After reflecting on the demise of Toys r Us, I reached out to my friend and business expert Jim Gilmore, who coauthored a book in 1999 entitled The Experience Economy. This is a quote from him:
“Toys R Us demise indeed indicative of a company not ever fully understanding the Experience Economy. Locally, the closure of Big Fun indicates same failure for local company. Both the big box chain and quirky outlet in Coventry Neighborhood in Cleveland Heights failed to recognize the experience of playing with toys as an opportunity to generate revenue from explicitly selling such, versus merely offering physical goods, the toys. Neither even saw the most basic opportunity to offer birthday parties as offerings (and platform to sell toys), let alone offer toy subscriptions, or B2B playing experiences — say, in conference rooms to stimulate creativity and ideation”.
Retail property owners need to be aware of stagnant retailers who may be hot now, but who don’t keep up with the trends. I can think of some other retailers that will fail because they don’t realize the need for businesses to embrace the experiences consumers now seek . Underwriting tenants’ longevity for leases today is more than looking at their financials, but more importantly, their management and marketing policies and practices. In actuality, the best retail centers today are those offering services (and experiences) such as dental, restaurants, recruiting, hair care, schools and training, etc. If a tenant is just about selling goods, it’s only a matter of time before they get cannibalized by the online alternatives.
The good news is that retail is not dead; it’s just different and will keep changing.
I would recommend Jim’s book which can be found on Amazon.com. By the way, he sold many copies of his books by putting on live seminars all over the country describing how various businesses have employed his principals of implementing “Experiences” into the sale of goods and even services. One of the most simplistic of examples is how a person will spend a quarter to buy a gumball and wait for it to find its way through a funnel and buy another and another just to experience the purchase.
