Tom Schwarztrauber, Nestlé Purina PetCare – Photo: James Tenser
Apocalypse? No. Retail faces a reset
Is the retail industry sinking in a quagmire of its own making? Is it succumbing to a heartless assault by Amazon.com, or are we witnessing a transformation wrought by a convergence of technological, economic and behavioral trends?
At this year’s Global Retailing Conference hosted by the Terry J. Lundgren Center for Retailing at the University of Arizona in Tucson, the conversation included references to the “Fourth Industrial Revolution” and the “Retail Apocalypse.”
“Wall Street has a list of retailers on a death watch,” said Tom Schwarztrauber, director – global category management & strategic planning North America, Nestlé Purina PetCare. He cited predictions from financial analysts that as many as 80,000 stores would likely close in the U.S. over the next five years.
Large as that number is, it’s about seven percent of current total retail locations, according to the U.S. Census American FactFinder. By comparison, 13 percent of 2017 total retail sales were transacted online, the U.S. Dept. of Commerce reported.
While it may be easy to blame the bulk of the disruption on Amazon, Mr. Schwarztrauber added, “It’s only part of what is happening.”
In fact, physical retailers face multiple sources of pressure that threaten their businesses.
“Shoppers are in charge now, due to the presence of the inter-web,” he said. “They are no longer geographically contained around local stores. The nation is over-stored. There has been a fragmentation of the mass market. Manufacturing scale has gone out the window. The internet has permanently blown up the purchase funnel.”
What steps should retailers take to ensure a relevant, prosperous future? Mr. Schwarztrauber offered advice across several areas of business practice. Now that the era of growth by expanding store counts is over, he urged retailers to cultivate shopper communities by creating experiential environments through storytelling and focusing less on what suppliers want them to sell and more on what, where and how shoppers want to buy. With mass selling losing much of its relevance, he stressed the importance of making shoppers fell like you know their needs.
Further, retailers need a new set of metrics to support these new customer-centric approaches. They should find ways to put customer experience measures on their performance dashboards in addition to sales and conversion metrics.
Mr. Schwarztrauber told the audience to advance beyond a survival from quarter-to-quarter mindset. Track those who are thriving and emulate them.
And forget “omnichannel.” Start planning around the moments you have as a retailer to gain your shoppers’ attention and connect with them.
Discussion Questions
DISCUSSION QUESTIONS: Is it time to bury the retail apocalypse trope and start a more thoughtful dialog about transformation? What practices do you think will enable retailers to prevail in the next era? What practices will lead them to ruin?
Poll
BrainTrust
Jon Polin
Cofounder and President, StorePower
W. Frank Dell II
President, Dellmart & Company
Yes, it’s time to focus on the opportunities retailers have in this new era. There will continue to be churn as some retailers simply fail to adapt, but this is retail Darwinism — a natural process of renewal. The key to success will be the ability to adapt. It starts with a brutally honest assessment of where the retailer is at and coming to terms with what their customers actually want. Retailers that continue thrashing around, raging at Amazon, paying lip-service to half-baked strategies and ultimately doing nothing different deserve their fate. Opportunities abound for those who have the courage and the smarts to see them and seize them.
Darwinism is an apt description. The tragedy is in seeing extinction where this is not necessary. Indecision and under-investment with a clinging to the status quo are poor excuses, as capital is cheap, suppliers are hungry to help and retail climate change with online is a proven reality.
Gosh, I feel like we’ve been talking about these things at RSR (many in the exact same words) for more than a decade. This is not rocket science. It’s just 21st century retailing.
And yes, please bury the damned retail apocalypse nonsense. It was always nonsense, and remains so. All it does is scare the heck out of retailers and their shareholders.
Amen!
And another Amen, Paula!
Yes, yes and Amen!
Retailers, like all businesses, need to live with and adapt to change or else face going out of business. Selling goods and services will not face an apocalypse, but will always needs to adapt to consumer and environmental expectations. The surest way to fail is to remain stagnant. The best path towards success is one of constant experimentation and adaptation, always putting consumer needs first.
