One thing I enjoy about COMM 101 is that there isn’t just a focus on large, famous firms, but also a focus on local small businesses. Learning about small businesses helps us understand all facets of business in a single firm. So, as I cruised around The Globe and Mail, I was happy to chance upon an article about a local business in Vancouver (which is also coincidentally written by Jeff Kroeker, a beloved member of the COMM 101 team) called Tealeaves. Tealeaves is a small business that is famous worldwide for its mastery in producing the world’s finest teas, working with renowned restaurants and hospitality like Mandarin Oriental and Four Seasons Hotel. The article is a case discussing how Tealeaves had to change its sales strategy from selling only to large venues like hotels to selling directly to individual tea drinkers, thanks to competitors reaching consumers first and positioning themselves with their brand names in the consumers’ minds.
Tealeaves is a Vancouver-based firm positioning themselves as the world’s leading experts of tea and its craftsmanship. Image from Tealeaves Logos.
I won’t spend this post talking about the business itself, but rather enter into my thoughts about the greater picture: is retail dying out? Many examples in class, like Dell’s successful virtual integration, seem to argue that relying on wholesalers and retailers is costing producers much money. On one hand is price, with original prices driven down so retailers have room to make a profit off of escalated pricing. Another aspect is operations, with direct sales reducing the risk of inventory turnover. This article reveals a third side: how direct sales strengthens a product’s marketing, giving it the ability to position itself as the best product in the consumers’ minds.
If financial, operational, and marketing advantages exist by cutting out the middleman, is there even a future for retailers anymore? Will our beloved department stores die? Well, maybe – I hardly shop at The Bay anymore. But depending on the product, there is always room for retail everywhere. Think how ridiculous it would be if Coca-Cola only sold coke at Coca-Cola stores. Pretty impractical, and they’d lose large access to the market. They need convenience stores, wholesalers, and grocery stores to distribute their products to all consumers. In addition, e-commerce firms like Amazon and Shopzilla show how technology can streamline information and prevent inventory turnover, making e-commercial retail a potential successor to the conventional physical location model of retail.
In short, let’s give a sigh of relief for retail distributors. Reality needs them and technology saves them. It’s been fun thinking over cups of tea.