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Patanjali Sokaris

Pondering the universe

A new retail model

With the increasing internationalisation of the clothing and other manufaturing sectors, mainly to take advantage of cheap labour, bricks-and-mortar retail stores in developed countries have taken a hit.

This is because while their customers are getting higher salaries than other countries, they still prefer to pay a lot less for their goods than what would cover local labour costs.

Even then, local stores are in competition with overseas online retailers, so their margins have been whittled away. This has meant that these local stores cannot afford to stock full ranges of lines, nor the staff to talk at any depth to customers about their needs.

Because of the lack of range of sizes and options in local stores, many customers are forced to risk buying what they can only get from overseas, without being able to see them for real.

So we have a downward spiral that saps the earning capacity of local businesses. Dilemma! So what is the solution?

The loss of retail revenue from the selling of goods is unlikely to stop until manufacturing costs overseas rise to the point where local manufacture becomes viable again. Not holding one's breath for that one!

However, while manufacturing and selling of goods is declining, the provision of services is increasing, and this provides a clue to how to shift the emphasis of retailing. Make it a service.

For clothing, one of the issues for customers is that buying online is a risk, mainly because clothes sizes are not a reliable indicator of whether items will actually fit, just because we are all individuals and not exactly the same in all proportions to each other, coupled with how clothes are 'cut' differently from maker to maker.

Now, if retail stores could afford to stock the ranges and take the time to help customers, while still allowing customers to buy cheaply, that problem would be solved.

To allow this, a retail store would need to charge a fee to help customers, so that they could stock shelves with full ranges and properly help customers.

Once having found what suits them, customers could then buy where they pleased. Better for the retailer is that they have an arrangement with a distributor overseas, with which they can arrange delivery to the customer for a small fee, allowing the customer to still get their cheap prices.

Of course, it is not economical for customers unless they still save on their one-off purchase plus 'browsing' fee, or they will be buying more of the same in the future, so amortising the fee cost over several purchases. For clothes and whitegoods, people will generally get the same sizes as goods wear out or break down.

This model would allow shops to get the satisfaction of taking the time to really help people, instead of constantly being under pressure to move stock at ever-decreasing margins.

Sometimes it is a matter of seeing opportunity where there appears none.


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