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BrainTrust Query: Is Retail Going the Way of the Airlines?

February 11, 2013

Through a special arrangement, presented here for discussion is an excerpt from a current article from Insight-Driven Retailing Blog.

In a recent article in Fast Company, Jeff Katz, a former airline industry executive, suggested that retail is bound to follow the path of airlines. Seeing their customers driven by price more than any other factor, airlines have lowered prices and stripped down service accordingly. Then they let their customers pay for the things that matter to them, basically relying on add-on services, like preferred seat and bag fees, for profit.

The retail landscape isn't that much different with today's customers myopically focused on price. Traditional retailers can't expend the effort and dollars to provide service to customers that whip out their phones and buy from lower-price competitors (Hello Amazon and eBay) that have lower overhead.

Marc Andreessen, co-founder of Netscape and venture capitalist, has been trumpeting the coming downfall of brick-and-mortar stores based on the fact that the overhead doesn't allow them to compete with online retailers. And, while I understand where he's coming from, I don't agree at all.

Competition has and will continue to cause retailers to change. Traditional brick-and-mortar retailers are leveraging new touchpoints (notice I'm staying away from the dreaded "channel" term) and understanding how to provide greater personalization. (Whenever I receive coupons from Target, I just have to wonder exactly how much they know.) And while the technology exists for my pre-teen daughter to order clothing and shoes online, she will never do it. She enjoys shopping too much.

Back to the airline industry... Retailers have the technology to track every interaction with me, and they can even personalize offers based on my patronage, their inventories, and the state of the local economy. So just like I know my fellow passengers in row 20 (the exit row on MD-80s) each paid a different price for the exact same flight, we could be moving toward personalized pricing in stores. And why stop there? Browse the aisles, use a dressing room, make a return — all might someday have fees associated. (Remember re-stocking fees?) Of course those fees will be waived for their most loyal customers, plus we get to use the express checkout as well.

So, will consumers put up with the airline-ification of retail? In some ways they already have. Just look at big box, rock-bottom price, self-checkout stores. The associates are about as friendly as TSA agents and yet we still buy because we are so driven by lowest price. Do you pay a fee to enter a Costco or Sam's Club? Yes, you do.

Fortunately, there's enough room in the retail industry for bare-bones retailers all the way up to personal shoppers and many points in between. So we'll take some lessons from the airline industry, but we'll also avoid some of their mistakes.

Discussion Questions:

Do you see retail more and more resembling the experience at airlines? Does a more widespread fee-for-service model ultimately make sense for retail? Will consumers accept the airline-ification of retail?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What's the likelihood that a more widespread fee-for-service model makes its way to many parts of retail over the next decade?


The WSJ had a great story about how the airlines, in the age of deregulation, dropped fares below what they could sustain. They all went bankrupt in one form or another or merged to survive. I would suggest that is the analogy most apt rather than charging extra for things consumers value or developing "personal pricing."

There's no mystery to discounting—someone is going to pay for it, either the owner or the stockholders, in Amazon's case. Retailers should use the airlines as a cautionary tale.

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Bob Phibbs, President/CEO, The Retail Doctor

The American consumer is going to the retail marketplace multiple times per week—grocery stores some 99 trips per year, discount stores 20+ times per year, specialty stores and department stores on an ongoing basis. The airline experience for those outside of the business travel segment just doesn't measure up to those frequencies.

Consumers will readily accept being recognized for being loyal customers and receive reward points. They are not likely to stand still for radical price swings for their discretionary, and even non-discretionary purchases at retail.

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Roger Saunders, Global Managing Director, Prosper Business Development

I do see retail going in this direction in some ways. Advanced technologies are allowing retailers to personalize offers and prices for individual shoppers online, during the shopping experience and at checkout.

Of course, there are always risks with this type of approach. If Customer A knows Customer B is spending less on a product, or getting a better offer, the retailer risks losing Customer A. As always, retailers are going to have to weigh the benefits of personalizing prices and offers, remembering who their best customers are.

