Q&A: Robert Spector on "Category Killers"
Author Robert Spector answered your questions about the future of 'big-box" stores in a changing retail landscape.
Read an excerpt from his book "Category Killers: The Retail Revolution and Its Impact on Consumer Culture."
A large "lifestyle center" is being planned on surpus Boeing land. This concept has thrived in places like the University district. Would the same hold true in this location?
— Monica Soto Ouchi, Retail reporter, The Seattle Times
R.S.: The fact that a developer envisions a "lifestyle center" in Renton illustrates the "mainstreaming" of this concept. The original lifestyle centers were in tony California suburbs and areas like the University Village. In West Seattle, where I live, the former Westwood Village mall has been reborn as Westwood Town Center. The retailing there is a little more upscale, but it still caters to the demographic of the area.
Lifestyle centers are part of the natural evolution of retailing. We will not be seeing another Southcenter of Northgate or Bellevue Square built in this area, but we will see smaller malls, such as lifestyle centers, which are not enclosed and where stores have their own entrances. This way, shoppers can get in and out the stores more easily.
Jim Cramer (of TheStreet.com) put out this negative piece on Wal-Mart a few days ago. Do you agree with him? He wrote that the colossus of Wal-Mart, the greatest retailer known to man, would stumble badly. He reasoned that a host of other, better retailers - with stores that don't resemble the Soviet-style racks and aisles that Wal-Mart stores have come to resemble - will take share: Target on the fashion side (if you even believe that Wal-Mart offers anything like fashion); Best Buy on the hard-goods side; Whole Foods on the food-retailing side; Lowe's and Home Depot along the do-it-yourself lines; Costco on the large-size wholesale-like goods; and a resurgent Sears, aided by ABCs Extreme Makeover: Home Edition and the retailing touch of Eddie Lampert, courtesy of the Kmart merger. There is still time to sell Wal-Mart's stock: Wall Street won't stop loving this behemoth until long after it has lost whatever charm it once had. — Tim Bueneman, Seattle
R.S.: First a disclaimer: I'm not a stock analyst and I'm sure Jim Cramer knows more about the market than I do. That said, I think I know more about retail. Wal-Mart - love it or hate it - fills a need in the marketplace. I think all those retailers that you mentioned will continue to do very well and continue to take their share of the market. I would strongly disagree that Eddie Lampert has a "retailing touch." A real estate touch, definitely. An investment touch, without a doubt. But a retailing touch - that has yet to be proven. I don't see the Sears/Kmart combination surviving long term. In Category Killers, I predicted that Sears and Penney's would merge. (Since the publishing business requires a manuscript to be completed six months prior to publication, I wasn't able to change that prediction.) Nevertheless, I predict that Penney's will buy pieces of Sears/Kmart.
As for Wal-Mart, I think it will experience the death of a thousand cuts-increased competition, terrible PR, labor problems, consumer backlash, etc. But it is not going anywhere any time soon. It is expanding overseas, particularly in Asia (it has 40 stores already in China). It is still making its numbers. Do what you want with their stock, but I still believe Wal-Mart will be viable for the foreseeable future.
Which technologies can help small, independent retailers better market to their audiences and thereby compete more effectively with category killers? Please be specific as to which technologies/services have proven to be successful. — Reg Kolinda, Seattle, WA
R.S.: The first technologies to come to mind are obvious: the Internet and the telephone. Does the retailer have a user-friendly Web site that can accommodate special orders? Does your site help you stay in contact with your customers - alerting them about the arrival of new merchandise or an in-store event?
I don't think this is a technology issue. It's an issue of offering consumers something different. If you're going to be a specialty retailer then you must be special.
In Category Killers, I write about a bookstore in Minneapolis called Wild Rumpus. This children's bookstore is set up for children, with lots of animals, and a scary little cottage in the middle of the store to read scary books. Barnes & Noble can't do that.
