There’s an interesting meme that’s been making the rounds lately: the newspaper as department store.

According to Wikipedia:

A department store is a retail establishment which specializes in satisfying a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice multiple merchandise lines, at variable price points, in all product categories.

While department stores first began to appear in the early 1800s, it wasn’t until late in the 19th and well into the 20th century that they truly hit their stride. The primary factors driving this growth were transportation, industrialization and urbanization. As commercial production and logistics improved, it became possible for a single, large store to collect and stock a wide variety of goods for sale from throughout the country (and world). At the same time, urbanization was producing a substantial pool of consumers in close proximity, who needed and wanted these products, and welcomed the opportunity to procure them from a single all-encompassing source at a fair price. A key factor driving this growth stemmed from the fact that, just as commercial transportation (ship, rail, and eventually truck) was booming, personal transportation and delivery was still in its infancy. The automobile was a luxury item until late into the 20th century, making it difficult or impossible for consumers to cover the ground necessary to visit a broad range of specialty retailers. By the same token, the lack of availability of these goods in a rural setting, coupled with the difficulty of advertising and supporting a small-scale mail order business, gave rise to the mega-catalog industry – which eventually produced Sears, Roebuck and Co.

In the 1960s, the largest store operations (both in sales volume and physical size) were department stores Macy’s, Hudson’s and Marshall Field. By the 1980s, the largest retailer in the world was Sears.

What killed the department store? Malls. While malls were always anchored by one or more department stores (which had the name recognition and volume to draw consumers), the inside of the mall was filled with small specialty stores that exchanged breadth for extreme depth of offering. Suddenly consumers could visit a single location (the mall) and select from a variety of stores that specialized in music, or cooking, or clothing, or shoes or what have you. In the 1970s people visited the department store to peruse a limited selection of a broad variety of items. By the 1990s they visited a store in the mall for a huge selection of a particular good, then went next door for the next one. While the department store model is still thriving in certain instances, its sole remaining advantage is to use its volume buying power to drive down prices (see: Walmart).

The parallels to the media industry are likely clear. Your local newspaper has catered to a broad range of needs and interests in the community, offering a single and authoritative, albeit limited, source for news and entertainment. When production and logistics dictates that this is your only choice, a natural monopoly is created.

However, the rise of the Web has upended this model. Now it is possible to instantly get any story you want, but also find it from a source that takes interest in a particular subject to the level of obsession (we call these “bloggers”). And if this was the first body blow (driving down circulation), the other was clearly the rise of sites such as eBay and Craig’s List, which have decimated the newspaper industry’s safety net: the classified ad.

So what does the future hold for the industry? That is the $64,000 question. Journalism, as a profession that is distinct from the newspaper, which is merely a delivery vehicle (i.e., “store” to continue our analogy), will survive. As will certain premier brands (WSJ, NY Times, etc.) that offer a distinct value proposition to the reader/consumer. However, it is likely that most newspapers will go the way of Sears: years of struggle to survive, until they are eventually forced to either reinvent themselves or find a place on the Web as a mere shadow of their former selves.

-posted by Paul