Yes please! We’re heading into an era where the consumer is at the center of commerce. That means that retail has to stop telling consumers what they want, and find a way to give them what they’re searching for (hence the list of seven things).
My only objection to the list above is that I don’t love the term “omnichannel,” but right now very few retailers understand how to make their business seamless. I would love to see an alteration to point number seven to say; make it easy for the consumer to buy your product regardless of where they are — online, social media or brick and mortar. The experience should be seamless.
I disagree with the concept of a “reset.” What retail is experiencing is evolution. There are great companies pushing the envelope of innovation in retail. It’s not just limited to Amazon. From big names like Target and Walmart to small boutique companies, retailers are different than they were five, 10 and 20 years ago.
All retailers need to realize that the customer’s expectations are based on the best retail experience they have ever received. That could be Amazon or the smallest store in the mall. If the customer loved the experience, they will crave it from others. That means retailers must recognize their competitors are not similar retailers, but all retailers.
The article makes some excellent points. More than 80 percent of sales still happen in-store. So why are so many stores failing?
With more than 80 percent of sales still being made at physical stores, there are still many opportunities for brick-and-mortar stores.
I’m sorry, it’s easy to say that the retail apocalypse is all garbage, however — and it’s a big however — these numbers don’t show the scores of independent retailers going out across the country. Entire shopping districts are going dark — look no further than NYC with a vacancy up to 30 percent while landowners think brick-and-mortar retailers are dying to pay higher rents. That said, all of these reasons are factors certainly. But as much as the NRF wants to say that things are just fine, they aren’t. And as all of these brands go out it’s a wholesale slaughter on margins across all categories slaughtering those still in business. This is more than a market correction.
The #1 thing that will help retail survive in any era (whether an apocalypse or an era of rapid growth) is focusing on shoppers’ needs to convert them into buyers. This is a simple strategy, yet oftentimes hard to execute. And maybe one that is hard to remember with all the talk of apocalypse …
As in any industry mid-disruption, those retailers who embrace the changing reality and smartly adapt to it may not only survive but thrive. Those retailers with their heads buried in the sand hoping that these changes can be ignored are already starting to die out. This does not mean that retailers must adopt every hot trend immediately; it does mean that the C-suite conversations must acknowledge that change is happening and that they must place their bets on some of the trends.
The only retail apocalypse is that of the status quo. Retail needs to change. We can no longer wait for some spark of enlightenment. It’s time to be proactive and innovate. Do something! The status quo is what will kill you. Amazon and others are marching forward. It’s time to watch, learn and participate or you will watch this parade go by — leaving you to fade away.
Retail apocalypse = clickbait. It even has its own Wikipedia entry. It’s not an apocalypse, the “end of days … ” It’s natural selection, a transformation, a renaissance. Change to the retail landscape is not new, it’s been happening from the very beginning, thousands of years ago. The only change is the accelerated pace of change.
In the article, Schwarztrauber refers to an “80,000” store closure statistic. This comes from a new USB study which predicts that “for every 1 percent increase in eCommerce penetration to total retail sales (excluding food & gas), 9,000 retail stores would need to close in order to maintain current levels of sales per physical store.”
This would be the equivalent to shutting down seven Toys “R” Us chains.
Should online penetration of retail sales rise to 25 percent by 2025, USB estimates it could lead to 80,000 store closures (assuming 2 percent sales growth and 2 percent store growth).
Sure, many traditional retail stores are closing. And many other stores are opening. Many retail jobs have been lost. Many new retail jobs (drone operators, coders, AI, distribution center, last mile delivery, CSR) have been created. Change is essential, inevitable and often painful.
“Signs of the apocalypse” are rampant in some segments, such as traditional mall anchors, but overstated in other high-growth areas like off-pricers. As regional malls suffer one tenant loss after another, it’s hard to see how all of those giant locations are going to be filled — especially if the anchors were in B and C malls to begin with.
