By Wayne Jordan
The Business Insider headline read: “Warren Buffett just dropped Walmart and signaled the death of retail as we know it” [http://read.bi/2lInSM6].
Fear not, antiques retailers; this misguided assessment raises its ugly head from time to time. There’s no need for concern. But, in this case, there are a few lessons to be learned by studying the implications of the banner.
Story Behind Buffett’s Retail Reaction
The article by Ashley Lutz explains that Mr. Buffett — the third-richest man in America — has sold off
nearly all of his Wal-Mart stock, about $900 million worth. Amazon, it seems, is besting Wal-Mart in the online marketplace, and Buffet sees this as a sign of the general collapse of bricks-and-mortar retailing. Once a retailer starts on a downward spiral, says Buffet, there’s no recovering: “Turning around a retailer that has been slipping for a long time would be very difficult. Can you think of an example of a retailer that was successfully turned around?”
No, I can’t, Mr. Buffett; on this point I have to agree. But, to paraphrase Mark Twain: “The reports of retail’s death are greatly exaggerated.”
You see, Buffett’s move isn’t a reaction to retail markets at all; it’s a response to the stock market. Amazon’s market shares are worth $356 billion, and Wal-Mart’s are worth a paltry $298 billion. In the first quarter of 2016, Amazon’s stock rose 42%. Currently, MarketWatch calls Amazon “one of the best investments on Wall Street” [http://on.mktw.net/2baMVmw].
Stock Movement Doesn’t Tell Whole Story
I suppose if I were a Wall Street trader, I’d prefer Amazon stock over Wal-Mart stock, too. Amazon leads all online sellers with a market share of 43%. Wal-Mart — contrary to public perception — has only a 10.8% share of U.S. retail sales, fourth behind Macy’s, Sears, and J.C. Penney. Still, fourth-place Wal-Mart crushes first-place Amazon in overall sales: Wal-Mart’s 2015 sales were $482 billion – more than four times Amazon’s $107 billion [http://bit.ly/2mkd3w2].
So, Mr. Buffet, don’t tell me that bricks-and-mortar retailing is dead. It isn’t. Consumers are spending a lot more money at Wal-Mart and other bricks-and-mortar retailers than they are at Amazon, eBay, and other online sellers.
Why? For starters, consumers prefer to handle an item they intend to buy.
Retail: An Unequaled Hands-On Experience
They like to pick it up, examine the construction, and become convinced of its value. And, if they
decide to buy, they like to take it home right-then-and-there. In the May 2016 edition of Behind the Gavel [http://bit.ly/2fZLmoJ], I discussed a 2009 university study by Joann Peck and Suzanne Shuthat that demonstrated that touching an object is an important step along the path to buying it.
Also, most folks enjoy shopping. It’s fun. It’s entertainment. There’s even an idiom for it: “retail therapy.” Whenever I’m on Amazon or eBay, I’m buying, not shopping. Online, items display according to my search term; there are no other choices; no atmosphere; no ambience. I’d never say to my wife “Hey honey, let’s go online and browse for some new furniture.” If I said that she’d think I was possessed by an alien being. But if I said, “Let’s go downtown and hit some antique stores,” she’d have on her hat and coat in a New York minute.
When it comes to new consumer goods (commodities), online sellers are highly price-competitive. They have to be because brands are consistent and price is the only true differentiation. For example, I know that my favorite Wrangler blue jeans will be the same fit and quality no matter where I buy them. For me, a decision comes down to price and convenience. The same brand of guitar strings, vitamins, or bed sheets will perform as well no matter where I purchase them.
Consider the Items Sought
On the other hand, antiques are engaging. They are nostalgic. We can spend a day going from store to store and never see the same item twice. And, if we do, it’s likely that the condition of the two items will differ. When shopping, we often find a few delightful, unexpected items. Even when shopping for something specific, we may go home with an item we didn’t set out to buy. That usually doesn’t happen when we are buying online. The preeminent retail guru, Paco Underhill, author of “Why We Buy” [http://amzn.to/2n1ZTrj] tells us that “almost all unplanned buying is a result of touching, hearing, smelling or tasting something on the premises of the store.”
Try doing that online.
When customers enter your store, they want to be engaged; they want a trip down Memory Lane; they want a shopping experience. It’s up to us, as antique dealers, to meet their expectations. We do that by implementing well-thought-out displays of unique merchandise and providing a clean, welcoming atmosphere. When a customer enjoys a memorable experience they will want to come back.
Fusion of In-Store and Online an Option
Does this mean we don’t need to be online? That depends on your business model. I know many
well-established dealers who don’t have a website and don’t sell on any online platform. But, I assure you that those dealers are leaving money on the table.
I believe that all dealers would benefit from a website, if for no other reason than to be found. Don’t underestimate the number of antique shoppers who use mobile mapping.
For store-centered dealers, online selling platforms are supplemental distribution channels. Choose which ones work for you, and work them consistently.
The antiques business is a key to keeping retail alive. Our stores provide shoppers with an experience they can’t get online. We are destination locations: antique shows, flea markets, and fairs abound across America and draw hundreds of thousands of participants. Towns develop “antique districts” as a part of their tourism plan. Publishers distribute hundreds of thousands of “antiquing” maps annually so that shoppers can find antique stores.
Bricks-and-mortar retailing is not dead. But, online platforms are certainly changing the way consumers buy commodities. Good thing we don’t sell those, isn’t it?