Every retail client I ever had doubled as a spy.
Wow. Look at all those SKUs
That is, they all spent time mystery-shopping competitors to see what they had and how they did things. My Sam’s Club clients, for instance, might have spent more time in Costco’s warehouses than their own with the result that their warehouses started to look like Costco’s.
For decades, a cold war-like situation held sway with retailers keeping tabs on each other and reacting quickly. More recently, I’d argue that online retail, particularly that other Seattle-based retailer, has effectively ended the cold war and made it harder for bricks-and-mortar retailers to know what’s going on.
Witness the example of fidget cubes. Where they came from and how they got there speak volumes to the new status quo in retail.
For those of you without grade schoolers in your life, fidget cubes are small toys that offer several tactile experiences such as button pushing, switch switching and spinner spinning that supposedly help relieve anxiety. They cost anywhere from $2 to $15. As the parent of a fourth-grader and a sixth-grader, I suddenly noticed them everywhere. Every kid seemed to have one. Almost as quickly, these kids also acquired a complementary fidget spinner.
At this point, you might think “so what? It was Hatchimals last Christmas and something else before that. There’s always a trend.” Indeed. However, unlike the other fads, fidget toys seemed to come out of nowhere, with very little presence in traditional retail. I don’t recall seeing them in Target or Duane Reade. In fact, when my daughter requested one, I didn’t even think to ask who might sell them in the neighborhood and instead simply looked for it on Amazon.
Compare this out-of-nowhere phenomenon with an experience I had years ago in a shopping mall. I noticed that one apparel store was selling clam diggers (the fashionistas among you can probably pinpoint the year). Then I noticed that every apparel store had some form of below-the-knee trousers, whether they called them pedal pushers, cropped pants or something else. If one store had them, every store had them.
Conversely, none of the big retailers seemed to have fidget toys. It fell to Amazon and, perversely, small retailers like newsstands, street vendors and bodegas that buy from fly-by-night wholesalers. When Wal-Mart cross-shops Kmart, they probably won’t see fidget toys, or at least they wouldn’t have in the initial weeks of the craze.
In short, Amazon now has the ability not only to capitalize on but potentially to monopolize a trend. A trend might come and go before big box stores have a chance to harness it. Unlike bricks-and-mortar stores, Amazon does not lend itself easily to meaningful mystery shopping since algorithms make each experience unique. These retailers will lose a vital source of intelligence. Over time, Amazon will enjoy an unassailable advantage in market intelligence and insights.
Well, even George Smiley had to retire sometime.