February 6, 2012 by Mel Croner

Retailers are retailers, right?  Perhaps not!

William J. Lynch Jr., Chief Executive of Barnes & Noble was quoted in the New York Times as saying that Barnes & Noble … “is, in fact, a technology company.”1  How does a venerable book seller with roots dating back to the 1870’s suddenly change its self-image?  Easy, in order to survive.  The Internet has evolved and is transforming almost all businesses, most in profound ways. According to market research firm iSuppli Corp., the number of worldwide subscriptions for wireless services reached 5-billion in September 2010, equaling 73.4 percent of the earth’s population.2  Each of these subscriptions represents a recurring payment for wireless services delivered to a device, ranging from an Ultra Low-Cost Handset (ULCH) to a high-end smart phone.

With this transformation comes the need to hire and pay talent from other than the traditional industry sources.  Retail clerks are being replaced by Software Engineers; Merchandisers are being replaced by Business Intelligence Engineers and Data Miners.  Correspondingly, you must pay these positions in a manner competitive with industries outside your “base” industry.  You also may need to compete with start-up companies that offer totally different (and dynamic) work environments, e.g., foosball and basketball courts; dogs under the workspace; in-seat massages; dry cleaning services.

What might this mean to your company?  You’re thinking, nothing!  We’re a bank or a brokerage or a retailer or a travel agency.  Not so fast!

A survey conducted in 2010 indicated that 36 percent of adults preferred online banking.  In a comparable 2011 survey conducted by the American Bankers Association, 62 percent of U.S. adults named online banking as their preferred banking method3 … quite a growth rate!

Engineering and technology graduates can look forward to more openings in the banking sector since banks are likely to hire a large number of technology experts.  The Institute for Development and Research in Banking Technology (IDRBT) estimates that banks would need to hire technology professionals numbering up to about 10 to 20 per cent of their current workforce.  Are you prepared to handle this?  “The role of the future branch will be primarily as a marketing and new account indoctrination center.  Smartphone use will eliminate most face-to-face financial transactions, as well as paper checks, paper currency and plastic cards – not to mention the costs associated with those media.”4

Dramatic changes also are occurring in the retail sector:5

• e-commerce sales will represent 8 percent of all retail sales in the U.S. by 2014, up from 6 percent in 2009;
• In 2009, 154 million people in the U.S. bought something online.  This represents 67 percent of the online population (4 percent more than in 2008); and,
• Three product categories (computers, apparel, and consumer electronics) represented more than 44 percent of online sales ($67.6 billion) in 2009.

Apparently, Mr. Lynch saw the future and responded strategically with a plan.  In March 2009 Barnes & Noble brought a few new hires to create the Nook, its proprietary electronic reader.  What began as herculean effort to catch up with the Amazon Kindle has now grown into a 300-person operation in the heart of Silicon Valley.  Mr. Lynch has hired engineers, software developers and designers.  Currently there are three models of the Nook that range from the single black and white model to the feature-loaded Nook Tablet.

Mr. Lynch’s bet seems to be paying off.  Barnes & Noble has captured 25 percent of the e-book market in the U.S., larger than its share in physical books.  The company will sell twice as many e-books as all formats of physical books combined on BN.com.6

Perhaps, like Mr. Lynch, you need to rethink the essential nature of your business.

As the internet continues to transform your business, how will you attract and retain top talent?

The Croner Company has been comprehensively surveying compensation practices in the Digital Content Industry since 1997.  Participants in the 2011 Croner ”Digital Content and Technology Survey” included 112 major companies in the industry sectors of: Media Online; e-commerce retail; Publishing; Transactions; Web Publishing; Web Site Services; Online / Mobile Gaming; Portal / Search; Directory / Resource Information; Social Networks.  The survey covers such compensation practices as base salaries; bonuses; long-term plans; advertising sales incentive plans and other related practices specific to the Digital Content Industry.  If you are going to compete in the digital world, you will need this survey … the industry benchmark.

For more information, contact Susan Cronk at +1 (415) 485-5512 or by email at susan@croner.biz or Mel Croner at +1 (415) 485-5525 or by email at mel@croner.biz.

Sources:
1. “The Bookstore’s Last Stand”, Julie Bosman, New York Times Business Section, January 28, 2012.
2. “Global Wireless Subscriptions Reach 5 Billion”. iSuppli, September 17, 2010.
3. “Online Banking Popularity Surges.” Max Thompson, e-wisdom.com, September 14, 2011.
4. “Step Inside a Bank Branch in the Year 2030.”  Jay Sviglas, BankThink, The American Banker, February 6, 2012.
5. “Forrester Forecast: Online Retail Sales Will Grow To $250 Billion By 2014”, Tech Crunch, March 8, 2010.
6. “B&N: Nook has 25 percent of U.S. e-book market.”  David Carnoy, CNET News. February 23, 2011.