More Retail Stores Going Broke

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

More Retail Stores Going Broke

The Limited is just the latest retail chain to go bankrupt. Sports Authority closed earlier this year. Many others are on the slide down into BK.

There is a lesson or two to be learned from retail.

Marketing is very important to getting traffic which may or may not result in customers. Whether your store is online or in a mall, it is your job to get Attention and traffic.

The Limited started with one store in 1963. Sun Capital Partners acquired the Limited in 2007. That marked its decline. Expansion and Brand dilution worked against it.

Growth for the sake of growth is irrelevant without profit. I see this in the startup world all the time (Uber). Getting bigger as if that is the answer.

In telecom, the alternative provider has about 50K billing accounts. (By the way, doctors need about 5000 patients to have a practice.) It isn't about being as big as Comcast or AT&T (22M accounts each thereabouts.) A wireless ISP can have a thriving business with 2000 accounts - as long as each tower is profitable. Adding towers just to grow will eventually sink your boat. Each tower has to have return on investment. The same as each brick and mortar store.

VoIP is now over 13 years old. The Telecom Act is 20 years old. Retail is older, but the same trend is happening in all 3 areas: shrinkage.

Retail moved online - and malls have to readjust their thinking about what they are to the consumer (think destination attractions). VoIP went from computer to computer to cellphone. No one even thinks about the 500 features that come with the fancy softswitch or PBX anymore. It is more about dial-tone and call quality - and price.

The Limited, JCPenneys, Sears, et al - what was the difference between stores? Not much other than the name on the store credit card. Nordstram, Anne Taylor, The Limited and other chains all opened outlet stores and additional concept stores. This diluted the brand.

A lot of chains are known for coupons, sales and discounting so that a customer would hardly ever pay full price. As jewelry is up for negotiation / discount so to are cars and VoIP. No one wants to pay the first quote. It's commodity, like all but the best designer names. And why are they designer? Because they built up a Brand.

A Brand is a Promise, Expectations, Persona, Value and Unique. It is the difference between commodity and value; commodity and unique.

Don't be like retail. Don't be a store for things. Build a strong message around your service/product, your company, your promise. Brand around that. Or end up like The Limited, JCP, Sears or Sports Authority.

To be fair: a lot of these chains were over-leveraged like Avaya or the ILECs currently. That's fine for expansion in a growth market, but what growth markets are left? Voice? Broadband? TV? SD-WAN?

So too much debt, shrinking markets, no coherent brand led to BK. Hmmm, what does that sound like to you?

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