One example, in my home market of Milwaukee, is the exit of Sears (three locations) followed by last week’s announced liquidation of Bon-Ton Stores. Boston Store (the local Bon-Ton nameplate) had five locations here — including two stores with over 200,000 square feet. If you’re a mall developer losing two of three anchors, it’s easy to feel like you have a black cloud hanging over your head.
Two words. Shopper obsessed. All retailers have a base set of customers. If they could only focus, focus, focus on making them happy by meeting and anticipating their needs, retailers could reap benefits untold as their shoppers turn into advocates. This is not new news but the “practice” of relevant retail needs to default back to seamless experiences for shoppers.
Customers are resetting how they consume. Better product information, improved buying experience and a focus on value underpin this shift, which retailers and brands are responding to, though much, much more slowly than would allow any retailer to gain substantial new market share and positioning. Those retailers that are investing are gaining rewards of revenue and margins through traffic and conversion, and improved loyalty with that all important word of mouth advertising.
Someone is always thriving. Their particular business model may not appeal to you. But you needn’t be recognized as a great tech innovator in order to survive. Look at the literally multi-decade puny success of hand-held devices at retail. But clinging to 100-year-old successful thinking is NO guarantee of survival, either.
I respect those who introduce transformative technology — IF it IS transformative to the shopping crowd. Alexander Pope left us some sage advice: “Be not the first, by whom the new is tried. Nor yet the last, by whom the old is laid aside.”
Focusing on the Big Head (what people mostly buy) without burying it in the Long Tail (what they might want to buy, sometime) has been a winning strategy from time immemorial. Probably will be, going forward, too! (See my article on “Crowd-Social-Nudge” Selling.)
I am in full agreement with the RetailWire community that retail as we know it is undergoing an evolution to a channel-less, customer-focused experiential model that is built on forming trusted and sustainable relationships with customers. The incessant clickbait articles regarding the “retail apocalypse” and the mass store closures are reminiscent of the 2008/2009 financial collapse and housing crisis, which was preceded by the mass media frenzy about the pending economic collapse.
What we all should embrace is change, innovation and all the excitement to come. Will there be continued challenges ahead as legacy retailers undergo their internal digital transformations to adapt? Yes, however retail remains fundamentally the same. Retailers must provide an outstanding customer experience, across channels, and compel customers to remain loyal to their brand.
No industry buzzwords about evolving to an “omnichannel retailer” will help drive this paradigm shift. Retailers have to focus purely on the customer experience and the customer journey across all the channels, so that it is consistently providing joy, removing friction and building loyalty.
The internal retail ecosystem has already moved beyond the apocalypse dialogue. The general media still uses it as clickbait but that’s it. Being at the conference last week as well, it was great to hear from retailers (both those that are struggling and those that are not) about how they are evolving their models and their messages to adapt to this era of retailing. Yes, it’s about creating experiences and meeting the shopper on their terms (including respecting their expectations of privacy vs. personalization).
There is, in fact, a retail revolution. I think this is the first real revolution ever. Physical stores have basically looked and run the same for 150 years. Look at old photos of supermarkets, department stores, etc. Stuff piled on shelves. And people restocking them. Are they really that different today?
Online commerce has definitely thrown a wrench into that model. I feel there is unprecedented opportunity for retailers to thrive. And unprecedented threats to their survival.
True loyalty today is all about the shopping experience. Retailers, large and small, can create a seamless experience and provide products and services to the world. Literally. Small, even “mom-and-pop” retailers are making their presences online in ways that give the shopper no idea how big those retailers actually are. That means they can “punch above their weight” and truly compete with any company.
From the physical store perspective, those who make the bridge to online with no disruptions in the shopping journey are making a substantial stride forward toward securing their future.
There are lots of good, basic recommendations in the article and comments so far. My first suggestion to retail leaders around the world is to go into five stores and try to complete a shopping list. See what struggles arise. Then do the same thing online with different shopping missions. I guarantee you’ll find obstacles to completing your missions.
