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Lawrence, KS 66049
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A view of the industry through the eyes of a chain buyer.

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The State of Retailing & The Local Bead Store

The fast pace of changes is creating challenges for all.

by Scott Remmers (June 6, 2011)

(Note: The April 4 issue of CLN asked the following question, "Are Bead Shops Next?" and invited readers to

(Note: Scott and Wendy Remmers operate Brea Bead Works, a jewelry-making store in Brea, CA. Scott is also the founder of the Southern California Local Bead Store Association. To learn more about the group, click on Category Reports.)

In the last 24 months, brick-and-mortar bead store retailing has probably seen more changes than ever before. Everyone is trying to drive business, maintain margins, and figure out what the future will bring if we stay at this new "NORMAL."  The owners are really taking an in-depth look at their businesses. This is not to be a doomsday outlook, but a gut-check on the direction of the bead industry from this brick-and-mortar retailer's perspective.

Our business is changing faster than we can react! I believe a handful of large retailers will continue to be an overall force, but some retail segments will die out. I'm very concerned that the brick-and-mortar bead store could die in the next 5-7 years unless something drastic takes place. In the last year, I can count 6-8 stores that have closed, and they are only the ones that I know about. How many more are there? There are many reasons for this, all based on what is going on in the overall retail industry and the bead industry in particular.

The manufacturers, not the retailers, could change things dramatically. Manufacturers could narrow out customers who are not adding value to their product line. Plus, there already are blurry lines with manufacturers going direct to the consumer and cutting out the retailer. I believe that in the future some bead suppliers may start to enter the brick-and-mortar retail business and/or start selling to the consumer through various sales channels. Even though there are only a few major suppliers in this industry, it is very possible that one or two will try a brick-and-mortar business.

The manufacturers are losing control in one area of their business: they're seeing the end of their brand building because the retailers are becoming the brand managers of those products. This is one reason the manufacturer will decide to possibly sell direct to the consumer. Right now the manufacturer is relying on the retailer (maybe too much) to sell their product. 

The retailers' advantage: they are looking at consumer behaviors every day and leverage their strengths through innovative store-within-a-store concepts or brand-sharing partnerships and are pumping billions of dollars into advertising and developing data on the consumer buying habits.

Large retailers have been learning more about their customers over the last ten years through data mining. Local bead stores do not have the ability to do this, so they should create a sense of community among their consumers. By building a "I'm at home" feeling, they can drive the message that the consumer can see the product first hand, get it that day, and deserve a great shopping experience.

New jewelry-making competitors by the hundreds have moved in over the last 7–10 years, and that means doing business a whole new way. Probably in no other industry is it possible for anyone to become a vendor so easily.  People can buy from anyone at rock-bottom prices, turn around and sell the product at shows, door-to-door to retail bead stores, and the list goes on. The future is bringing us into a new era, with new rules, new roles, and new relationships.

Besides the onslaught of competition, the challenge in the years ahead will be the changing consumers. It will be more difficult to understand their buying behaviors. Why? The Internet, catalogers, and the social media. The consumer will have more knowledge about products and pricing because of instant price-check mobile applications. But will the consumer still want to buy from those sources -- or the brick-and-mortar store they are standing in? Will companies do price matching based on these applications? E-commerce will be more action-based activity versus transaction-based activity because the retail world will dig in and not lose the battle. The reason for digging in is the fact that retailing accounts for 1/3 of the U.S. Gross National Product and is one of the largest sectors in the workforce. If retailing does lose ground to the Internet, it would create tremendous job losses and commercial real estate would suffer dramatic losses.

Consumers are calling more and more of the shots. The trend of finding the lowest possible price is a concern, but many studies show that this can turn around; value-based, pricing-based shopping experience and unique product and stores will make the turnaround easier. This is especially where the Local Bead Store can shine by giving the consumer a shopping experience that includes education, inspiration and friendship.

Retailers have always learned that they need to create value for the consumers, because it is their money that will carry the retailer through the thick of things. It is the shopping experience, the customer service, the smell, the sound, the product, that will bring the customer to the registers. 

Another concern in the overall retail world is that Wal-Mart keeps moving on while we should be concerned if they collapse. That is a major question that the experts continue to examine.

The overall concept of the supercenters will grow, changing the way we shop. With the growth of the supercenter. department stores will be in a death spiral. This is a very vicious circle because of escalating competition from mass retailers and lifestyle specialty stores. There will be more consolidation of the department stores and survivors will return to the core principles. With the department store chains changing, malls are going to change beyond recognition. Stores will do a re-concept versus re-model. Products will have shorter lifecycles because they will have to move fast to meet the customer’s ever-changing wants and needs.

To keep retail moving and not be stagnant, stores and store associates will need to get smarter, due to all of the new technology.  The retailers will be investing more and more into up-to-the-minute updates. Over time, the technology could replace much of the human touch.

The retail bead industry is operated and run many times by the owners. The average age of the storeowners probably falls in the 50+ range, if not older. I believe in the next 10 years stores will close because the owners will be retiring from the business. There are not enough young owners in the industry and probably won’t be in the years ahead because of the risk of owning a small business.

xxx

 

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