Get Ready for the Paradigm Shift

Good solid holiday sales are the repeated news story this year in the general press. Jewelry sales are doing alright, according to early reports, but so far the diamond jewelry category is not doing as well and unless any last minute surprise in consumer demand appears, this season will be mediocre at best. There is an exception, or should I say, exceptions.

The exception does not have to do with a certain category, band or store. It has to do with the medium. Online sales are exhibiting double digit growth so far this season. Not just across the board, but in practically every category. Coremetrics reported that online jewelry sales increased 17.6 percent on Thanksgiving and increased another 60.3 percent on Cyber Monday. These figures are staggering compared to sales volumes at traditional stores.

The online revolution, in other words, ended in a clear victory. The evolution is continuing, and it's advancing quietly to a very new place. A surprising number of people made their purchases over the phone, and I'm not talking about a voice conversation.

The Wall Street Journal described this week how a shopper walked into a Best Buy, saw a GPS he wanted, compared the price instantly on his Android smatphone, found a better price on Amazon and bought it from the online retailer on the spot. According to Coremetrics, 2-3 percent of online sales this season were made from mobile devices and the forecast is that it's going to grow exponentially.

Are you Ready for the Wave?

The shopper in the WSJ report bought the GPS in one store while standing in another. Smartphones are not 'just' another way to go online. iPads, smartphones, even the latest browsers are representatives of a paradigm shift. No more a table-bound PC, hardware, is the center of activity but rather highly mobile, wire-free, multi-functional and very integrated devices that are set to accept tiny utilities – apps – that add very specific functionalities to the devices.

While some are already calling the PC dead, Google just announced its next move, a laptop with basically four components: a screen, a keyboard, wireless connectivity and a browser. That is it. Once released, be sure the Chrome OS will be on a host of other devices. I must wonder. If my PC dies tomorrow, why should I buy a $600-$1,000 PC if I can get a $500 iPad? Just remember that last year, the tablet category didn't really exist. Today, iPads are changing the way many are advertising, making the content far richer and engaging. Naturally, iPad users are great consumers.

Enter Blue Nile. The company is dreaded by many in the industry, but we must pay attention to what it's doing, because if not anything else, it's one of the most successful diamond jewelry retailers around these days. Its CEO Diane Irvine told investors.com that in November, visitor count was up more than 1,000% vs. the year-earlier period. And more than 25% of the traffic to the company's website now comes through smartphones. Here is the best part: mobile shoppers are spending 10% more on average this holiday than desktop PC shoppers.

A bend in the road is not the end of the road… unless you fail to make the turn

Over the years we heard many retailers lament about the business they lost to online retailers. Think of typewriter manufacturers in the late 70s and Kodak in the 90s. The central role of PCs and digital cameras was an outcome of their ability to become a household product. Smartphones and tablets are prevalent as PCs and therefore, if a business won't adjust to the changes, it won't survive.

I heard two people talking the other day. One was rejecting the notion that he needs to accept something, his friend told him he was just sticking his head in the sand and it won't help him. "Maybe it's convenient for me to stick my head in the sand," he replied dismissively. "Well, just remember that it makes your butt stick out. Don't be surprised when it will get kicked!" I'm not wishing anyone to get kicked from behind, but the implied advice – accept that even if unpleasant, facing a tough reality is less painful than ignoring it – is a sound one. The changes are far reaching and swift. The 2011 Holiday Season will be very different than the 2010 season and we all need to be ready for it.