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The retail revolution.



(CHART OMITTED)

At last week's Emerging Channels conference, Ann Stephens
For the American dime novelist, see Ann S. Stephens.


Ann Stephens (May 21, 1931 - July 15, 1966) is an British actress, popular in the 1950s. Born in London.
 of PC Data posted a chart (see page 2) that points to a quiet but profound upheaval--a paradigm shift A dramatic change in methodology or practice. It often refers to a major change in thinking and planning, which ultimately changes the way projects are implemented. For example, accessing applications and data from the Web instead of from local servers is a paradigm shift. See paradigm. , perhaps--in the retail channel. Over the past three years, says Stephens, software sales volume through traditional mail order and software-only stores has declined significantly. Increasingly, the real action at retail has shifted to outlets that are relative newcomers to the software business--mass merchants, price clubs, consumer electronics and office supply stores.

A lot of veteran channel managers insist these numbers are nothing to worry about. They argue that hard-core computer enthusiasts and corporate buyers still choose to buy from CompUSA and Egghead, and they point out (correctly) that many of the new outlets for software have proven to be expensive to support and prone to failure.

But we suspect the channel veterans are missing something important. During the past few years, the Years, The

the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109]

See : Time
 software industry has largely "crossed the chasm" (to use Geoff Moore's famous phrase) from early adopters to a more mature, mainstream customer base. Almost everywhere, software prices have dropped to levels that are consistent with other mass-market consumer products. And it's no accident, we suspect, that most of the industry's current design and marketing hot buttons--ease of use, self-help content, multimedia, small business solutions--happen to appeal primarily to Main Street and consumer buyers.

Yet when we look at how traditional computer channels reach these new PC users, it's clear there's a major disconnect disconnect - SCSI reconnect . Yes, some PC enthusiasts do visit neighborhood computer stores with some frequency. But the majority of mass-market buyers and small business owners spend far more time hanging out at shopping malls, supermarkets, book and record stores. They watch home shopping Home Shopping commonly refers to the electronic retailing / home shopping channels industry, which includes such billion dollar companies as HSN, QVC, eBay, ShopNBC, Buy.com, and Amazon.com.  shows on TV; they join book clubs and rent movies from Blockbuster block·bust·er  
n.
1. Something, such as a film or book, that sustains widespread popularity and achieves enormous sales.

2. A high-explosive bomb used for demolition purposes.

3.
. Worse, key demographic segments of the PC user base--in particular, women--rarely shop in any computer outlets.

As a result of this growing disconnect between products and buyers, thousands of retail SKUs (at least 16,000, according to according to
prep.
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

3.
 the latest counts) now jostle for a shrinking amount of shelf space in computer stores. Toss in publisher consolidation (which tends to take shelf space away from smaller developers) and fierce price competition among best-sellers--and the traditional retail channel begins to look like a dangerous bottleneck A lessening of throughput. It often refers to networks that are overloaded, which is caused by the inability of the hardware and transmission lines to support the traffic. It can also refer to a mismatch inside the computer where slower-speed peripheral buses and devices prevent the CPU  to the industry's long-term growth.

So where will we find new shelf space (and buyers) for software? In fairness, the skeptics are right: We won't reach software buyers simply by parking a crate of fresh databases next to a grocery store's avocado avocado (ä`vəkä`do, ăv`–), tropical American broad-leaved evergreen tree of the genus Persea of the family Lauraceae (laurel family).  display. Even outlets that seem closer in concept to software--such as book, music, and video stores--have seen software trails crash and burn.

Much of the problem lies with the software itself, of course. Mainstream buyers want appliance-like simplicity and out-of-the-box practicality, and they don't find these qualities in many products designed for early adopters. (It's interesting that software may not sell well in book stores, while "Dummies" books about using software are best-sellers.) In addition, new channels typically require different packaging and merchandising configurations, new price points, and new business practices; their customers respond to sales messages that may be radically different from traditional software marketing themes. None of these changes are trivial, and inevitably many publishers will fail to make the transition.

In fact, it's tempting to compare the migration to Main Street retail channels to the Internet revolution. Just as the Internet forced a painful re-thinking of products and channels, the new retail marketplace is likely to create profound upheaval and new competitive opportunities. We're not sure who'll become the Netscape of the Main Street channel--but there are certainly contenders already eager to play that role..

Ultimately, though, we don't expect the rise of new retail channels to create anything like the Internet revolution. The good news is that software publishers this time are moving into well-explored territory. The mainstream retail world may not fully understand software, but they do know what works (and doesn't work) in packaged goods Noun 1. packaged goods - groceries that are packaged for sale
foodstuff, grocery - (usually plural) consumer goods sold by a grocer

plural, plural form - the form of a word that is used to denote more than one
, in traditional enthusiast A person who enjoys using computers and electronic equipment. Enthusiasts like technology and are willing to learn more of the ins and outs of a product than the average consumer, who just wants to use it. An enthusiast is more like a "prosumer." See consumer and prosumer.  markets, and in small business sales. "This isn't rocket science rocket science
n.
1. Rocketry.

2. Informal An endeavor requiring great intelligence or technical ability.
," says Bob Citelli, a software distribution expert who spoke at the Emerging Channels conference. "It's just retailing."
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Copyright 1997, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Industry Trend or Event; sales through outlets, not mail order or software-only stores
Publication:Soft-Letter
Date:Sep 28, 1997
Words:692
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