What Is The Future Of Retail Really About?
There are many retail labs, experts, consultants and keynote speakers offering advice. In addition to the plethora of technology solutions available. Why aren’t retailers heeding and acting on the advice?
I believe that there are a combination of issues; retailers were either playing it safe or are locked into their own paradigm by debt and or the incapability to change fast enough.
In addition to that we may be overwhelming retailers with an inordinate amount of information as well. If you Google “Customer Experience” you will likely get over 3.5 Billion results. That is an insane number, and it reinforces what I am saying about being inundated by information and suggestions, ideas or unproven theories that have no ability to create change. I also question whether what retailers are hearing are just old ideas repackaged to look new. Why is that happening? Well to start with what experts are calling out the obvious, the lessons learned from a past successful career and the low hanging fruit that everyone seems to have forgotten in the heat of retail survival. However, there is something else here at play. It seems that many retailers and perhaps those who offer advice in some shape or form are hanging on to the old economy. Over the last two years, I took family time to be with my dad, during this period I studied and hashed over an incredible amount of data and even watched Youtube videos from other fellow retail experts. Please forgive me friends. But it all sounds the same with a few twists, turns and speculation.
I came to a conclusion….. Most Solutions Are Not Bold Enough!
To start with current solutions may be in fact both too old and too late! What if in our own reluctance we seek to find the answers to saving this incredible industry from its own demise and yet we have missed one important aspect. All of us need to step into the future.
Step into the future beyond the new normal of mobile apps, mobile payments and ordering as an example. With that thought, I also often wonder if everyone sponsored by technology to make speeches have also inadvertently moved the retail industry a little closer to the brink of new no return. You may say that I am contradicting myself, not at all! It is important that even as experts, advisors or keynote speakers that we have an opposing mind otherwise we risk not seeing opportunities and the future.
I am always reminded of the buggy whip with the invention of the automobile over 100 years ago society embraced change as they have embraced e-commerce. No matter how hard you tried back then to convince the public that a horse drawn buggy was they only way to commute, it no longer worked. Why? Well in the early 1900’s in New York City for example, the public was ready for the automobile. The reason, the smell, 2 mIllion pounds of horse manure everyday was enough to push for change. The automobile was the future of choice and fully embraced.
While retailing doesn’t suffer from that, the consumer has suffered from inconvenience for quite sometime. Couple that with the opportunity to have more time at home and or doing the things consumers would prefer to do rather than get in a car and drive to go shopping. You have a perfect storm for change. The internet and online retailers didn’t destroy traditional retailing the consumer walked away from it. Nevertheless, just about everyone is on to “Customer Experience” wagon as a means to revive the retail sector. Full Stop! Let me be the first to admit this, customer experience initiatives will not save traditional retailing. Interestingly, well led and operating retail chains were talking and delivering customer experience strategies over twenty years ago. Is this more of the old repackaged to look new? Or may be this is just more low hanging fruit for those with service opportunities, but not everyone will benefit from it.
The Future of Retailing Will Be One Continuous Experiment
I recently studied with MIT taking two technology programmes to ensure that I was current and capable of moving faster into the future. I have always been a fanatic about technology and I believe that it has significant implications no how to compete in business and in the aid of addressing societal issues. Experimentation has been the norm for years in the retail industry and in my view, over time as retailers looked to maximize profits forgot to continuously innovate their business and consumer models. Innovation is sometimes confused efficiency and productivity gains that is not what disruptive innovation is about. If General Motors were to start up a new division to make affordable electric cars, I would think that they would be in effect disrupting their business and consumer models. On the other hand in retail unless you took a leap of faith and shut down all your stores and moved to an e-commerce only platform you are here to stay in the physical world. However the rush by any to make e-commerce an equal footing strategy and not just another channel, may have hurt them more. It is in my opinion that 100 years from now history will show that the biggest strategic error made by traditional retailers was putting the proverbial cart before the horse.
So let’s start here for some perspective on the future or retail.
Forecasting the future of retail as much of the media dialogue has been about business failures or the end of stores, it tends to be nothing more than fear mongering and positioning for some agenda. I am not convinced that anyone can predict the future of retail with accuracy. Even with the likes of Amazon who have bought physical stores demonstrates an excellent inflection point recognizing that e-commerce in fact has its limitations. I don’t believe anyone knew with certainty that a physical presence would be their next move. Nevertheless the number of online retailers stretching beyond their cyber space into the physical space means that there is a level playing field developing. The challenge is how do those who have survived so far make it through this next level of competition? First, I would advocate that if you want to win, forget about Amazon as a competitor, it’s fools game to try and develop strategies against them. My advice is that retailers should build compelling and bold consumer models that will drive curiosity and traffic.