Now, regarding fees for service, that is more of a slippery slope. No one is pleased with having to pay an extra dollar to print out a boarding pass at the airport or an extra $50 for checking a bag. Airlines can (sort-of) get away with it because, when we need to fly somewhere on a specific date and time, we may not have a lot of choices. Shoppers have more choices when it comes to choosing a store to buy a jar of pasta sauce or a sweater.

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Debbie Hauss, Editor-in-Chief, Retail TouchPoints

The Fast Company article and Marc Andreessen's comments about the downfall and even death of brick-and-mortar retail make for great headlines but like David, I'm taking the other side of the trade on this one.

It's important to note that not all airlines are low-cost/low-service just as all retailers to not compete solely on price. If you look at the Macy's sales numbers posted (January same store sales +11.7%!), they are driven by both physical store and online sales increases. There are a number of other retail examples (Nordstrom, J. Crew, etc.) that also compete on dimensions other than price.

That said, there is increasingly a black/white contrast in retail between those that "get it" (i.e., compete on dimensions other than price) and those that are going to follow the path describe by Andreesen and Kath in the article.

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Phil Rubin, CEO, rDialogue

David forgot my favorite part of airline-ification, going to the deli and getting to jump to the head of the line with my gold loyality card. My good friend Dich Schulman spoke about this many years ago. Century 21 Department stores made a step in that direction when they opened up dedicated checkouts for their top loyal customers even providing red carpets at the loyal checkout stations.

Pricing is a big factor in retailing but not the only one. Service, instant gradification, and just being with people also count these days. It will be soon enough that the network providers will add fees for shopping on a mobile device.

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Frank Riso, Principal, Frank Riso Associates, LLC

While there will be some examples of this occurring, I expect competition will limit it from becoming widespread.

If it does occur, I agree that any fees will be waved for loyal customers.

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Steve Montgomery, President, b2b Solutions, LLC

Good review David and glad to see you avoiding the "C" word. Katz and team are way off the mark and gee, happen to be in other industries. Retail is not simply shopping for a low price—like traveling point to point to point at a low price.

Retail is a relationship business that takes on multiple shapes at multiple points throughout the relationship. One retail shopper relationship might be one based on pure price. Another might be based on the experience and the experience element might be the catalog, the store, the website, or all of those combined.

Dr. Phil helps with this. A good relationship let's one vent, have common interests, and more. Being close to Valentines Day go visit the link to Dr. Phil and learn that retail and airlines are not in the same business, and prepare for Thursday.

Thanks Dr. D!

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Tom Redd, Global Vice President, Strategic Communications, SAP Global Retail Business Unit

Okay...where do I begin in commenting on this story?

1) There is ZERO evidence that consumers are obsessed with price, big ticket items excluded. There is more than ample evidence that retailers (particularly those who underperform on comps) ARE obsessed with it. Isn't it time we stopped propagating this myth/self-fulfilling prophecy?

2) I thought we tried the "airline model" in the early 2000s, when some retailers persuaded themselves that "pain avoidance" (i.e. avoiding long lines at the airline counters) was remotely equivalent to "service" and installed all kinds of self-service tools and technologies and took payroll out of the store. #epicfail.

3) The airlines have what amounts to a cartel. Thus, they can [more or less] get away with some of the stunts they pull to cut their costs and increase their revenue. Fliers don't have a lot of options. Retail shoppers have a LOT of them.

4) Marc Andressen is a brilliant technologist and (so it seems) a not particularly astute student of human nature. People really are social, and they like to shop. So it's a bit premature to declare bricks and mortar dead. Of course, if we follow the airline model, that could certainly become true.

5) Sams Club and other warehouse stores have a very different value proposition than traditional retailers. Some are obviously successful, others not so much. And I actually think they have more risk from Amazon than traditional retailers (ever bought pretzels from Amazon? It's pretzels by the ton).

The future of the store lies in a convenient, personalized experience with curated assortments and loyalty-based pricing. There will always be a [large] place for online retailing. There will also always be a place for stores. But bare-bones or for-fee service is just not gonna happen.

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Paula Rosenblum, Managing Partner, RSR Research

Great piece David. And it relates very nicely to other recent discussions about retail doing what was good for vendors and to heck with the customers. So, sadly, retail IS going the way of the airlines.

