The Future of Retail

Interesting article today in the Wall Street Journal by Tom Hayes and Michael Malone highlighting the rapid and significant change in media and the potential impact on how retailers find and connect with the customer.

Retailers now must reimagine a world where consumers experience products in stores but ultimately buy them on the Web: Stores are for experiences, the network is for inventories. And what in turn prepares potential customers for what to look for in stores? Online communities.

Although the statement above is a bit for effect to help lift sales of their upcoming book, it does raise a legitimate and serious question about the future of the retail experience.  With the majority of shoppers checking reviews online before they purchase, the impact of social networks and word of mouth referral can not be overstated.

Studies have shown that people trust information from their peers above any other source – ahead of the government, traditional media and certainly corporations.  Add to the fact the vast majority of reporters find story ideas on the Internet and you have a great deal of traditional media driven by user generated content, influenced by social networks and word of mouth.

Consumers are increasingly organizing themselves into new communities — not just the big generic social communities, but myriad idiosyncratic slices of narrow, passionate interest (i.e., BlackPlanet, Inpowr and MomsCafe).

These new market spaces, or “meganiches,” may seem small, even strange at first. But when they’re efficiently targeted, they can be highly responsive, lucrative and loyal. Well-established meganiche Web sites include Gamefaq.com for video gamers, Dpreview.com for digital photography aficionados, and Howardchui.com dedicated to mobile phone zealots.

With this shift toward self-organization by consumers, national advertising campaigns as we know them will increasingly become a waste of time and money for many companies. The trick for brands is to cohabit social spaces with these consumers. Social media, and its verb form, “friending,” requires entirely new forms of advertising: bottom up instead of top down, personal rather than public, and subtle rather than full frontal.

Although the term “meganiches” is an unnecessary effort by the authors to coin yet another trendy new media phrase, the concept is accurate.  In fact, some would argue that the next generation of technology will take the niche concept all the way to the individual.

All in all, a very good article and well worth the read – hopefully the upcoming book will be as interesting.

Read the Entire Article

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