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Are Retailers Relevant Anymore?

November 28, 2012
Just when I thought it couldn’t be any harder to be a retailer in this industry, a couple of manufacturers proved me wrong this year. To wit: Brown Jordan selling direct to consumers on their web site and Summer Classics partnering with Frontgate in a new Internet venture.

In the first quarter of this year, Brown Jordan redesigned their web site. The site went from being informational and brand establishing to an Etail site complete with a shopping cart button and a consumer registion feature opting the consumer in for email blasts announcing sales.

Brown Jordan told all of its retailers and reps not to worry because they would only be selling closeouts and discontinued models on the Internet. The sense we got from them was they had a limited supply of furniture which they needed to get rid of. However, as of today, they haven’t run out of anything. Worse, their recent email blasts have announced discounts as much as 50%.

There is wrong on so many levels from a retailer’s point of view that I don’t know where to start. Let’s begin with how retailers use vendor web sites. Time was every vendor had some sort of consumer brochure which retailers handed out to interested clients. These brochures had no prices, no “special deals,” no "close out" sales. In fact, their only aim was to help consumers come closer to a buying decision at the store that gave them the brochure. The Internet made these printed brochures irrelevant as vendors developed web sites whose sole purpose it was to give consumers information about their products. Retailers began to give out web site addresses and even began to show vendor web sites to the consumer in their store as part of their sales presentation.

When Brown Jordan changed their site, retailers had to think twice about giving out their web address. After all, if a consumer went there they might see a close out they liked. One which was just as good if not better than what they saw in the brick and mortar store. And one that was one deep discount from the manufacturer. Retailers risked losing a sale when they sent a consumer to Brown Jordan’s site.

The other point I find offensive about Brown Jordan’s approach to the Internet is how they communicate directly with the consumer. Remember that "consumer registration" feature I mentioned earlier? I signed up for it just to see what would happen. A lot of email offering specials is what happened. In fact, since November 13, I have gotten three emails one offering up to 55% off of select collections, another for a big Black Friday sale, and a third for a Cyber Monday blowout. Each and every email blast offers the consumer the convenience of shopping from home and bypassing their local retailer. What’s up with that?

To their credit, Brown Jordan reworked their site for 2013. Yes, they do still sell direct to consumers; but, the site is less oriented to direct-to-consumer sales and more to brand information. I just don’t understand why they don’t create a separate web site for closeouts and make their brownjordan.com web site a high impact product information site.

Summer Classics is approaching the Internet in a different way. They are using Frontgatge as an intermediary to gain a presence on the web and catalog sales.  Summer Classics has sold to Frontgate in the past; however, they only opened up a portion of their catalog to them. Now, Frontgate has carte blanche rights to the entire catalog. Right now, they are showing Summer Classics as a part of their web site. However, according to recent news releases, Summer Classics and Frontgate will be developing a special web site just for their Summer Classic product. This is where Summer Classics and I disagree about strategy.

When I was originally told about this, my rep tried to calm my fears by stressing that Frontgate would be selling Summer Classics at a 10% - 20% discount. That would make their prices much higher than mine.  Further, Summer Classics felt that by associating itself with a well know web and catalog retailer, they would increase their brand awareness. Finally, by allowing only Frontgate to sell Summer Classics on the web, they could prevent the “price footballing” that has happened with other brands which allow everyone and their brother to sell their product on the Internet.

All of this would make it a win-win situation for me. More people would know about Summer Classics, demand for their product would rise, and, lo and behold, I would be overwhelmed with customers who would want to buy from me because of my lower price and better service.

As it turns out, Frontgate’s prices are not as low as I was originally led to believe. In fact, the discount they offer is the same as that which I offer. I have to charge sales tax (about 9% in my sales area). They have to charge freight which may or may not be less than the sales tax. And, they have several sales during the season where they offer free freight. Finally they have the advantage of convenience over a brick and mortar store for people who prefer to shop from the comfort of their own home.

Management at both Brown Jordan and Summer Classics have been driven to these strategies in response to rising consumer acceptance of Internet shopping. Neither want to lose out on what they see a lucrative market. I can’t blame them. However, each strategy pushes the specialty retailer a little more out of the main stream. Will there come a time when we are a irrelevant as consumer brochures?

Yours in confused retailing, Bruce