It is very true that retail is going through a major change now, but that has happened before and will no doubt happen again. Recall when the hypermarkets were going to take over the world and local specialist shops were all going out of business. Now we’re seeing the reverse trend of hypermarkets being too large and consumers wanting to shop more locally and conveniently. The specialist is back on the rise with innovative new offerings that are making shopping fun again.
This last point reflects the thought that shopping must become more of an experience; theater, really. Customer-centricity and using the retail location to maximize engagement with customers is vital. This does not mean that “retail is dead” or that stores’ numbers are going to continue to decline. We are now seeing pure-play online retailers opening stores. Why? Because they want to connect and communicate with customers.
Retail has always been a dynamic evolutionary industry and today is no different. All this talk of how Amazon is taking over retail shows a lack of understanding of this industry and how resilient, innovative and creative it can be.
I think we all have seen the numbers and know that the industry is doing just great, so bye bye apocalypse. This article covers many good points about what retailers should be doing in order to stay relevant and in the game. I love Mark’s thoughts about retail renewal. That is precisely where we are and smart retailers are already thinking this way. What practices will lead them to ruin? Doing the same ole thing, the same ole way. It’s time to keep your eye focused on the customer! For my 2 cents.
Seriously? “We’ve all seen the numbers and know it is doing just great?” Tell that to the 23K people no longer working for Bon Ton this week or the 31k people who used to work for Toys “R” Us.
Total retail sales in the U.S. have been up 4 percent year over year for the last three years so, it doesn’t take much to realize there’s never been an “apocalypse” of any sort. It’s a weeding out, pure and simple, and much of the weeding out is coming from retailers that lacked in basic fundamental execution, like customer service, convenience and speed. So many large companies got so complacent/lazy by virtue of the stack it high/let it fly philosophy of the ’90s that they became easy targets for new, more dynamic entities with missions that said things like, “to be the most consumer-centric company in the world.” They deserved to get the chop!
“Retail” (the art of selling goods) will always be fine. Especially in the U.S. It’s what we do! But if you took a nap for 20 years anywhere along the line, odds are you wouldn’t recognize it when you woke up. It’s just the nature of the game. Relax and, oh yeah, fail fast.
Already 90 million square feet of retail will go vacant in 2018. Hard to see that all is well.
Retail is not going away, it is changing like many areas in our lives that are being impacted by the speed and access to information provided by the Internet. Retail has never been about what is sold — it has always been about what shoppers want to buy. Now there are just more buying modalities that shoppers can and expect to use to learn about and purchase items. As in the past, those retailers who adapt to their customers’ desires will survive and those that don’t will be gone. This situation is not a reset — it is and will be an accommodation of the ever-evolving use of technology by shoppers.
Retailers need to maintain close contact with their customers and new shoppers who are happy to explain their expectations and the desired behavior of the retailer with their pattern of purchases. In-store buying, the Internet and online buying provide convenient tools for gathering consumer information and buying habits. This information can be used to adjust the retailer’s business to maximize retail sales.
Ruin will come, as in any business, when retailers do not listen to their shoppers’ desires and react accordingly.
The retail industry seems to be in the thick of a correction or disruption that’s been building up over the past several years or more — namely the bifurcation of consumer demand into luxury goods and discount goods. Retailers not aligned with these markets have been struggling, but working hard for the most part to transform around better and more appealing shopping experiences. That’s an economic impact, but Amazon’s ongoing growth has exposed the excess retail square footage in the U.S., leading to store closures and the abandonment of malls. If nothing else, the “stack em high and let em fly” mantra so long associated with retail has got to be shelved — in its place, there needs to be a focus on the end-consumer, their household, lifestage, interests and connections. Retailers need to design an experience they can defend.
One final note about the discount market — just because the consumer has less to spend does not mean you can take their business for granted when it comes to a pleasant shopping experience. Companies like Walmart have foreseen these market shifts and have the supply chains to go even more down-market, while their size makes it possible to invest also in new segments more luxury in nature. In the U.S. at least, the retail industry is becoming more and more reflective of its population’s economic situation.
