Day: June 18, 2012

Monday, 18 June 2012

07:53 – Greek elections results are in. New Democracy and PASOK between them have enough votes to form a coalition with a slim majority, but PASOK has announced that it will not be a part of any coalition government that does not include the far-left Syriza party. The most likely outcome is a three- or four-sided coalition that will claim to be attempting to comply with the Troika terms while insisting on their modification.

This result was actually the best that the supporters of Greece remaining in the euro could have hoped for, expecting that it would buy Greece and the euro a little more time. That hope has already been dashed this morning. After a very short upturn in the markets, the plunge has reasserted itself, with Spanish benchmark 10-year bond yields hitting new record highs above 7% and Italian benchmark yields again climbing over 6%. In other words, Spain has lost access to the markets and Italy nearly so.

I just read an interesting article: Will ‘showrooming’ kill businesses?

The interesting part is that the author is completely clueless about how showrooming actually works these days. He talks about people visiting stores to look at items they want to buy, recording the details, and then going home to look up better deals on the Internet. That’s so 2009.

The way it actually works is that people point their phones at the barcodes on the items in the stores. An app running on their phones scans the barcode, hits a price comparison site, and lets them order the product on-line while they’re standing in front of it in the store.

Nor is this a new phenomenon. When I was working at Entre Computer Center nearly 30 years ago, we called them SHABEs. Shop Here And Buy Elsewhere. And that was even more annoying, because they weren’t just comparing prices and then buying somewhere else. They were taking up the time of our sales staff–all of whom were very knowledgeable not just about computers and networking but about their application to business–getting detailed advice and recommendations, and then buying from places that could sell at deep discounts because they employed minimum-wage order takers.

Ultimately, there’s simply no way that local stores can survive if they’re selling what amount to commodities. In that business, you have to be efficient, and brick-and-mortar stores are inherently inefficient. When local stores come up against competition that uses a more efficient business model, they’re going to lose. That’s what happened to music stores, bookstores, and video stores, all of which were attempting to sell commodities in competition with more efficient suppliers.

But showrooming really isn’t the problem. Only a tiny percentage of buyers actually showroom. The problem is that for many stores the vast majority of their potential customers are like me. They don’t bother to visit the store at all. They don’t even consider buying locally. They just use the web to find a good price from a reputable vendor and order the product.

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