- Real Estate
- Food & Drink
July 28, 2019
It was either the retail industry and my perception of it or the media industry and my experience in it.
I couldn’t remember which topic I’d been asked to address when I was invited to speak to the Sioux Falls Downtown Rotary this week. It actually might have been both at different times.
So I decided to share with the club of business leaders a message that has been in my head for a while, and I thought I’d write it down too.
As you know from reading SiouxFalls.Business, I spend a lot of time covering retail. It’s one of the largest industries in Sioux Falls and of broad interest to readers. I have been fortunate to learn from industry experts every year when I attend the industry’s largest annual convention, RECON, put on by the International Council of Shopping Centers.
I also have spent more than half my life working in the media industry. My first paying media job was reporting for The Plain Dealer, the daily newspaper in my hometown of Cleveland. I was 15 when my first story was published, and I remember making a beeline for the newspaper sitting in the kitchen every morning that I woke up and suspected my byline would appear.
I started gaining experience in television about the same time. When I was 20, I did regular on-air work thanks to the support and mentoring of the team at KELO-TV. I watched every newscast – from the morning show through the 10 p.m.
Point being, while I’ve been in the industry awhile, it hasn’t been that long. But it has been long enough for me to experience incredible, fundamental change and to observe enough to know we are far from done with it.
If you think about media and you think about retail, they both inherently involve consumption. In the case of retail, it’s about consuming products and services. In the case of media, it’s about consuming information and insight.
The way we as consumers have changed our approach to consumption has dramatically affected both these industries. And while this metaphor isn’t perfect, I think you may agree it fits.
Think about newspapers as department stores. In one era, they were consumer destinations for what they provided. The masses patronized them. You felt you could get anything you needed there. You basically felt good about the brands connected to them.
Today, your options for what department stores carry are vastly broader. You can buy apparel, shoes and household items from a huge range of specialty retailers and, of course, online. You also can consume information online or from more niche media, often for free, if you’re OK with a delivery mechanism that doesn’t involve a print product. Increasingly, most people are willing to make the switch.
There are plenty of factors behind these shifting models, but I think the growing income disparity nationwide plays into it. Department stores that used to cater to a middle-class clientele, such as Sears, have really struggled, while those that cater to upscale and value-driven customers are doing better.
You can make a similar argument for newspapers. If a consumer is on a modest or moderate budget, is that person willing to make room in it for a print news product? Sometimes, but generally only if that person is basically a lifetime subscriber. In other cases, even something like a $10-per-month digital subscription may not be worth it to a household of more limited means. Sorry to say, but if it’s your local paper online or Netflix, I suspect I know which wins.
The broadcast media – radio and television – have been more insulated but not immune from changing consumer habits. Think of them like grocery stores.
Broadcast media and grocery stores still capture the masses. You need milk, fruit or eggs? You’re headed to the grocery store. You’re wondering about the weather or what breaking news happened overnight? You’re probably – though not always – turning on the television.
This is changing too, though, and I could see it about to accelerate generationally.
It’s kind of amazing to me when I ask people younger than 40 about their television-news viewing habits. Many don’t have them. They are so connected throughout the day that the idea of being home to sit in front of a television at a prescribed time to learn the news doesn’t hold as much value.
Just as grocery stores find themselves disrupted by on-demand deliverer Amazon and other services, broadcast media that rely on appointment viewing I think will find they need to restructure how they deliver content. Whether that new model lends itself to the same level of advertising support remains to be seen.
Then there’s digital media, including my own product, SiouxFalls.Business. I think of us like I think of online boutiques. A decade ago, these barely existed. Today, thanks largely to the rise of social media and the lowered cost of web development, it’s possible to set up shop, target a niche and start reaching an audience. The lower barrier to entry and instant feedback we receive allows us to constantly test things and hone our business models.
So where does this leave us, the media and the retailer? Retail, for better or worse, is probably better positioned to figure that out. That industry has had to innovate many more times than the media industry has. It generally has operated with more competition and smaller margins, and both have left it with perhaps a little better honed business acumen.
For much of local media, I think the future lies in figuring out how to mirror another type of retailer: the wholesale club.
Someone – I hope – is going to figure out how to become the Costco of the media industry. That will entail reaching the masses with a product they consider vital enough to their lives to pay for the privilege of consuming it. And I don’t think it’s as easy as selling a digital subscription.
I’ve also been asked about the role of a nonprofit model to sustain local news. I think in the short term as new models get figured out that nonprofit support to fill gaps in news coverage could be valuable. But I am not sure it’s a long-term solution. Where I would like to see a nonprofit form is around a way to preserve the news that is being reported for posterity. Newspapers have played a critical role in chronicling our history. If they move away from a daily print product, as seems inevitable, or dissolve entirely, we have to figure out how to archive news for the future. There’s probably not a great way to monetize that, so philanthropic support seems to make sense.
I think we have a couple of things pulling in our favor as an industry. One is that it’s a bit easier to figure out a new model when you’re building from the ground up as I’ve experienced in my business. You can add personnel as your bottom line supports it. You’re not beholden to shareholders like the large media companies, so you don’t have to cut costs and increase prices in an attempt to maintain margin.
The other element in our favor is workforce. I know that sounds counterintuitive, especially in this community, but it’s not if you take a little longer view. The upcoming generation of workers consists of people who have been creating content ever since they learned to use a smartphone.
Media leaders must channel that strategically and offer organizational brands and structures that appeal to young workers. If they do, we could find ourselves entering a new age of storytelling just as we as consumers are likely entering a new age of shopping.
Want a sense of how the media industry has been disrupted? Think about how the way you shop has changed.