Amazon's latest patent, aimed at preventing alien showrooming in store (!) could be another nail in the coffin of a traditional shop.
In fact Bezos' patent, combined with his Whole Foods snack, raises some fundamental questions:
What is a shop? (Sales outlet?, showroom?, sales aid?)
- Maximum assortment (needs to offer everything, even long-tailed SKUs, selling less than a SKU/month...)
- Online can offer ‘infinite’ selection (‘Amazon 300m items…’)
- Tesco cull 90,000 SKUs to 60,000 SKUs (Cull 1), enough is not enough?
- Tesco discovery of 80/20: 80% sales via 20% SKUs, what really counts instore?
- Sales/sq. ft. (Standard £1,000/sq. ft.) but should we include all sales of the SKU by the retailer, including their ‘show-roomed’ sales, providing they capture these sales on their online facility (but every little blocking of 'alien' sites helps...)
- Redundant space: ‘large space redundancy’ (can franchisees produce adequate returns even with a mix of rental and share of sales?). If not, instore theatre has to generate £1k/annum/sq. ft. or the store performance goes down to say £750/sq. ft./annum, thereby diluting value of the real estate…
- UK mults own a high proportion of their stores, and are locked into the space (because 2% depreciation per annum means 50 years of the same (in this retail climate?)
Who in the supplier or retail company is doing this degree of fundamemntal and open-ended thinking?
Not being an experienced retailer, Bezos does not know what does not work, and goes on to make it work…while expert retailers continue to search for the tram-tracks…