What is the 'airline' model? Well, the customer be damned by constant nickel and diming, a tortuous flying experience, deceitful operational practices and irrational pricing policies. I just wish they'd compete on price since they've abandoned any kind of comfort or service. Check a flight and you get one price, go to book it ten minutes later and it's another price. Who wins the "Total Irrationality" award for their business model is a toss-up between airlines and book publishers.

But is retail really going that direction? On many points, yes. For the most part shopping isn't a great experience any more, it's just not fun. It is almost impossible to distinguish one store from another and it's all too desperate. Soon it will be "Do you want buttons on that shirt?" Or "We'll take another 3% off if the sale is final." Maybe the floor folks are there "primarily for our safety" and have no intention of providing any kind of service.

If airlines actually believe they're giving customers what they want, we need to hold an intervention. And the same goes for retailers who think the only game in town is based on price.

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Ian Percy, President, The Ian Percy Corporation

I don't think there will be a widespread trend toward the airline model. There are just too many choices at retail and through the internet to make the fee add-ons work everywhere. The airline model has made flying distasteful enough due to fees and less service. I used to have a 4 hour drive rule as to whether to drive or fly—it is now up to 6 hours.

If consumers had to put up with add-ons and much less service, the large percentage of people who like to shop would rebel and force retailers back to catering to consumers. Retail consumers today have the power of choice-airline passengers have much less choice as time goes by.

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

Please say this is not going to happen. Oh my, can you imagine how retail will look and be perceived by the public if it takes on even the slightest appearance of the airline industry? Retail has enough of a PR problem now. Add to it, as the article suggest, fees for services; and we can see a little upstart, like Southwest Airlines at the time, come along and grab a big market share.

Competition from an upstart grabbing the attention of the big boys might be what is needed.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Sadly, this has already been true for quite some time about supermarkets. But it's interesting because once consumers get what they ask for, i.e., low, low prices, but with less services and less comfort, there will gradually be a demand again for something "nicer," just as there is on the airlines.

Low cost, no frills airlines are fine until consumers start complaining about lack of services, cramped seating, and long lines. Some consumers will always want low, low prices no matter what. But be careful not to judge what all consumers want simply by listening to the low, low price crowd.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

The major challenge with this post is the assumption that all customers have similar value structures. In fact, many customers are highly convenience driven, especially those with dual incomes and very little free time. In addition, certain segments of customers are very service oriented, particularly in categories that require expertise that is more technical in nature (e.g. computers, appliances, etc.)

Now, in order for those value propositions to succeed, the pricing of those retailers must be competitive—with the availability of price information on the Internet, consumers these days are more aware of the premium that they might be paying in any given store.

When the price is considered at least competitive, then consumers in the segments will choose establishments that speak to their needs.

There is also a segment that is willing to experience less customer service and a worse customer experience in order to have the lowest prices. However, that is just one segment of the population, and often a low profit one to boot.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

Some retailers will compete on price, others will compete on service, and still others will compete on exclusive inventory. Consumers will vote with their dollars. In some ways this is similar to the airline model; in others it is different.

Soon there will be only 4 major air carriers in the US. There are far more options in each retail category. This alone will prevent some of the airline-ification of retail.

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Max Goldberg, President, Max Goldberg & Associates

I don't think the airline-ification allegory holds. I don't see the same level of amenities for retail. Maybe I'm myopic about this as I try to think of examples. Would consumers perhaps be asked to pay for the use of a shopping cart or a fitting room? And the retailer's risk of turning people off is huge. Once a shopper has gone elsewhere for her business (and been satisfied) you will have a hard time bringing her back.

However, this article made me think of the extraordinary accomplishments of the big gaming establishments...hotels and casinos. They also know their customers very well (by name), what they like and how to bring them back...again and again. Often it's done with some kind of upgrade (better room), discounts (free meals), etc. It's not just for the high rollers, but the frequent rollers. In my opinion there's an opportunity to look at their successes (and failures) for a best practices inspiration.

