The turmoil in financial markets is revealing an interesting truth, “too big to fail” is fraught with public policy and financial risk. Seriously, is anyone really comfortable with the notion of any bank or insurance company having so much scale that our financial future relies on their continued existence? How about an auto manufacturer that is declared immune from bankruptcy and all costs to the taxpayer?
The “Wall St. and Main St.” analogy has been seriously overplayed, but that won’t stop me from using it one more time. Much has been written about the implosion of retail chain stores Linen-n-Things, Circuit City, and Mervyn’s …. but as I make my way through daily errands with local retailers I am not seeing the precipitous drop off in activity that would predict such large scale retail failures.
A very effective way to gauge retail activity at the local level is simply to ask. Most small business owners, store managers, and even retail clerks will be quite forthcoming when asked “how is business” and that picture can be compiled into a picture of overall economic activity in a local region.
There is a drop off in retail activity, clearly, as people think twice about purchases that would previously have been an impulse buy, but it’s not apparent that this is being felt equally by all retail segments (case in point, the store manager at Babies-r-Us told me their sales were up 2% last month).
I don’t think consumers are abandoning mass market retail, certainly not so with the sales and discounts that can be routinely found, but I do believe that local retail is resurgent as consumers stick close to home, and quite possibly value the intimacy of local retail experiences as, for lack of a better word, comforting. Greg Cohn dubbed this an extension of the “slow food movement” in a conversation we had recently.
I have always been a big advocate for local and hyper local but equally fierce in my criticism of local retailers who either fail to offer superior service and believe that it is a forgivable indulgence to charge prices well above what could be found elsewhere. In other words, local retail can’t suck and cost more than national chains just for the privilege of being a locally owned business, in fact the bar for good service is actually higher in local retail because there is an expectation of it born from the business being a member of the community as opposed to simply located there.
There remains a significant opportunity in local search but that window is closing. The big search engines continue to enhance their local search products and local retail is learning how to take advantage of these services. Niche search sites are improving the depth of their search results and in the case of review sites, it’s increasingly uncommon to find businesses and categories that feature no reviews.
Mobile local search is a related topic but that’s one I’m not so bullish on, primarily because mobile search in general is a niche compared to broader web search as a result of device and behavior circumstances. Having a mobile experience to augment a web-based service is a winner in my opinion.