Retail's Deconstruction Eruption
I recently interviewed the principal of digital agency, Coexist, which has developed a platform that layers commerce capabilities onto the popular blogging and photo-sharing platform, Tumblr. Our conversation got me thinking about how hunter-gatherer platforms such as Tumblr, Pinterest, and Instagram are continuing a deconstruction and recontextualizing movement that is now manifesting in retail. Just as users of these platforms have turned appropriation and reassembly into an art form, the retail world is busting up, dissecting, and recombining elements that once seemed destined to remain in their original contexts forever.
For example, showrooming is really just the deconstruction of the previously self-contained in-store shopping process. Thanks to mobile apps, retailers’ walls are now permeable, and shoppers are researching, comparing prices, browsing, and purchasing at any time or place, and in any sequence.
Not long ago, retailer acquisitions involved retailers taking big bites of others and digesting them thoroughly. A prime example is Federated’s 2005 acquisition of May Company, and its subsequent decision to make its crown jewel, Macy’s, its national moniker. In contrast, Walgreen’s recent moves represent deconstruction at its finest. When it acquired Duane Reade in 2010, rather than swallowing the chain whole and folding it under the Walgreen banner, it maintained a separate Duane Reade banner, and wasted no time in deconstructing and relocating select assets. First up was Duane Reade’s DR Delish private brand, which Walgreen plugged into its stores simply as Delish. Duane Reade’s Look Boutique concept was also brought over to select Walgreen stores, as a major vault into the highly-competitive beauty category. The next phase will see Look Boutique serving as a home for brands that Walgreens plucks from Alliance Boots’ portfolio, after having taken a stake in the UK health and beauty group in June.
Retailers have taken to deconstructing their portfolios in order to blow out high-margin opportunities and grab bigger market shares in key categories. Best Buy is looking to open an additional 100 Best Buy Mobile stores, even as it shutters 50 of its big box locations, and its decision to carve out mobility products from the mix in its mainline stores may have been one of its best to-date. Best Buy Mobile stores currently generate 30 percent of the company’s profits, at a time when it is struggling to hold its ground with its legacy businesses.
Only a few months ago, Amazon seemed on track to becoming the ultimate virtual generalist. These days, it’s usurping Walmart as the opportunistic category killer to watch. Walmart has famously disrupted multiple categories that already had homes in its stores, including grocery, toys and entertainment, simply by paying more attention to them. Amazon’s recent rash of category-crashing plays in gaming, action sports, and apparel has it leveraging event marketing, sponsorships, and celebrity tie-ins to seize market share in offerings that would otherwise have stayed buried in its massive marketplace.
Clearly, the monolithic past of retail is splintering. Today, the parts, and how they can be moved around and reassembled, are more important than the whole.
This article originally ran on the International Licensing Industry Merchandisers' Association (LIMA) website.