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Joan Treistman, President, The Treistman Group LLC

To some extent the airlines are following the lead of retailers and many other industries that have already lived through massive consolidation. The number of "legacy" airlines has shrunk from six to three in a matter of a few years, and their product hardly differs from the well-run "low cost" operators like Southwest and JetBlue. The parallel is the reduced number of regional department store nameplates and the rise of Macy's.

The parallel ends there, however, because of the wide array of goods and services still available across the retail spectrum. There is room for both Walmart and Nordstrom (and a lot of options in between, in terms of merchandising, pricing and service) but very little room for airlines to differentiate a commodity product.

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Dick Seesel, Principal, Retailing In Focus LLC

There will definitely be retailers and brands that will experiment and implement similar experiences as we've been forced into by the airlines. It will depend on the brand and our expectations as shoppers. If we're actively looking for the cheapest airfare, then our expectations are minimal. On-time arrival and departure as well as the number of stops or layovers factor into our decision making.

Ironically, I just received an e-mail from Spirit Airlines enticing me with a $19.95 promotion. When prices get that low I begin to wonder what their maintenance schedules are?! For me, I can tolerate almost anything for a flight shorter than 3 hours. Beyond that, I am willing to pay more for some degree of comfort and respect.

However, as Mr. Dorf points out, there will be a range of retailers and it will depend on the objective, perception and competitive landscape for the brand. Costco has found an intriguing balance—low prices, low sales associate expectations, but balanced with a shopping sense of surprise, discovery and excitement with its product mix.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

Study and after study shows that customers will spend more for a better experience. Customers refuse to pay more for an average or mediocre experience.

I love Paula's comment, "Isn't it time we stopped propagating this myth/self-fulfilling prophecy?"

Price matters. People matter. Convenience matters. Selection matters. There will always be a spot for brick and mortar retailers. They just have to be better at what they do than they used to.

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Doug Fleener, President and Managing Partner, Sixth Star Consulting

To paraphrase Mark Twain, reports of my death are greatly exaggerated. Retail is, as always, changing. To believe that whatever is happening today will replace everything from the past is, in a word, silly.

Bill Emerson, President, Emerson Advisors

Good article and also love Paula's comments on it. One thing I'll add is that there is a lot more room for creativity in retail. Airlines are constrained by a lot of things including regulation, safety concerns and fuel costs. Retailers have far fewer constraints, and preparing for an airline-like future is a trap that would deny the industry the creative energy that will keep it viable for decades to come.

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Martin Mehalchin, Partner, Lenati, LLC

The exec's experience base is a single service industry (at least he discusses it as a single service industry) and that is the transportation of the public. Additionally, his history is with airlines who have failed to thrive because they act short term (quarterly) and fail to offer services the consumer prefers.

In all but the largest hubs, the choice of carriers is very limited. Consumers are basically captives. To say retail is following this course is very short sighted. First of all, retail is much broader that the airlines industry, and isn't a service industry. You go to retail to buy objects. Airlines only sell services and almost every service industry evolved to a fee for service basis years ago. You go to your mechanic and he charges for labor plus parts, same with your doctor, your plumber, and almost everyone else in the service industries.

Retail isn't going where the airlines are, and I hope no other industry ever goes there. Retail will have its price comparison issues—always has, always will. Retail could evolve into a different type shopping experience that more closely aligns it with entertainment which is where it should go, but retail will never go the route of the airlines which survive primarily because of the high cost of entry for new competition.

Consumers have had enough of the airlines service and have spoken loudly on this issue by supporting any start-up that will promise to save them from the traditional carriers. Just look at the growth of Southwest, who comes closest to providing the service consumers are looking for from an airline. No fee for service there!

Ed Dennis, Sales, Dennis Enterprises

Retailing will never follow the airlines. They are a broken model that only survives because if you want to travel, you have limited choices.

In the airlines industry the customer is last. If they could containerize you and palletize you, they would.

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Mel Kleiman, President, Humetrics

My oh my! If you want to make shopping into the most dreaded of things to do then yes, go the way of the airlines. Buying an airline ticket is a necessity if I need to get somewhere that is outside of my reach any other way. Not only do I need to get there, I need a seat and my gear needs to get there with me. So paying extra for my seat and paying extra for my bags is not giving me any added value, it is the only way I can have what I NEED.

