February 03, 2019

Bifurcation: Retail

Let's talk about Bifurcation in three arenas ... today is retail.

Retail is splitting into pieces. You have the best retailers with the best experiences in the best locations. You know it when you see it. You'll be able to offer 3x the square footage and it will be profitable. Anybody who has ever been to Bass Pro Shops understands what this is all about.

This side of the business operates in stark contrast to the rest of retail. Think Gap. For their flagship brand, sales are tepid. Stores are closing. And quite honestly, the 10,000 square foot Gap store is a dinosaur ... if they could dynamically shrink that thing down to 3,500 square feet featuring only winning items they'd do it in a heartbeat ... and if they are reading this and say "no, we'd never do that", then they have no idea how bifurcation is destroying retail.

We're going to have the best stores in the best locations with maximum square footage and maximum experiences.

Everybody else will be optimizing their way through the bifurcation process ... closing stores, building smaller stores, figuring out how to drive online volume which further accelerates the bifurcation process, speeding up store closures and creating even smaller formats. When a "savvy" online brand builds a store that doesn't sell anything, that's the optimization process. They are dealing with bifurcation with smaller experience-centric formats.

Retail is being bifurcated into the future.
  1. Best customers shopping large stores in popular locations, stores big enough to be able to offer great experiences.
  2. Everybody else is bifurcating toward a completely different experience ... smaller stores with only the best products or no products with the best experiences ... but not both because the store cannot be big enough to handle it.
Does that make sense? And don't come back at me with the one example in forty that refutes this as a way of refuting the thirty-nine cases where this is happening ... y'all have seen this, you've experienced it, and you know where it is headed. You are smart!!! Now respond to it reasonably and profitably, ok?

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