“People are always going to go shopping. A lot of our effort is just: ‘How do we make the retail experience a great one?’– Sir Philip Green
Retail consultancy firm McKinsey & Co estimates that in 2022 more than 80 per cent of retail sales in the US will still happen within physical stores. Or conversely, 20 per cent will occur on online.
Given that 30-40 per cent of retail sales occur in the November to late-January window, these forecasts indicate a deeper and more profound trend, since the spike in online shopping is likely to occur during the traditionally most cash flow-positive months of the year.
Even if these forecasts are a little bullish (and our insights indicates they are), it still confirms the profound effect on retailing that everyone knows is occurring. The societal impacts of shopping centres adapting to fulfilment models will be fascinating to observe.
But where do retailers need to focus their endeavours?
- Do stuff differently, be curious and open the kimono to others’ thinking
I recall speaking with a prominent CEO of a large retail channel about the benefits of neuroscientific customer profiling to underpin segmented marketing strategies. His response was that the retailer didn’t need any more data in the business. (I wasn’t talking about data.)
That channel is in decline as I write this. Regrettably, he has made the point for me quite succinctly.
The Australian retail sector, a classic island economy and historically very profitable, was ill-prepared for the change to online shopping. There was little if any funding for research and innovation. While Jeff Bezos, Steve Jobs, Bill Gates, Jack Ma and so on were revolutionising the world, we were busy putting another shop in another shopping centre.
Scale, size, product and location ruled this empire. Capital refurbishment was at best lease renewal. Customer experience was a habitual journey to the mall. Organisations existed in silos and were never really forced to think from the customer’s perspective. It was classic case of pushing product down a pipe.
Now speed, relevance, product agility and the ecosystem matter most. With more channels to market merging into one and a far more researched customer, a shop on every corner is not necessarily the best strategy. Building communities rather than coverage is far more important. This, met with a diverse, curious team adroit in change management, is critical.
The retailers that fell over in the last 12 months didn’t meet this criteria consistently.
- Don’t overlook the fact that being a great retailer is fundamental to the customer experience in retail
It is as critical to understand stock turns as it is to understand Google SEO on your site, as it is your core customer insights.
The advent of fast fashion shows us that relevant brands and offers, right locations, customer fanaticism and fresh, beautifully curated stores are what customers want. Constant reinvention with fanatical attention to detail. Gee, what has changed? Could I be quoting Sam Walton?
The mantra of customer experience has understandably been dialled up, and it needed to be, but perhaps, it needs to be done in a more meaningful “retail” manner.
Interactive beacons in a shop are cute, but out-of-stock items will determine the customer experience in a far more powerful way.
Every great “fit” retailer is, at the heart of their business, a great retailer that delivers great differentiated product consistently. That’s rule number one.
The retailers that fell over in the last 12 months didn’t meet this criteria consistently.
- Recognise that we’re living in the age of the specialist
I once worked for a great leader in retail and he would say, “Stand for something in your offer. Be great and known for something.”
That is more important than ever before, as the heavy use of online (especially mobile) for research and the laser-like mission of customers forces retailers to be experts in one core category or area.
Now apply this to the big generalist retailers that are struggling. What do they own or specialise in? And what are they the best choice for in the market?
The retailers that fell over in the last 12 months didn’t meet this criteria consistently.
Words Brian Walker – The Retail Doctor.