This in no way correlates with shopping. If retail were only about price, then maybe you could use the argument that I'll get the absolute lowest price, but will have to pay to use a buggy or a dressing room.

Shopping is a pastime even a hobby for some. It's fun! Let's improve the customer experience and yes, I see no reason why retailers can't add value with add-on services that the customer actually wants to pay for. Look at Amazons 'Prime' as an example.

Lee Kent, Sharing Insights for Success in Retail, YourRetailAuthority

The biggest difference is that barriers to entry (mostly capital costs but also regulation) are much lower in retail than in airlines. As a result, people can try many more retail concepts that serve different niches.

There is ALWAYS room for low cost in any industry. That isn't unique to airlines or retail. In airlines, though, there isn't really room for anything more. Fee-for-service is what passes for innovation. In retail, not so. We will continue to see innovation in pricing and service both, in the physical world, online, and in increasingly wonderful blends of the two.

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Jonathan Marek, Senior Vice President, Applied Predictive Technologies

Until the economy rebounds, the consumer will not pay a premium for the promise of better service, selection and price advantage. They have learned how to play the "game" over the past 10 years especially. Charging a premium for a preferred credit card that gets more rewarding service benefits (no questions asked returns, free shipping, personal shopper, etc.) and incremental rewards.

David Slavick, Director, Loyalty & Retention, FTD.com

I simply believe that the premise is incorrect and a poor comparison. For example, yes, you do pay a fee to enter Sam's Club or Costco. On one of my most recent trips to Costco, I was flagged by an associate carrying a hand held device as I came through the check-out. I was advised that had I had the next level membership, I had already qualified for a rebate that would not only cover the cost of the membership but also the cost of increasing to the next level. Is that a value?

When all else is equal, consumers do tend to choose the lowest common denominator—price. If that were not true, Walmart would not exist as it does today.

Nevertheless, consumers do seek the overall value proposition that includes all of the other factors one can place in that equation.

Successful brick and mortar stores are evolving and re-inventing the value proposition. They are also making the connection with the consumer online as well making their connection even more relevant.

In making the distinction between airlines and consumer goods, retailing and services, the factor of choices rises to the top for retailing far more than for the airlines. Do consumers have choices in airlines? Sure. However, those are limited—very limited. In consumer goods retailing the choices are far greater and vastly different. Airline routes are nearly monopolized leaving the consumer in a very weak position based on destination. If a consumer wants a pair of slacks, a pair of shoes, or any other item they have what might as well be an infinite amount of choices where they can acquire the items.

How do they make that decision? Consciously or not, they work their way through a value equation. When selecting a airline ticket, they have two maybe three choices.

Consumer goods retailers have absolutely no incentive to marginalize themselves by thinking as narrowly as airlines are able to, due to the limited nature of their choices. I can purchase the same pair of shoes from at least five stores at the local mall. I can also get them from Zappos and likely dozens of other retailers online. There are very few instances in consumer goods retailing where a cartel exists like the airlines and extortionist behavior towards the consumer can exist. There is also far less of even a remote possibility of a new competitor breaking that cartel in the airline as there is in consumer retailing. In consumer retailing, someone new can rise to the top level of competition nearly overnight.

As Paula said, nope! It's not going to happen.


This is an apple-to-orange comparison. Airlines is a commodity service and the more accurate comparison of airlines would be internet services or mobile airtime.

Retailers are not commodities.

Ed Dunn, Founder, (Stealth Operation)

Per Katz, "airlines determined that their customers are driven by price more than any other factor." While that might be true, let's be realistic; the fee-for-service model is driven by airlines squeezing margins everywhere they can.

I can see retailers offering a bare bones approach in retail—akin to GAP's Old Navy—but a widespread fee-for-service model similar to the airlines completely ignores the value of brands. Also, I wonder how popular the airline model is with frequent users—I'm not a fan of it.

