I recently read an article from the Wall Street Journal (yeah, I’m boring) about the increasing use of Smartphones in-store to get the best deals. By scanning a specific barcode on a product (or reading / typing in the name of the product) customers could run a search on their phone for the best deal right there and then.
Now, with only 5% of all mobile phone users owning a smartphone, this doesn’t seem like a large problem. And it isn’t – right now. Heck, those programs don’t even work as far as I know in Canada. However, it will eventually become a factor and at that point, retailers are going to find themselves squeezed on prices all across the board.
It’s an interesting phenomenon for these big box retailers that b&m game stores have already (and are already) facing. I think many will attempt to adapt in the same way – by paying more attention to branding and the customer experience in the store. B&M game stores have added gaming tables and regular events, food & beverages, expanded and trimmed their product lines and modernised because of competition from online stores.
Of course, there will be others who will attempt to stop this from happening entirely – potentially putting in telephone jammers and the like. After all, those things are quite cheap and concert halls and movie theaters have already started (for entirely different reasons of course).
At the same time, I think with the cut in the retailers margins, these big box retailers are going to attempt to cut costs. I expect we’ll see a lot more self-checkouts (pushing the costs of those machines lower) and probably a push for lower retail rents.
In the long-term; with the big boys of the retail world (excluding potentially fashion / clothing which produces unique products) being pushed on margins; they’ll push back on landlords and on land prices. The big box stores won’t take the 3 – 4 times premium they’re currently paying for retail storefronts, which will eventually push the rents for everyone else down. It’s an interesting phenomenon but one that I expect to play out over a decade or two; not anytime soon.