In the book, you talk about the shortage of workers thwarting Wal-Mart's expansion plans. Do you think the employee shortage gives Internet companies such as Amazon.com a competitive advantage, given Internet businesses are less employee-intensive? If so, why? — Becky Bisbee, Business Editor, The Seattle Times
R.S.: I don't think that the employee shortage necessarily gives Amazon.com, et. al. a competitive advantage. I think the reason why consumers will shop one retailer - online or offline - still depends on price, selection, reliability, customer service, its return policy, etc. But I do believe that Wal-Mart and other big box stores will be slowed down by the shortage of workers. Home Depot is working with the American Association of Retired Persons (AARP) to find older workers who are dependable.
With the rise of the "lifestyle" center, such as University Village, is there any hope for non-downtown urban retail areas, such as Capitol Hill? What can be done to resuscitate such a district to resemble something closer to New York's Soho District or West Hollywood in Los Angeles? — Shane McIver, Seattle, WA
R.S.: Although places like Soho and West Hollywood are seeing the arrival of popular chain stores, both of those areas have lots of unique shops. Regarding our own Capitol Hill, it needs to have the right mix of small chains as well as independent retailers. It is up to the consumer to patronize those smaller stores. That's the only way Capitol Hill or Ballard or West Seattle or Wallingford will represent something special.
Why is the term "big box" applied to retailers like Wal-Mart or Home Depot? — Stan Thompson, Tukwila, WA
R.S.: Because they are large, no-frill boxes. Nothing fancy, just lots of space filled with lots of stuff.
Toys 'R Us, which helped to pioneer the category killer, is ironically facing pressure from an even larger force: Wal-Mart. The toy retailer had to regroup for the 2004 holiday season after Wal-Mart discounted the most popular toys below cost the season before. How has the world's largest retailer changed the playing field for category killers? — Monica Soto Ouchi, Retail reporter, The Seattle Times
R.S.: Wal-Mart kills the category killers. It can go into any category it wants and dominate. In the case of Toys 'R Us, ironically, Charles Lazarus, the founder of Toys 'R Us and the man who launched category killers in the U.S., was on the board of Wal-Mart for many years. Toys 'R Us could not compete with Wal-Mart on price. It couldn't differentiate itself in terms of selection. Plus, toys is a seasonal business. Wal-Mart can go in and out of that category at holiday time, which Toys 'R Us cannot.
What is unique about this area that it spawns such powerhouses as Costco, Amazon.com and Starbucks? — Becky Bisbee, Seattle Times Business Editor
R.S.: This area has always had superior local retailing as well as a group of innovative entrepreneurs who know what to do with a good idea. Eddie Bauer (the man) was a pioneer in that regard. The same holds true today. Must be something in the water.
Our city is overly represented by big box retailers and has no personality of its own, which has resulted in retail slippage. How can we reverse the trend? — Joe Ganem, Federal Way, WA
R.S.: You can reverse that trend by supporting small, independent retailers. It may cost you a bit more to buy at those smaller retailers, but it will give Federal Way - as well as other communities in the same situation - an opportunity to be unique. Support Your Local Retailer!
Given that regional centers and category killers both depend absolutely on cheap oil for both the delivery of their products and for their customers to drive to stores to buy them, what do you think their future will be when oil is too expensive to do either? — Hal O'Brien, Redmond, WA
R.S.: Your question assumes that oil will become "too expensive." Today, the price of oil, factoring in inflation, is not particularly high. Plus, oil, being a commodity, will greatly fluctuate in price. Even if the price of oil became a problem, category killers have online channels through which shoppers can buy goods.
In your book, you say that at no time in American history have we seen such an everchanging retail landscape. How has the category killer contributed to this sea change? — Monica Soto Ouchi, Retail reporter, The Seattle Times
Robert Spector: The category killers have given shoppers more opportunities to buy more stuff in more places. The category killers responded to department stores that had eliminated particularly categories. For example, here in Seattle, The Bon Marche, now called The Bon-Macy's, used to be a major outlet for electronics. Today, The Bon-Macy's and other department stores, don't sell those products any more. The same holds true for toys, books, etc.