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Carlos Arámbula, Strategist, One Ninth & Co-founder of MarcasUSA, One Ninth, MarcasUSA LLC

Although I 'get' where Katz is coming from, seems to me he made that statement as an attempt at getting some valuable P.R. vs reality. And FastCo fell for it. Now, if he would've said that poor retailers (long list) would go the way of the airlines, that would sound more plausible.

You don't need to look further than your local Apple store to see that good service goes a long way, or Nordstrom, or Whole Foods, or Chipotle, on and on. It actually enables you to charge more without saying so overtly. So I think that the reverse is true; that aware retailers are on the verge of realizing that good associate help is THE key to success. Even Home Depot increased the amount of people on their sales floor last year and turned in a great year, especially vs. Lowe's.

To me, those that go the way of the airlines will be in fact going out of business...or just going online in the near future; a self fulfilling prophecy.

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Lee Peterson, EVP Brand, Strategy & Design, WD Partners

I agree with David Dorf from a personalization point of view. Retail is becoming personal with targeted offers, curated assortments online and loyalty-based pricing. However, charging fees for services which were once free of cost might not be the best strategy a retailer could adopt.

Differential pricing has been in retail for sometime now, though not so on the face, but through loyalty programs. Customers are trained now to accept the fact the customer with loyalty cards gets a bigger discount/certain privileges which others don't. Any change to the existing model needs to be derived from understanding the needs of the customer for it to succeed.

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Shilpa Rao, Practice Head - Merchandising, Tata Consultancy Services

What is driving retailers to the bottom on price? It has NEVER been about margin to the most aggressive retailers. And the reason is that the most successful mass retailers have mostly driven for ZERO margin on sales to drive MASSIVE volume. They then profit from these behemoth engines by sharing in their suppliers' profits through trade allowances, promotional fees and the like.

This in turn, has created a business culture where the SUPPLIER is the REAL customer, buying space for their products in the neighborhood warehouses (aka stores), using the stores' circulars for advertising, and paying for other "services" from the retailer.

The airlines do not have supply-side customers paralleling the stores' suppliers. So they have to nickel and dime the traveler to offset their drive to zero margins, but they still can sell some advertising, and some are doing better with in-flight deli services and the like.

So my conclusion is that airlines are moving in the direction of the retail stores more than retail stores are moving in the direction of the airlines. Are there similarities? Of course! They ARE both retail businesses.

As an added note: The drive to low prices ALWAYS leads to a focus on costs and efficiency, which is why retail is at the forefront of the evolution of society. Brands innovate features, but retail innovates efficiency.

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Herb Sorensen, Ph.D., Scientific Advisor Kantar Retail; Adjunct Ehrenberg-Bass, Shopper Scientist LLC

Retail is unlikely to go the way of airlines. Airlines had a great model, but fell into the low price trap. Flying went from an enjoyable experience to a bus ride in the sky. Yes they expanded their market but most went broke chasing low prices and no customer loyalty. Flying is a commodity today with lots of nickel and dime add on charges. There are plenty of retailers that will not go this way.

Just like Club stores in the early '90s, Amazon and eBay will not take over the world of retailing. They will get a good market share but Walmart still has more sales from stores than online.

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W. Frank Dell II, CMC, President, Dellmart & Company

Unsustainable union contracts contributed greatly to the airline industry's inability to run profitably. Same with the US auto industry.

In retail, the classes of trade where unions dominate will accelerate toward the Andreesen apocalypse faster than others. But all will get there eventually.

Bobby Martyna, President and CEO, Tradavo, Inc

I hardly believe that Neiman Marcus, Nordstrom, etc. will start following the airlines' model of customer service. People will choose price or value—value being in the form of customer service, experience and quality of product.

Low price shoppers will continue to be loyal to low price retailers and focus on price over just about everything. Other customers will be willing to pay more for quality. The retailers who haven't defined their value proposition—the ones stuck in the middle—will most likely have the hardest time, unless they have a niche following.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

Reid Hoffman, another Silicon Valley entrepreneur, rebuffs Andreessen's prediction and states "it's a mistake to think that the offline retail industry—which currently represents 95% of retail buying versus e-commerce's 5%—will shrink to next to nothing."

