Another nail in to bricks and mortar retailers

Last week I bought lightbulbs - it's always an annoying chore as I forget to write down the details or take the old ones with me - for some reason we seem to have four different types of spotlight in our house and when I get home I invariably discover I've bought the wrong ones, but last week it was different. 

Why?  Because I decided to buy them online and, as increasingly is the case, my first port of call was Amazon (ok, I can hear some of you booing). They directed me off to one of their third-party sellers, who actually was a manufacturer and a few days later a large quantity of bulbs arrived which, lo and behold, all fitted perfectly.

We also had a couple of other deliveries last week, a box full of seasonal organic fruit and veg and another one of beef. Now these weren't from Waitrose, Sainsbury's or Ocado, rather they were ordered online direct from farms and delivered to our door. Now before you think we must live out in some rural idyll, we don't, we live in the 'smoke', right in central London.

So why am I telling you all this? Because a few days ago I was having lunch sitting next to the UK CEO of one of the world's largest electrical beauty product brands. I won't name him or the brand, as what he said might send a chill down the spine of a few of his customers, namely some of the UK's biggest retailers.

We were in mid-discussion about the changing nature of the high street and then he dropped this little bombshell on me, "I can't remember such exciting times", he said, "Social media has allowed us to forge a one-on-one relationship with our customers, something which has never been possible before and that allows us to add real value to their product experience and entertain them with exciting and useful content.  

He continued, "We're also seeing a shift to customers buying online but not just through online retailers, the big difference is they are now buying online direct from us." 

And here comes the boom in the bombshell. He added, "In the next five to ten years I really see us selling the majority of our products ourselves, directly to our customers."

So what could this mean? Here is a company which has been beaten up on margin by Boots, House of Fraser, Argos and all the other usual suspects, year after year. Imagine for a second if all those profits were coming back to them and they were to devote even a small chunk of that to bolstering their marketing budget, especially in social media, where they are already sizeable spenders. 

As a consumer surely the idea of buying direct from the brand who is my friend on Facebook and entertain me through YouTube, Twitter and a blog is more appealing than buying it from Argos or Boots? 

We are probably not going to start to go to individual brands for everything we buy and the value of some items may simply not warrant us doing that (although, lightbulbs and carrots?) but we don't really have to, do we? By going through Amazon which can act as a gateway to third-party brand owners, or Facebook, or Twitter, or YouTube or a blog, it really isn't that much of an effort is it?  Ok, these people will want their slice of the action but it's going to be a hell of a lot smaller slice than bricks and mortar retailers.

Maybe this is more bad news for some of the UK's biggest multiple retailers but also maybe they've had it too easy, haven't had to work that hard for our custom, taken their relationship with us too much for granted and haven't really added value through their so called 'loyalty' schemes. 

Back in the second half of the nineties when I started one of the first digital agencies in London with my business partner John Wood, this level of disruption to the supply chain and the retail model was the promise held out by the internet and many an academic paper was written on exactly that subject (if any a retailer could have been bothered to read one): brands becoming owners of the customer relationship and everything that would entail. 

What has really surprised me is that it's taken nearly twenty years for this promise to become a reality but it turns out what we were all waiting for was the final piece of the jigsaw - social media.


Also see:

http://www.philipbeeching.com/2012/08/why-companies-fail-rise-and-fall-of-hmv.html

http://www.philipbeeching.com/2013/02/bbc-interview-on-future-of-hmv.html

http://www.philipbeeching.com/2013/02/life-after-hmv-trip-down-high-street.html

http://www.philipbeeching.com/2013/03/can-companies-like-hmv-reinvent.html