I agree, though I’m most bullish on the (oft-overlooked) independent retail space. IHL Group predicts 4,000 net opening stores among large retailers, with independents expected to outpace this with around 6,000 net opened stores. Independent retailers intuitively have an advantage on a number of Tom’s items regarding stories, community, knowing the shopper, etc.
I do worry that “experience” is starting to become the next cliche now that omnichannel has seemingly run its course. I believe the intent behind this movement towards experience is right, but retailers need to be very careful not to simply inject the term into marketing/PR without being specific on what “experience” actually means.
It is time retailers get off their death bed and start changing. First, Amazon is not the problem. They lower prices to drive competition out of business and they still don’t make a profit even when the competition leaves. Unless Amazon gets into making a profit, their house of cards will fall down.
Yes the consumer is changing. Yes some product are going to be sold mostly off the internet, but not all. Wegmans, Publix and H-E-B don’t seem to have problem. Stock what the customer wants to buy, service them with a smile and understand you are competing with everyone not just the retailer down the street. Get back into the game of merchandising and an enjoyable shopping experience.
For many brands and still many stores, “apocalypse” is still applicable. All one has to do is read Jeff Bezos’ letter to shareholders that was released last week. Amazon has been “obsessed with customers” for 20+ years now and that, among other reasons, is why things have changed for retailers and for consumers. Our (rDialogue’s) proprietary research underscores this.
What’s missing but is implied from Mr. Schwarztrauber’s list is investment. There are still too many retailers that are loathe to invest in systems and technologies that help deliver a better customer experience. Consequently, these retailers lazily resort to competing on price rather than any of the ideas that Mr. Schwarztrauber appropriately suggests.
Retail is at an interesting crossroads where there will be the haves and the have-nots. The latter will cease to exist; the former will be focusing on customers.
While mentions of “apocalypse” might work great at grabbing headlines, the reality is something much subtler and far more interesting. While store closings capture everyone’s attention, there are winners too, as the retail economy is healthy. In fact, according to the U.S. Census Bureau, retail sales in 2017 were 4 percent higher than 2016 and the consumer confidence index reached the highest level in 17 years.
Have the ways that consumers acquire many goods and services fundamentally changed? Have consumer expectations continued to rise? Have technology and retail models like Amazon disrupted the traditional retail model? Yes, yes and yes! Is this new? No, retail has gone through many periods of disruption or transformation. Catalogs, the move to suburban malls, Walmart, and the rise of e-commerce are all great examples of retail disruption and transformation cycles. Now, the current rate of disruption and the subsequent transformation is probably the largest many of us have or will ever see. While it might be an “apocalyptic” outlook for some, the reality is that it is just the ever-evolving nature of retail and consumers.
Focusing on the “retail apocalypse” is liking hitting the pause button, and ignoring what is really happening. Call it the “Great Retail Transformation,” it doesn’t matter – it’s the future and it’s just retail.
With the rapid pace of disruption, winning retailers are looking to outpace the competition, and adopt strategies that position them for success as customer expectations and technology continue to evolve. Yesterday’s retail model is dead. The customer journey has changed, driven in large part by mobile technology, and the retail model must evolve to meet enhanced customer expectations. Banking woke up to the value of networks, ATM’s and the cloud, so to will retail and it will transform the customer experience and the retail model just as it has transformed the banking industry. The legacy retail applications and infrastructure still in place at many retail organizations are not properly equipped to support this new model. The retail winners in 2018 and beyond need to accelerate the transformation of their organization, business processes and technology to align with the demands of their customers. Victory belongs to the agile.
Apocalypse? — no. Total retail spend continues to grow as it almost always has. Change in balance? — Yes. A power shift to the shopper (and the brand owner)? Absolutely.
If you are selling undifferentiated products that can be bought anywhere (everywhere, really) well, you’ll need something else to grow your customer base. Be careful with one-size-fits-all models. If I need to pick up milk on the way home then I don’t really need it to be “an experience,” probably won’t buy it online and may not care too much about the branding. Fashion, electronics and sporting goods all require different models.