Communication: One of the things that I keep hearing is that the ROI with digital marketing is difficult to achieve. The future of retail marketing will be about the power of your communication model and those models will differ by brand and their target customers. With that said; the following is a bold statement and vision, “it is not unreasonable that retailers create a very high in demand brand because what they don’t say in communication channels is shared based on experience.” The future doesn’t mean that it’s all social media marketing. We may see trends where consumers choose to abstain from brands that are too digitally visible, because they too will want their anonymity.
Opportunities: I do believe that the store of the future will have to adapt its appearance from front to back and perhaps as frequently as every quarter. While the cost of remodelling is expensive the cost of changing imagery and re-merchandising isn’t. Retailers will need an army of merchandisers with technology skills to deliver those visual objectives. I believe that the front window displays will once again become important and come to life delivering the images of hope and aspiration that drive consumers. That’s what departments stores used to be great at. This will become the seamless imagery and messaging that future retailers will deliver from online to stores. This will be especially true of high streets and malls if they are to stay alive. There are various technical tools today for retailers to bring those front window displays to digital life now and this experiment needs to begin sooner rather than later.
A New Customer View: I my new book the Great Transition I mention the Jetsons as a means to define that we are not there yet and may never be. However with that said; technology is now the new experience there is no stopping this from happening, we humans want to be ‘Entertained’, ‘Educated’, ‘Engaged’ and above all we want our purchases to be ‘Expedited’ these are the 4E’s of retailing in the future. The 4E’s are what the customer experience be founded on. Each element must have a higher level of training and operational execution to deliver that overall objective.
What To Measure: In addition the new metric for retailers must be the depth and quality of their “Customer Digital Foot Print” that they are collecting or not collecting.
Customers will leave more personal information behind when they are comfortable with the “Trust and Relationship” that they have with your brand. The quality of your data and the impact you can have will be contingent on the 4E’s of customer experience. In fact this isn’t the number one metric you are tracking and working on growing as a retailer you will be unable to sustain your position in the future. If your customers are unwilling to leave information you need to understand what elements of trust and relationship are being missed.
The Future Must Be A Seamless Technical Experience: An assignment paper that I wrote at MIT was focused on the grocery sector and how they could implement available technology today, AI, Chatbots, Robotics and Mobile systems to engage and expedite shopping. Instead today we still have lineups and stalled waiting lines at self checkouts.
My grocery list on my mobile is not populated by the grocers offers or where I can find what I need. We still can’t just tap and go, we still have to put grocery carts into a carousel. If you don’t have a vision of the future and be prepared to implement it you will be left behind because someone else was willing enough to take the risks. Grocery has been a sacred frontier and while convenience is paramount it is not all about delivery as much as it is about making it easier for consumers to shop. That’s not to say home delivery will not be an important service component, it is to say that the time lead for convenience is now. The same applies to all retailers everyone needs to move faster towards improving convenience and it must continually evolve otherwise you are always chasing the future.
Retail Partnerships: There is a significant opportunity for large and small retailers to create and consolidate working partnerships with other retailers for the benefit of consumers. Not in the background but visibly it is the fastest way to be bigger without mergers and acquisitions. The opportunity is to align with like minded brands in complimentary segments that will add value to your long-term growth. I would introduce the reader to ASIAN Paints they have done an incredible job partnering and merging with complimentary brands that extend their brand experience. The timing is also right for this today as well.
While these are only small tokens of what is possible to remain competitive in this new arena. The future of retail is far more about entrepreneurship as it is about disruptive innovation, technology and ideology.
So I ask you to look closely at the advice you are receiving and hearing. Will it bring you into the future or is this something repackaged to sound new and make you feel good? The chances are if it doesn’t create a competitive advantage that aligns with your brand, it is likely the horse drawn buggy trying to disguise itself as a car.
My name is George Minakakis I am the CEO of Inception Retail Group, I have founded a quarterly newsletter called the Retail Realist. Recently released my new book the Great Transition which you can buy from my website here. Every now and then when invited I speak to audiences about how to be successful in retailing. I Have also led retail chains in North America, Mainland China, Hong Kong with assignments in Europe and Australia my experience is real world.