Today’s post is from Jonathan Lewis, an Account Supervisor at McKee Wallwork & Company. Jonathan guides stalled, stuck and stale brands through the maze of changing technology and shifting market forces. You can reach him at JLewis@mwcmail.com, or @JonathanLewis11 on Twitter.
The rise of Amazon, iTunes, and other online powerhouses has led to a dramatic shift in consumer behavior. The new online business model offers convenience and low prices for consumers and businesses like it because it significantly cuts overhead. However, the ongoing shift in how consumers interact with entertainment retailers has left most brick and mortar companies either barely hanging on or filing for bankruptcy.
Hastings Entertainment, a multimedia retail chain specializing in all of the challenged product categories (new and used books, CD’s, video games, movies, rentals) is doing its best to weather the storm. With 146 stores across much of the United States, Hastings has historically performed well by strategically filling a niche in small to midsize markets, essentially providing big city amenities in small towns by filling the gap between mom and pop shops and Best Buy.
But the rise of Amazon has taken a dramatic toll on profits and sales. An analyst at SeekingAlpha.com described Hastings’ precarious position when reporting “I am not sure one could pick a more challenged area of the retail segment than the categories in which [Hastings] competes” and further “It is unclear to me how this company has managed to survive…”
Although the market landscape looks bleak for traditional brick and mortar retailers, there are two main reasons why Hastings could be positioned to not only survive, but thrive.
1. Strong Foundation
Hastings has continued to defy traditional stock value analysis through conservative management, smart market strategy, and loyal customers; essential qualities needed if Hastings is going to make the uncomfortable changes needed to adapt to the new marketplace. For Hastings’ to survive, it will need to use its conservative management style to increase efficiency while it manages long-term brick and mortar decline. At the same time, it will need to activate and engage its loyal customer base in a way it hasn’t attempted before, using the passion so many feel for the brand to keep it afloat as it evolves with the industry. The question remaining for the management team will be how to leverage the unique niche it has carved out in the market as it ventures into new territory.
2. Brand Idea
The key to adapting to a changing market lies in the entire company rallying around a single, focused, compelling brand idea. Hastings isn’t just an entertainment retailer. Hastings is a thriving community, an organic marketplace, a place where authentic creativity intersects with authentic people. Hastings is an idea. Hastings is the place to find offbeat indie bands, niche movies, and local authors. Hastings could represent the last bastion of what is real in the industry; that intangible quality one can feel when flipping through a paperback or looking through album notes.
As the industry moves from personal touch to impersonal clicks, communicating that intangible quality could be the key to growth. If Hastings can stand for something larger than it’s current business model, it can continue to stay relevant to its customer base while making significant (read: profitable) changes to the way it does business.
Winning the Future
“…when you’re in trouble, the worst path is indecision.”
- Anne Mulcahy, CEO, Xerox
Anne Mulcahy’s wise words represent one of many responses a company can have when faced with an existential threat. Having a strong operational foundation and brand better positions Hastings to navigate the changing landscape than competitors. But in the end, it will be the company’s collective attitude that will make the difference. If Hastings can embolden employees to rally together, embrace change, and pursue innovation like the company’s existence relied on it, Hastings’ future can be as bright as its past.
But if Hastings is struggling with any of the four key internal dynamics identified in When Growth Stalls; lack of consensus, loss of nerve, loss of focus, and marketing inconsistency, then the paralysis of indecision will lead it down the same path of so many brick and mortar giants before it.