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David Dorf, VP Product Mgmt, Infor

I think that if retailers adopt the airline industry's best practices for driving true loyalty, both retailers and consumers will win.

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Ralph Jacobson, Global Retail Industry Analytics Marketing Executive, IBM

Retail is a far different enterprise than airlines. While airlines have an extremely high cost to enter, retail now can be entered at virtually no initial cost—thus driving the amazing plethora of options constantly sprouting up. While there will always be the price-only models out there, they will be driven mostly by the largest players. While those in search of "value," however defined by the individual consumer, will always find it in their distinctly unique ways. Some online, some offline, and usually some combination of the two. Hooray for the ever-evolving options of the retail universe!

Mike Osorio, Senior VP Organizational Change Management, DFS Group

"OMG, you must check out the retail industry strategy advice from these two guys, an Airline CEO who went to MIT and the guy who invented the Internet browser—they really get shopping!" Said no one.

Look, airlines are to retail as logistics are to Victoria Secret—except when it comes to flying, I do not aspire to go to NYC. I go to NYC.

To be sure, the authors mentioned have deep roots in service innovation, but retail...I don't know. So, now it's my turn to offer some unqualified advice to the airlines:

1. Create a club along with Costco - allow regular flyers to group buy foods and fuel! What I save buying wholesale gas, and eating food that does not cause gas, sounds like a win/win.

2. Become a showroom for retailers and others. Start by creating informative, entertaining and actionable content - deliver it via a few loaner tablets to a captive audience that might be motivated to visit an old fashioned bricks and mortar store once they leave your rivets and aluminum. We can call it "Multi-modal commerce."

MMC - I've seen some start-ups try, but to really nail it, let's try solving the problem together - is there a role for the NRF?

True integration would enable passengers access to the retail/partner help desks while flying—using Facetime or an equivalent. Remove all the hassles, provide connections to trusted limo services to move folks while on the ground. Linkages to the Airline and retail CRM/loyalty card information will streamline the last mile so that what gets purchased in stores, is fulfilled by trucks, not carry-on.

Commerce in the clouds has come of age, it is not peanuts or pie in the sky, in fact, it delivers on the promise of cloud computing!

Vahe Katros, Consultant, Plan B

Yes. This is an interesting perspective which we should not ignore, even at first blush. There are clear similarities between the two models, even if retail is not disappearing. Nonetheless, retail is clearly changing and adapting to today's technologies, often with price leading this change, but certainly not ignoring customer service (which is vital in all modes of retail).

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Kai Clarke, CEO, American Retail Consultants

There is a fundamental difference between airlines and retail: there are only a handful of airlines giving us a handful of options, and we fly only when we must and when there is no other choice. This is why we put up with additional fees and add-ons and yes, with the little customer service we get. A look at airline e-commerce initiatives proves the point; all they seem to have done is improve their websites and I've yet to enjoy a personalized experience with any airline, even with those with whom I fly frequently.

Retail cannot afford such an approach; it needs to customize every customer's experience in order to attract and retain their custom. A more apt comparison, I believe, would be with Hospitality. Hotels have recognized the need to change how they acquire customers but, more importantly, they realized that the key to their success is in having them return. To that end, hotels are harnessing modern technologies such as Mobility to give their customers instant choice and information, they are analyzing Social Media-generated big data to understand customer preferences, they are executing all-channel consistencies and are tailoring their product and price offering to the specific needs of the customer. Some even know their customers by name, as Joan Treistman in her comments noted. Customer delight is the number one priority for hotels these days and I believe retailers could use pretty much the same strategy and tactics to drive customer loyalty.

The fundamental point is this: customers are willing to pay for value and are willing to be loyal if they perceive that value and this is different from paying "fee for services." Hotels have recognized this and are implementing strategies to ensure a strong value proposition to the customer that includes anticipating and meeting their needs. I don't believe airlines are even thinking this way and Retailers are better off not using them as inspiration. I might change my mind if, after a flight, someone commented positively on the value proposition of that journey or for that matter on their entire experience with the airline!

Anand Medepalli, VP Solution Strategy, JDA Software

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