That’s the gist of Remarkable Retail, by Steve Dennis, a book that delves into the challenges that the retail industry is currently facing, and on how to survive this battle of the fittest. As he argues, ‘physical retail isn’t dead. Boring retail is’.
We have all seen it, the so-called death of the middle. There are still plenty of brick-and-mortar retailers, and many of them will stay, but only those that manage to adapt, and to offer a shopping experience which is unique and clearly differentiated. The graph below says it clearly: price-based and premier shops are not at risk; it’s the Sears and JCPenneys, those that do not have a clear positioning, that are condemned to disappear.
And the disease they suffer is caused by the well-known spiral of death. A battle of prices in a commoditized environment, which only leads to lower and lower margins without reducing operating costs. It was not Amazon the one that killed them. They did it to themselves, because they failed to react, to realize that the market was changing and adapting.
This is not unique. We have seen this effect across industries over the last couple of decades: from the infamous case of Kodak and the digital camera, to Barnes&Noble vs ebooks, passing through others which are still waking up (see Big Pharma vs personalized medicine, for instance). It is a keen reminder of Andrew Ross Sorkin’s Too Big To Fail, retail edition. A moving target which left its safehouse a long time ago.
There are plenty of things that we loved about Dennis’ book, but we’d like to pinpoint our main three takeaways:
- Long live offline. But, obviously, online.
In different words, digital marketing does not exist. There shouldn’t be a digital vs non-digital approach to target potential buyers. The blended channel is really the only channel. Customer is the only channel.
Let’s be clear, online sales still represent just an 11% of the total retail sales in US. And this number will not grow above 25% over the next decade. Nonetheless, despite this, digital channels provide an ability to influence customers which is difficult to match by brick-and-mortar shops. According to Forrester, between 50 and 70% of customer journeys are influenced at some point by a digital channel.
Again, it is a matter of taking advantage of this advertising banner that a physical shop offers, providing immediate gratification, ability to touch, feel and try products, sales help from a real live person, and so on, while eCommerce simplifies the shopping process, and adds the ability to quickly compare prices, products, and hassle-free conversion.
Dennis’ conclusion is remarkable: if a retailer closes many shops, chances are they don’t have a ‘too many stores’ problem, they have a ‘not enough brand’ problem. Retailers need then a different value proposition: growing revenues over cutting costs or, even better, optimize margins with the right strategy and tools.
- Shopping as an opportunity
Amazon has been the most disruptive in redefining the notion of convenience. It is not trivial for a retailer to compete with them, exactly because of this. Amazon is not always the cheapest, but that doesn’t really matter if your experience is superior. The online experience, that is.
And that is key to be able to beat the odds of losing clients to Amazon. Realizing that a shop does offer a competitive edge. Yes, Amazon can use data to predict what visitors might want and need, they know it even before they realise they do. But Amazon offers a limited shopping experience, while those with a blend of online and offline shopping have to focus their experience in building brand: personal service, compelling visual merchandising, unique products, well-curated assortments, social experiences, instant gratification,…
- The way is, after all, to be remarkable – easy task? This lays on excelling in eight key areas:
- Become truly digitally enabled, by understanding in detail the customer journey and understanding where technology can reduce friction and provide an exceptional experience
- Transition from a customer-centric perspective to a human-centric one, by building empathy with your customers and getting one – or several – steps ahead of what they might wish or need
- Harmonize your channels and touchpoints, they need to beautifully sing together. Remember, the customer is the channel
- Be mobile. The centerpiece is no longer their street address but their smartphone
- Learn to be relevant and personal. Being customer relevant requires that we gain deep insight into their needs and desires and the story they wish to tell about themselves and share with others
- Remain connected, where relevance and engaging quality of our content is what commands attention and inspires the action we desire. Because we wish to belong and be seen as special, spreading stories that reinforce that desire comes naturally to most.
- And not just that, you also need to be memorable and show a personality. A brand which is visually differentiated, with a genuine voice, honest, truthful, close and with a clear company purpose. Customers want to love you – let them
- Finally, be radical, since the age of Amazon and digital disruption demands organizations become more risk tolerant, more creative, more agile, and yes, more radical. Our job is not to find ways to eliminate failure, it is to fail better, to fail forward, to fail productively.
Therefore, providing the right shopping experience goes beyond offering the lowest price. As retail owner, it is your duty to generate that differentiated experience. It is our task, at Optimus Price, to make sure that you do it in a way that ensures profitability. A combination of both will get you a long way to achieve long term success – even when competing with market leaders.
Based on an article from David Boronat.