Barry's BULL-e-TINS

It’s now almost four years since we closed our Toombul Music business. In its heyday, that business was iconic to music lovers across the nation, and I’m still asked why it closed. The answer is simple. The winds of change were blowing for the music industry and those winds became a cyclone - a cyclone called Internet. And that cyclone is now devastating much of traditional retailing, and here’s why.

No matter how successful our business had been in the past we realised that our business model had become redundant. The combination of an expensive physical location and high labour and inventory costs, became an unsustainable liability that made it difficult to compete with online retailing, and music piracy on the Internet. We had to adapt to newer and different business models.

Herein lies the reason why retailing in much of its current form, is over, and why those businesses unable to make the transition will die.

Here are a few examples. The Virgin Superstores, CompUSA, Circuit City, Tower Records and even the mighty Best Buy is reportedly on shaky grounds. And closer to home, HMV, Borders Books, WOW Sight and Sound, Clive Peters, Clive Anthony and Sleep City, are all casualties of changing retail times.

Retailing is all about living and breathing the customer’s viewpoint. Those that understand this will be a survivor because the consumer is free to choose where, when and how to shop, depending on the experience and convenience. Notice I’ve not mentioned price? That’s because price is a given. It’s an essential part of a buying decision but not necessarily THE most important.

Just observe how Amazon and Apple are continually adapting their business models to match consumer needs. Consequently they have become the Internets most important service providers and are a huge thorn in the side to tradition brick and mortar retailers. Their efficient inventory and distribution control, management of customer relationships, competitive pricing, pre and post sales support and customer-harvesting programs are all examples of key competitive advantages for all retailers that wants to stay in business.

But many retailers find it difficult to adapt to alternative retail channels and endure self-inflicting wounds by protecting market share over profit. David Jones is a current example of declining sales yet could have successfully adapted an online channel years ago, because of its long experience in retailing. While transitioning to the Internet may be revolutionary for retailers, it’s simply evolutionary for consumers as they easily adapt to alternative purchasing channels.

Adaptability is imperative as an industry restructures to combat changing consumer options. The Internet has returned the power to the consumer and expensive shopping malls could well become mere window displays for future online shopping.

The old saying “The more things change the more they remain the same” is as true today as it ever was. When I think back 25 years when I was building our music business, the media at the time constantly reminded me that times of change were upon us. In fact my whole life’s journey has been constant adaptation to change. While I didn’t always like and embrace it, change was ever present in my top 10 lessons of business building. (Actually, it was number 6 on my ‘Hit List’ in my first book, A little Bull goes a long way’.) The same conditions of change existed for me 25 years ago, so nothing has really changed except the need to constantly review where you fit into the future of your industry and the minds of your customers.

It’s so easy to view the future through the rear-view mirror of past accomplishments, rather than determine what success looks like in the new digital world. And the biggest change in modern times is the way in which the Internet has become an essential conduit for consumers to research and access goods and services.

25 years ago, if you wanted local news you read the newspaper or watched the six o’clock news and read trade magazines and attended trade shows and conferences for business information. Radio and TV were our daily entertainment outlets, faxes were big news for business, mobile phones were a luxury item and ‘google’ was yet to become a verb.

So here’s the paradox for retailers. Do we need expensive showrooms to demonstrate merchandise, when customers can begin their buying journey by educating themselves on a tiny hand held device? All that expertise, knowledge and range is available from the Internet.

I’ve long held the view that the customer is the most important component of business building not the profit. The latter will follow if you get the former right. Success for me came by finding our niche and building a word of mouth reputation for being the best in our market category. Who better to help them find answers to their problems and to trust with purchasing decisions, than us? We definitely weren’t all things to all people because that’s not what niche marketing is about. If you ignore your uniqueness you quickly undermine what makes you different. But if you find your niche and develop a small force within your fields of expertise that you can own, you will become recognised as the expert in that niche. So when it came to music and home entertainment - we were the ‘experts.’

We made sure that our knowledge was worth sharing and our customers not only responded; they became the source of future referrals. As a specialty business, finding our niche and developing ongoing relationships with our clients wasn’t just instinctive behaviour, it was key to our survival.

So if you momentarily patronise my notion that nothing’s changed, except the way in which we connect with our customers and how they now access goods and services, then isn’t this worth considering?

Become the expert and customers will find you to help solve their problems.

Share your expertise to build your business by creating an effective database that allows you to electronically connect with your clients by regular E-newsletters. Just like I’m doing now. Promote it on social networks, webinars, your website and become the information source that the trade magazines used to be. Shared knowledge and information is the gateway for new business and the optimiser for existing client loyalty.

To be the best in business today, you need to do what you do best and let everyone know. Like I said…nothing’s changed in 25 years!

In the words of Charles Darwin, “It is not the strongest of the species, nor the most intelligent that survives- it is the one most adaptable to change.”  If you apply his theory of evolution to today’s business conditions then the message is clear - adapt or die.

Retailers, particularly the coalition of big brick and mortar chains, are claiming a competitive disadvantage with on line Internet retailers who benefit from GST exemption on items under $1000. While they say it’s not a level playing field, they are crying foul to a non-existence umpire because the game has changed.  It took the consumer to level the playing field and this is hardly surprising because it’s always been this way. No matter what business you’re in, the customer is always right and if you don’t give them what they want, and how they want it, then someone else will.

The challenge for any business as the operating environment shifts is to adapt to new consumer preferences or be left behind.

Ask yourself this simple question. What are the forces that are driving change in your industry? Regardless of the business, I suggest there are only two answers -the GFC and the Internet. And the paradox is that both leverage off each other. Cash strapped consumers are discovering significant benefits by purchasing on line.

What have you done to combat declining market share and is your on line offer competitive? The winners in the future will be those businesses who successfully combine a strong physical and on line presence to their customers. Unfortunately few retailers have achieved this.

If traditional retail is to survive in a world where every product with a model number is available with the click of a keyboard, then they must adapt to embrace new and changing consumer preferences. And their real competitive advantage is not GST exemption because this will never happen. It’s offering top quality in store service from well trained informed staff with strong after sales service.

But it’s not just retailers who are competing with Internet traders.

I visited a website to locate a local printer and discovered I could get a quote for any size job for any quantity with free Australia wide delivery. And if that wasn’t enough, within five minutes I received a call from an international printing broker advising they can submit my job to hundreds of printers to get the lowest price.

The Internet claims another industry!