The Changing Face of Retail

I wrote an article last year predicting that more and more manufacturers were going to begin to sell direct in response to a few different converging trends, mainly pointed on the fact that information is so accessible that the idea of a middleman is becoming extinct.

surfacestore1Retail is an outdated concept.  The old model of a merchant buying products from a manufacturer at a lower price than a consumer and then selling those products at a mark-up is becoming extinct.  (especially in this economy, see CompUSA, Circuit City) More and more retailers are having to differentiate their offerings through a blend of experience and services.

This week, Microsoft confirmed rumors that they were going to start opening up direct retail brick & mortar stores.  While many manufacturers have been selling direct online for years, they’ve been hesitant as they’re essentially competing with their channel partners.  I imagine we’ll see manufacturers worry less and less about this as time goes on.  It doesn’t mean all retail is dead, it just means that the old notion of what a retailer is defined as, is going to change.

Take Apple for example.  While they’re a manufacturer who sells direct, they still sell 3rd party manufacturer’s software and accessories.  Microsoft will probably do the same, so it’s interesting to see top manufacturers who will probably become huge channel retailers as well.

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2 responses to “The Changing Face of Retail

  1. Totally agree with your points. Retailers are facing increasing challenges in being able to differentiate or only fight on price difference.

    As an E-Business professional, I help manufacturers establish direct sales channels; what I’m seeing is that channel conflicts are valid, and long-time concerns for manufacturers.

    However, in this economy, consumers are more price sensitive and moving online to hunt for the best prices. Retailers are losing a lot of their bargaining power with this trend. As such, manufacturers may be more motivated now to go direct.

  2. I read this article when you posted it, but am re-reading it now – you will like Alice.com… I can’t divulge more than that, but I hope you keep an eye out on us!

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