As the continued layoffs continue throughout the print media as well as among many of our fellow media brothers and sisters, such as ESPN and others, even the staunchest media supporters are left asking ourselves: When does the tide turn and work in our favour?
To better understand our future and this process, I believe we must come to terms and better understand the trending future of retail.
It is my belief that most categories of retail — our biggest advertising customer — are entering a period or trend of prolonged declines similar to what we in the print media have experienced over the past 10 to 20 years. Furthermore, this irreversible trend has little or nothing to do with recessions and the Internet.
Let me explain why.
Arguably, the largest financially sound generational grouping — the Baby Boomers — have either entered into retirement or they are well on their way in the retirement preparation phases of their lives. In either case, retired or preparing, they are spending less money as they are wanting to assure they can make it through the golden years of their lives in a golden fashion.
Many experts have been predicting this for years. Simply put, this is no longer a prediction. The future has arrived, and their past predictions are playing out exactly as planned.
While the Boomers are retiring, we have a couple other generations to consider as well. The younger generations, including the Millennials and Generation X, don’t enjoy the sport of shopping in the same fervor as their predecessors. In fact, the opposite seems to be true.
For many reasons, they appear far more frugal in their spending habits, and, in many cases, they could be classified as minimalist. It appears experiences are far more valuable than processions. I have seen this in my own life as many of my children would rather bike to work, rent versus buy, and travel in lieu of buying material things. In other words, they live for the experience, not the things.
Add to that the known fact retail space in the United States had grown five-fold while consumer spending has grown only 20%. To contrast that, in the United States, we have 40+ square feet of retail space per consumer versus around 20 in Canada and 13 in the United Kingdom.
Yes, there are many exceptions to the above, but bear in mind it only takes a small percentage of any of the above groups to dramatically permanently alter the overall trends and so forth.
At the end of the day, for the various reasons stated above, three generations are spending much less with no signs of changing. We have an over-abundance of retail space that has outpaced spending by five-fold. The numbers and future are very predictable.
With retail contracting for the foreseeable future, what is a media company to do to weather this continuing storm?
First and foremost, realise and understand these seismic shifts and what we are up against.
Secondly, it is imperative we begin adjusting our business model immediately, taking these shifts and threats to our current business model seriously. That may include a three- or four-day print cycle in lieu of a six- or seven-day cycle, capturing the savings as well as the other synergies that occur.
This lengthens the airstrip, so to speak, making the probability of a safe landing more obtainable. These are never easy decisions, but it may be the difference between surviving and not.
Target the advertising categories that might see benefit from the above trends. Those could include travel, restaurants, experience-type advertisers, investment companies, and so forth. In many cases these are historically not very productive for media companies, but they will need help as these trends continue to unfold. We need to be prepared to assist.
We must create new revenue streams that go beyond advertising and content. Beyond a few national media companies that have scale in their favour, the trends for both of these traditional revenue streams are unmistakable.
New revenue streams might be events that create memorable experiences. It might be e-commerce, which is where the younger generations hang out. It might well be completely shifting our focus from what historically paid our bills.
But one thing is certain: It won’t be done by riding the dying wave of traditional advertising and/or content. To believe that is simply ignoring nearly every trend and mathematical logic known.
Lastly, years ago we had a decade or two to figure it out. That is no longer the case. The laboratory we labour in today has a very finite time period to adjust and change our financial paradigm. We have some of the brightest business minds in the world in our industry and can certainly make the shift.
However, we don’t have the latitude of decades to do so. Our time table today is only a few years at best.