This Week's Herman Trend Alert

Leadership in Normal 2.0

  The Herman Trend Alert

December 5, 2000

Cross-Retailing: All Things to All People

26 Days until January 1, 2001

In the ongoing scramble for consumers' dollars and loyalty, merchants are expanding their product offerings to attract and serve customers differently. The traditional merchandise mix found at particular kinds of stores is expanding significantly.

Remember when drug stores used to sell prescriptions and health-related items? Grocery stores sold food. Office supply stores sold office supplies. Gas stations sold gas and maybe, soft drinks. Life was so much simpler then.

The shift started a number of years ago. Gas stations began offering food items. Drug stores began offering a wide variety of merchandise including school supplies, snack items, milk and more. Then other types of stores began stocking items normally carried by different kinds of merchants. They were eager to establish themselves as one-stop shopping centers. Now, you can buy replacement computer cartridges at some local supermarkets. Even office supply stores sell cookies and candy, in addition to their bathroom supplies.

What's happening here is the reflection of two retailing trends: First, merchants are responding to our time-crunched society, helping people to manage their time by reducing the number of stops people have to make. People appreciate the opportunity to save the time by buying the needed items where they are already shopping. Second, merchants are taking advantage of the prosperity in the economy that gives people the privilege of buying more impulse items. That's why stores like Bed, Bath and Beyond buy so much gourmet food and candy. And they move large volumes of these non-soft goods products.

The upside: Greater profitability. The downsides are not so obvious. If you subscribe to Trout & Ries' theories of "positioning", these retailers are confusing their customers and will ultimately pay the price in loss of market share.

But something else, equally important, is going on here: In an effort to be all things to all people, these stores, particularly the large ones, are requiring more and more square footage. The convenience of being able to find what they need easily is lost to consumers. They flee to smaller, boutique stores, especially if they can afford the sometimes-higher prices. Let the seller beware.

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