Out competed

Out competed

Shayon Moradi

This year, according to Forbes, 6700 big-box stores are expected to close throughout the United States. Big retail stores that have been fixtures in American malls for decades like Sears, Macy’s and Kohls are getting out competed in the marketplace. With the end of the recession and the blooming of the American economy, many businesses have been flourishing, but the big box retail industry has been floundering ever since the 2008 Great Recession. President of DECA, senior Gautam Ajjarapu explains why these stores have been suffering and what they can do to climb out of their decline.

El Estoque: Why are all these big retailers like Kohl’s, Kmart, and Sears losing a lot of their market share and closing down so many stores?

GA: I think that companies like Kohl’s are really focusing too much on providing general goods for customers but I think [in] the modern day a least, [companies] have been focusing on specialized products that meet [people’s] best needs individually. So when these big department stores like Macy’s focus on selling very generalized lower quality and almost basic versions of things whereas online retailers like Amazon and more specialized stores, like more specialized clothing stores tend to focus on one specific type of product.
EE: What’s an example of a retail store that uses this more specialized approach?

GA: So you look at things like H&M in relation to Macy’s the reason that H&M is so successful isn’t necessary the quality of the clothes but it’s more, that it offers a simple elegant clothing, unlike Macy’s which offers much more general clothing options. So I think the general trend is toward more specialized products that meet individual customer’s needs rather than just a wide assortment of basic products

EE: Why is Walmart, which is the king of generalized goods, doing better than all these other stores?

GA: I think Walmart offers something unique in its pricing and its convenience aspect that, again, other more general companies don’t have. So I think the way to look it there are two ways of meeting the customer’s needs: by providing something unique through your product or providing something unique through your operations. So whereas places like H&M beat other companies in the products that they offer and the uniqueness of their products, places like Walmart beat other people in the ability to operate more efficiently

EE: Do you think that the expansion of the online marketplace has killed many of the old brick and mortar retailers?

GA: Yeah I think so, the online market and online commerce in general for me is the king of specialization. You can get exactly what you want, you can see exactly how it looks you can do all kinds of shopping without having to move around

EE: What do you think these companies can do to save their businesses before it’s too late?

GA: Well I think that even stores like Macy’s have a couple of unique selling propositions that they can focus on. Right now I think they are just trying to do too much whereas if they try to do certain things that they were good at, certain things that their customers like about them and focus on improving those then I think they can stand a chance against these more specialized companies.