3 ways to compete in retail today
By Steve Horwitz
The problem facing Sears, and that will face other similar retailers who cannot solve it, was that it got squeezed from at least three sides.
- It could not provide the range of products and service in any one narrow category as did large firms like Best Buy.
- It could not provide the low prices of firms like Walmart, nor did it offer goods like groceries to expand the range of customers who walked in the door.
- It did not capitalize on the need for online retailing with the convenience and breadth of an Amazon, which now is also in the grocery business.
Any large retailer that wants to survive in the 21st century has to find a way to respond effectively to at least one of those concerns. A reorganized Sears, and stores like Macy’s or JC Penney, will need to either try to compete downscale with Target and Walmart, or compete upscale with something like Nordstrom. Or they are going to have to find a way to muscle into the online world far more effectively.
Much in the same way that the general store has largely disappeared, at least in a form other than dollar stores, so will the midscale large retailers likely find themselves extinct in the near future. This is a good thing for American consumers, who have found far more value in the various options they now have with respect to price and quality, specialization, and online presence. This sort of dynamic change is a sign of a healthy, competitive economy that is delivering value for consumers. Firms need to either adjust to that new reality or face the fate of Sears.
Steve Horwitz is an economics professor at Ball State University.