the answer is “not much”, it’s time to move your offer on. And even if customers would mourn your passing now, the theory of business (and retail) evolution says that there is always something better just around the corner.
Time to re-think and re-invent. Smash your business model today before a competitor does it for you.