In the United States, one of the biggest retail successes of the mid 20th century was Sears. The retailer created a massive business, that in today’s dollars was doing twice as much business as Amazon is currently turning over. And it was built on one critical element – knowing the customer. Sears was eventually swamped by Walmart and others and today we’re seeing online retailers doing the same. Looking back at the past can be a great way to learn how to succeed in the future.
When Sears started growing in the mid 1920s, it was field by a simple strategy. Following World War One, there was a recession in the United States. But a retired general, with a passion for looking at census data, directed Sears to move their business from being purely a mail-order store, into one with bricks and mortar stores, setting up where families were emigrating across the country.
A few decades later, Walmart started buying up land and setting up stores in growth corridors. They were fuelled by a high efficiency model where they had great data about what products sold, from what selves and locales. They used technology to fuel an incredibly detailed view of stock control so they only every ordered what customers wanted. Of course, part of that high efficiency model is not paying great salaries but that’s an argument for a different day.
Today, we see Amazon playing a game that’s modelled on these two approaches.
They have precise analytics that understand customer buying habits, and only stock what they know (not think) they can sell.
With all the attention being given to upcoming entry of Amazon into Australian retail, it is critically important to remember these two things.
- Know your customers
- Know everything about your inventory
We often think everything today is new. But there’s a lot to learn by looking back at past successes and falls.