Oct 3, 2011

R.I.P. Strip Malls

An interesting thing happened as I drove to the store recently.  Shopping centers are changing.  I know, a revelation, right?  But then I read an interesting article, Walmart-Your Friendly Neighborhood Grocer, and it got me thinking.
Excerpts:
When you think Walmart, you generally think big and you don’t generally think groceries, but its Neighborhood Market stores may change that.
"Chicago opened its third Walmart this week, but this is a Neighborhood Market store, according to the Chicago Sun-Times. At about 27,000 square feet, the downtown store is a fraction of a regular-sized Walmart, which can be as large as 150,000 square feet.  And while groceries are typically 1/3 of the product sold at a Walmart, it takes up ¾ of the Market.
Walmart has been opening Neighborhood Markets since 1998 and now has 155 nationwide, but they are about to go into a boom time, with the company planning to have 300 of them by 2013.  Walmart also runs the even smaller Walmart Express stores nationwide, which are usually about 10,000 square feet.”
It is an interesting thing to consider ... strip malls and shopping centers will cease to exist as we know them within the next few years, possibly altogether. There you go ... it's been said. The elephant is out of the room. 

It's not a revolutionary thought to say that the internet, with it's wealth of information, infinite customer reviews, and countless avenues for price comparing, has completely reshaped the way we shop. The debate about how a brick-and-mortar store competes, however, is changing. The debate should now be how a brick-and-mortar store survives. I personally believe they won't, and while a scary thought, it should be at the heart of business strategies for future entrepreneurs. 

Walmart sees the writing on the all. The move to create smaller "Neighborhood Markets" for the necessities, groceries and the like, demonstrates that they are moving away from the superstore model featuring items such as household furnishings, clothes, toys, etc, all things you can purchase easily online. In a similar article (Walmart-The Next Tech Giant?), Walmart has assembled a team, dubbed @WalmartLabs, focused solely on their website presence, setting Amazon in their crosshairs, further moving away from the superstore model.

Excerpts:
"Amazon.com has been deemed the next disturber of the technology space. But as the e-commerce leader launches its own tablet device and beefs up its digital content, another retail behemoth is quietly making moves to become the next tech giant.
Tucked in the heart of Silicon Valley, Wal-Mart has assembled a team of 70 developers, computer engineers and researchers — dubbed @WalmartLabs — in an aggressive attempt to position itself at the forefront of social and mobile commerce. 
Born from the $300 million acquisition of Kosmix in May, @WalmartLabs is being led by two Amazon veterans, Venky Harinarayan and Anand Rajaranan.  The duo's comparison shopping site, Junglee, which was acquired by Amazon in 1998 for $250 million, has been credited for the success of Amazon's third-party marketplace. Harinarayan and Rajaranan are also the brains behind, a crowdsourcing Internet marketplace."
It's a winning strategy, and as someone who recently pieced together an entire baby room from Walmart.com (because every item we found in local baby stores was 20% less expensive online), I can attest to the huge price advantage they already hold.

I understand there will be nay-sayers who just can't let go of the concept of a physical store. Indeed, not all stores will disappear, but just look at strip malls and shopping centers today ... filled with stores that offer food, clothes, dry cleaning, veterinary care, and services that require a visit. I would even argue that clothing is going to go online ... following the Zappos model of success someday.

The next generation of shoppers are connected and mobile, and they don't necessarily put the same emphasis on privacy as us old folk do. They are incredibly tech savvy and more mature than previous generations.  They do and will continue to value 2 hours of their time over the experience of shopping at a store, possible several, to find an item they can Google from their smart phone. That's just they way it's going to be.  Shopping centers are going away ... now, it's been said twice.