Retail is facing a transformation that has been building up in pressure for the last 20 years. It has been accelerated to the breaking point for some, due to impact of personal technology to consumers and the implementation of technology by businesses.
Data visibility on pricing, tastes and brands is forcing traditional store centric retailers into a corner, due to how the stores are planned, measured, operated and financed. For many retailers, they are over stored, but the model doesn’t allow them to downsize and make up revenue online, and they have to exit.
Good observation, Ken. Perhaps our industry is at a “tipping point.”
Something new is possible for traditional retailers. It’s viewing their businesses not as fixed things that can only incrementally improve, but as communities of people themselves that can create entirely new experiences and new ways to buy, enabled by technology. Worrying only about the retail apocalypse and what to do about it will yield limited results. Transformation is possible. And it’s up to all of us to generate dialog consistent with the incredible potential in retail today.
Apocalypse, Not. Yes there’s change — yet change is always constant.
Out of this discussion, though, the talking point I really hate is the idea that “NOW consumers are the center.” Wait, what? Was there ever a time when they weren’t? No. Never in history.
It’s important to get this right — otherwise we’re living in a fantasyland. It’s always been about the consumer. Today’s consumers have some new information channels while others have gone away. Fine. There is theory that they have more options, but mergers and acquisitions (like Stanley owning 1/2 the tool business) are dramatically reducing options — even online.
No matter how you look at it, consumers are, and always have been, the core of the equation.
Thank you Doug. This is not news — it’s always been about the customer.
It’s not an apocalypse, however, it is a time that is demanding a redefinition of most every retail company, and I call that a reset! The best way for a retailer to predict their future is to focus on inventing it. Many of the answers are already discovered create an emotional experience, great service delivered by enthusiastic and trained associates, and an eye for, and a willingness to change constantly.
It is certainly true: 10% of your business will change every year, whether you like it or not. Those that don’t practice constant change of at least 10% a year, will, in just three years from now, look (and probably be) obsolete when compared to their ever-changing aggressive competitors. So the question for every retailer is, and all of us, is: “Your competitive world is constantly resetting — what are you doing?”
Gratified to see the strong response to this article. I wish more BrainTrusters could have been present here in Tucson to hear Mr. Schwarztrauber. It was one of the more cogent talks I’ve heard in a long time.
I was particularly taken by his emphasis on “experiential stories” and planning around “moments.” Both are different ways of thinking about the retailer’s mission that put shopper interaction to the forefront.
Making these activities systematic and measuring their efficacy will be a key area of innovation for retailers who lead the pack. If that seems a bit uncomfortable to the traditionalists out there, I submit it’s way better than being among the 80,000 store closures.
Agreed and the devil is in the details with a workforce generally taken for granted and begrudgingly given minimum wage.
23 years ago in 1995, Amazon sold it’s first book. In 1998 Amazon acquired Junglee, a shopping service for all kinds of products. 20 years have passed, still so much NOISE with all the made-up names like omnichannel! No substance.
After 20 years, the evidence is in — retailers still don’t get it. Even in the C Suite, the physical customer experience is farmed out to people with no retail experience, tech teams, forced to come up with the next shiny way to interact with a customer. And retailers are still wondering what happened? This is not a technology, digital customer experience problem, it is a business problem. Groupthink is far easier than investing the time and resources in a holistic solution and strategy. It is far easier for C-suite retailers to obfuscate under the rationale of not understanding technology.
It’s time for the talk about the retail apocalypse to end! Let’s all agree to use the following Star Wars quote when responding to anyone promoting this idea: “Amazing. Every word of what you just said was wrong.” Seriously, we can call it a “transformation,” a “revolution,” or an “evolution” — take your pick, but there are real fundamentals at work here that deserve attention:
1) This may be more analogous to the Internet bubble right at the turn of the century. There is a retail bubble that is now bursting in full glory. And it’s largely of the industry’s own doing (or undoing depending on your perspective). A friend of mine said over 3 years ago that retailers have spent decades trying to homogenize the shopping experience to the extreme, only now realizing shoppers want unique, personalized experiences. But wait, wasn’t this how retail got started? Wasn’t everyone greeted by name at their favorite shop? We have come full circle. Technology once used to homogenize the experience, is now being asked to personalize it. Cue the bubble bursting. (And a shout out to Kim Lewis for that homogenized comment!)
