Wednesday, March 09, 2005

Spin-up retail stores

Inc magazine has an interesting article about "instant markets" and "spin-up" businesses. New products and services are introduced so often that as soon as you begin your company you need to starting thinking about reinventing it. The shifting landscape of "instant markets" requires speed and agility. This is particularly true in retailing, where you must constantly update your inventory to sell the latest and greatest ... or someone else will.

The article suggest "spin-up" companies as a solution to shifting markets. Spin-ups are new, fast-growth business units with their own identities. Focus and grow the new unit even if it means letting other parts of the company languish.
Seen many commercials for Apple Macintosh computers lately? Probably not, but you can't escape those dancing silhouettes with the white ear-bud cords. The iPod is the spin-up that ate Apple -- and Apple isn't complaining, given that the iPod has handed the company its first runaway hit in years. Hewlett-Packard's photo-printer business has likewise exploded -- to the extent that Wall Street now regards the unit as representing virtually the entire value of the company.
Rather than building on an existing brand identity, a spin-up creates a new one, often overshadowing or even subsuming what came before. It's a different way of thinking about a company -- not as a seamless whole but as a fractured conglomeration of potentially independent units, some leaping into being and growing fast, others withering away.
Examples in the restaurant are cited. When a company has several restaurants, each with a unique concept, those are spin-ups.

Retailers can do the same thing. New niches sprout all the time in all retail lines. Instead of trying to serve them within a larger store, the niches can be spun-up in their own store with its own identity. This may be necessary to capture the niche ... teens looking for surfer clothes aren't going to shop in their parents' department store even if it does stock the stuff.

A diversified portfolio of small shops may have a better chance at long-term success than a single, large store. Markets change ... don't get caught with all your eggs in one basket.

Pop-up stores with their short life-span are tailor-made for executing an aggressive spin-up retailing strategy.

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