When Will the Category-Killing Carnage End?
A new breed of retail chain emerged in the 80s that spelled a last hurrah for brick & mortar before the digital floodgates opened in the 90s. Bigger than a specialty store yet smaller than a supercenter, category killers offered every size, style, and color imaginable, all in one place, and at nice prices. Suburban expansion, supply chain leaps, and global communications advances added momentum. Then came Amazon and its wake of digital competitors, slaying niches without mercy. A recent wave of retail bankruptcies attests to how lack of diversification has become a deadly trap. Category killing was a great model…until it wasn’t.
In this quick-take episode, Carol Spieckerman explores the history and future of category-killing and its impact on the retail landscape.
Episode highlights:
Why retail obituaries are riddled with dubious causes of death
Why smart retailers are scrambling to diversify
How category killing quashes retail media opportunities
Why portfolio plays and digital forays won’t save the day
KEY TAKEAWAYS
Brand marketing companies like WHP and Retail E-commerce Ventures are seeing opportunities as more brands falter, especially category killers.
Three main causes of death are cited when category killers bite the dust:
The rise in E-commerce
Shifts in consumer preferences and behaviors.
Competition, particularly as retailers grab onto the high-margin goods that category killers tend to target.
The inconvenient truth is that category killers are out of step with retail’s new mandate: diversify or die. Category killers are inherently narrow from a category and format perspective. Most are single-format operators. Most category killers have been slow to embrace E-commerce, and business model diversification is completely absent among category killers, particularly expansion into solutions and services.
Retail media is another gap among category killers and it’s understandable. It’s hard to position as a media power player with a narrow category focus, paltry online presence, and brands that everyone else has.