2) For years the industry has referred to frontline store associates as the “face of the brand.” Yet investment in their people has been few and far between for most retailers. Not just in training, but any sales enablement. Even with modern tablet-based tools, most stores are not equipping their associates with what they need to deliver a great customer experience. This is reflected in study after study that tells us consumers don’t want to engage with associates because they don’t feel the associates are knowledgeable. Year after year this behavior is repeated, until … cue the bubble bursting.
3) This is a data business … but what is the data telling us? For every report we see telling us how store closings define the “apocalypse,” we can point to another that shows how store openings have outpaced the closings and how net number of stores is still increasing. How can both be true? Depends on our definition of a store. Then we have the market reports that tell us retail is growing at 4% (or more) and that everything is just fine, thank you. But what do we see when we look at who is getting the benefit of that growth? This is even true with consumer goods brands. Consolidation is creating behemoth businesses that do manage to grow, but at the expense of those smaller brands left behind. Does this mean we’ll have a booming retail industry in the future with only 3 brands for us to choose from? Again, cue the bubble bursting….
Yes, this is retail. The fundamentals around focusing on the customer haven’t changed. What has changed is how this is accomplished. Amazon has shown the industry new ways to focus on the customer. Sometimes they aren’t even new — just well executed. And sometimes they look innovative and well-executed because everyone else, by comparison, is so poor. The fact is, too many brands have taken their customers for granted and lost sight of what it means to convert a shopper into a buyer.
The industry has also been distracted by shiny technology (At the expense of solid infrastructure that supports the business!). All of these things have converged and produced a wake-up call, just like for the Internet industry when their bubble burst. What happened to them? The survivors got better. Produced better products, and some did get bigger (yes, still at the expense of smaller brands — that’s what happens in a strong economy). Retail is not dying, it is just finally waking up to a new reality that requires change and evolution — those that refuse to do so won’t be around to see how it turns out!
You can now take your child to Maggiano’s Little Italy for cooking classes. Tween retailers are going to host birthday parties. And at the September meeting of the Store Operations Council, we’ll get a tour of the new flagship DSW store, which has been completely reimagined. Get experiential, or fall behind.
There are so many exciting concepts out there that deserve our attention vs. the many dinosaurs that either failed to adapt to the evolving customer, or more commonly, got buried under the weight of unmanageable debt loads. Retail is an industry that can serve as a poster child for over-consolidation and over-homogenizing. Over-consolidation as represented by too many too large chains led by financial types that don’t prioritize the customer and end up getting buried under leveraged debt burdens. Over-homogenizing as represented by prioritizing efficiency over customer experience, and resulting in vanilla concepts that few desire. And usually the over-consolidated/leveraged and over-homogenized lists are the same.
Instead, the winners are changing the way they interact with the well-informed customer who expects their experience to be personalized, down to the product. Amazing to see so many doing this so well!
And a final comment: Look beyond American retail, and beyond e-commerce and mall stores. Some of the most exciting innovations are happening in other countries, notably China, and in other formats, such as travel retail (airports, downtown duty free, border stores, in-flight, cruise ships, etc.). Only if we are curious about the entire retail universe will we notice and be able to take advantage of rising retail innovations.
It is time for all in the industry to talk about how the new state of retail will look like from a positive point of view, based on what we’ve seen so far in terms of trends, challenges and opportunities. Enough about retail apocalypse and negative outlook. The ongoing change is evident and I suggest to focus our energy in helping to shape the new face of retail. The new face of successful retailers will be based on 1) Deep understanding of its customer base regarding how they interact with the retailer’s brand in every touchpoint of their journey; 2) Ongoing personalized and seamless experiences (anytime, anywhere); 3) Fast, free shipping, returns & exchanges; 4) Provide new local experiences.