Best Buy as “digital plumber.” Brilliant! For apparel retailers I like “We are in the business of managing people’s emotions.” People feel faster than they think. If you can’t make them feel better than the next guy, how will you survive? Are you just offering stuff on sale? Or do customers actually look forward to your next delivery? A retailer who manages emotions well probably has a longer life than a retailer trying to win the race to the bottom.

Retailers can differentiate themselves in terms of the products they sell. Good firms like Apple, Williams Sonoma, Lululemon and Sephora all do this. Indeed, their products are often part of a solution to a customer problem or need. However, it is also important to add additional value whether this is in the form of services, advice, the lowest prices, an experience and so on.

I remember the CEO of Southwest Airlines saying in a speech that they realized that they weren’t in the transportation business, they were in the customer service business. I think the same could be said for most retailers. It seems, at this point, that Amazon gets that concept better than anyone else.

The shift from a product-defined retailing paradigm to co-creating customer experiences is well underway. That means not just defining what business one is in, but the entire organizational structure, strategy, capital investments and metrics. From the board level to the store and web storefront, the change is irreversible. As Max so cogently stated, retailers need to fill a role in consumers’ lives. It’s not the stuff you sell that matters, it’s the experience your customers have and feelings you engender that will define your business and brand. Start with the customer and the rest will follow.

Most of what retailers sell is a commodity. What differentiates them from their competition is not the products they sell, but something else they deliver to their customers. It could be knowledge, a special/unique feature, customer service or something else. What you sell is one thing. Understanding why the customer buys from you is another. Knowing the “why” is very important. And to take it to another level, Dr. Ted Levitt also said that businesses need to understand that the function of their business is to get and keep customers. Most people think the function is to make money. That’s the goal. He argued (and was right) that if you confuse the function with the goal, you don’t always reach the goal. So what can a retailer do to get customers to buy from them over their competition? What can they do to get them to come back? Finding the answers to those questions seems like a good place to focus your marketing and sales energy.

My definition of retailing used to be: “to sell products people want, buy them at the lowest price possible, sell them at the highest price possible, in the best locations possible.” Today one must add: “through attractive and exciting channels and employing a frictionless process for purchasing.”

This is one of my favorite questions, and one most retailers do get wrong. A great example of a retailer who thinks beyond the products they sell is Publix. They are the largest employee-owned grocery chain in the U.S. They are dedicated to customer service and community involvement and food is the solution they offer. From in-store Publix Aprons demos and recipes of the week to sponsoring local soccer and giving to Feeding America they are more focused on helping the community than they are on winning in the grocery game.

Retailers have been rightfully worried about defining themselves by category for a while now. At first, Walmart was the concern – which categories would it go after next at crazy low margins? Those days now seem quaint with Amazon on the scene, picking off categories one by one at massive scale and with algorithmic alacrity. Amazon already is a multi-pronged product, brand, solution and service platform. Now an over-correction is at work in retail that is even more perilous. The concern is (or should be) complete loss of identity as retailers offer store space to competitors and expand online marketplaces into oblivion. This is diluting brand equity (hence many brands’ pull-back on wholesale distribution). The answer to “What business are you in?” can’t be a reactionary “Selling all kinds of stuff everywhere.”

Fundamentally it has become about the “why” for today’s retailers. The continuous evolution of customer expectations has led to retailers having to re-evaluate their objectives, purpose and how seamlessly they fit in with their target audience’s lifestyle, in a channel-agnostic way.

The move to experiential and personalized retail experience is top-of-mind as one of the main differentiators that will draw customers to your brand. Retailers that are getting this mix right are positioning the retail store as a brand and platform — to build relationships and drive closer attachments to their local communities.

Retailers such as Apple, Gucci, Farfetch, and Restoration Hardware, are not only focusing on experiential retail but also empowering their sales associates as brand ambassadors, to drive and enhance the overall customer experience.

In addition to Levitt’s classic article, Charles Revson, founder of Revlon proclaimed, “In the factories we make cosmetics; at the counter we sell hope.” If a business can define its equivalent of “selling hope” it provides clarity to what business it is in.

Three food retailers stand out as evolving marketers who clearly understand the changing nature of selling hope: Wegmans, Publix and H-E-B. Perhaps none have done a better job of redefinition than H-E-B with its customized banners (H-E-B, H-E-B Plus, Central Market, Mi Tienda, Joe V’s Smart Shop and H-E-B Convenience Stores). More recently its move into online with convenient delivery options from click-and-collect to in-home delivery continues to raise the bar on its equivalent of “selling hope.”

“What business are you in?” leads to a static answer though it is a good start. To make it dynamic you need to ask yourself “Why?” two more times. Most businesses are two “Whys” short of a compelling and meaningful purpose. Activity and busyness are typically defined economically (the “oikos nomos” or numbers). True purpose has to be defined ecologically (the “oikos logos” or word or meaning of your existence). Why does your retail operation exist? Who would miss it if it disappeared? Most of this article leans toward the economics of products, pricing, strategy, etc. We need both since what drives us and gives us meaning is the ecological and what rewards us is the economic. Going for the numbers without the meaning will wear you out and make you miserable. Not being able to sustain your higher calling because you’re broke isn’t so wonderful either. I respectfully suggest a better question is “What good are you doing that will make our world a better place?” Do you create or preserve beauty? Are you… Read more »

This is a question that many consultants are still using in many speaking engagements at many conferences. “Disney is not in theme park business, but in the experience business,” and so on. While it is certainly important to focus on what you provide to your customers or guests, changing the “what you do” from “what you sell” or the industry you are in is useless unless it is truly socialized and adopted by everyone in the organization that services the customer.

I recently changed my LinkedIn profile from describing the software we sell to, “Helping CPG companies use all of their data sources more efficiently and effectively to increase sales at retail.” Unless this is put into practice by everyone in my organization, it is just marketing speak.

While the product is important, it’s really about creating an emotional bond between brand and customer built on memorable experiences that remove friction and create delight. Retailers that embrace this (Apple, Sephora and REI come to mind) will succeed, while others will struggle. Look at Macy’s (a frequent topic in this forum) — they used to have consumers’ pulse on apparel defined in every way, but over time lost their way as the product became less important than how it made the customer feel when they purchased it. Now we see Macy’s buying STORY and investing in b8ta to reverse that trend. Why? To regain that emotional connection with their customers. I recently attended an event hosted at a Treehouse store in Dallas. They have a highly curated concept for home improvement built around offering sustainable, green products to homeowners but with very few products in the store. Their shopping experience is based more on providing knowledge about products and services to deliver and install them in your home. For a store where most purchases… Read more »

Brick and mortar stores have an incredible positioning opportunity card that they must play, and that is creating the sense of positive emotional experiences through discovery, which takes place in an emotion-creating environment. Like going to Disneyland — that’s an amusement park that focuses on creating emotions. Disney plays that card well!

Macy’s, with their connection with “Story” is hitting that button: “Come in and experience and dream.” We call that the “Second Story”, which is focusing on creating positive emotions about the business through presentation and interaction with the store. When that happens, the physical becomes interactive, both mentally and physically, and that is card that must be played.