The Metail Economy by Joel Bines

Author:Joel Bines
Language: eng
Format: epub
Publisher: McGraw Hill LLC
Published: 2022-01-15T00:00:00+00:00

Killing the Category Killers

For decades, big-box category killers obliterated small neighborhood stores. Category killers provided average service, an average range of products, and an average experience. Their competitive model was basically to accumulate stuff inside a cavernous space. If you’ve read this far, you can see why that’s not going to work as well in a Metail world. They stock products under the bell curve, locating their stores in large off-mall locations, in the hope that will be enough to attract the sheer volume of consumers it takes to make a profit with this model.

And the formula worked, for a period of time. Book chains like Barnes & Noble and Borders ate up the small neighborhood bookstores. Local music and movie stores got razed by Blockbuster, HMV, Tower Records, and Virgin Megastores. Toys R Us ravaged the mom-and-pop toy stores. Until a new model emerged: the category killer killer, called Amazon. You see, killing a category is a strategy that could work for only so long.

Best Buy was also a category killer at one point, but unlike the aforementioned retailers, it realized (before it was too late) that killing categories is not a viable long-term strategy and went all-in to become a category expert. Going back a few years at the height of Amazon’s competitive strength in electronics and computers, if you walked into a Best Buy, it was nearly impossible to find a sales associate who could explain why a certain laptop was better or guide you through the purchase of a home entertainment system. That was because, in an effort to plug the company’s profitability hole, Best Buy executives cut cost after cost without regard for the effect on the customers.

I remember a time when I asked a question about one of the dozens of printer models in the store and was answered with a shrug: true story. Then, in 2012, Best Buy did something unthinkable. It hired Hubert Joly, a CEO who had no retail experience, although he did have his own personal experience as a Me. He began a multiyear campaign to fix the company, leaning heavily on the category expert model. Best Buy reshaped its entire approach and cost structure to become a place where customers could ask questions and get experience-based answers. While the smart money left Best Buy for dead like all the other category killers swallowed up by Amazon, a funny thing happened. The Me’s came back.

This allowed Best Buy to pivot toward more expertise and value-added services, and that emphasis on expertise is precisely what saved it from obsolescence.

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