Will you survive the future of Retail? Eight strategies you should focus on.
Published on September 9th, 2015
By: Pascal Abukhalil
Are we ready for the 2020 store? This question is the topic of every boardroom talk. It’s filling the corporate war rooms’ flip charts, the consultants’ white papers, the agencies’ think tanks and the designers’ drawing boards. Just hit google with “the future of retail” and you’ll get 303,000,000 results.
What will happen to the brick and mortar store? How is the digital world transforming the way we shop? How to cope with a constantly changing technology landscape?
The rise of young entrepreneurs, the growth of shared economy models and the ubiquity of platforms where customers can give satisfaction feedback are all factors contributing to the transformation of the retail landscape. With a new generation that understands that value is more important than a brand name, there is no more room for error.
Retailers like Apple, Nike, Disney, Amazon, Uber and Ikea are setting the rules. It is clear that if you don’t anticipate the trends and be ahead of your competition, you will sooner or later struggle. Here are eight strategies you should focus on to be ready for 2020:
1- Have a nimble footed team, and maintain constant relevance checks to sustain your success.
In a constantly changing landscape, you need to be light on your feet. Many retailers have fallen behind and eaten by competition because they resisted embracing new platforms, new technologies or new marketing strategies. The tactics used in 2014, are no longer relevant in 2015. From Facebook, to twitter, to Instagram, to snapchat, to influencers blogs, the ever-changing media platforms are forcing marketers to rethink their strategic toolbox every day.
No need to mention the cases of retailers like Blockbuster and RadioShack, or other brands like Kodak, Nokia, or Blackberry that weren’t fit enough to survive the evolving climate.
A brand relevance check is necessary more often than ever, and making change management part of your culture is a must. Your team needs to leave room for transformation in their business models, drop irrelevant products, embrace new platforms, and ensure that innovations are absorbed and adopted as best as possible. With a new generation of consumers, brand loyalty is on a declining trend. If you don’t continue to challenge yourself and push yourself to earn and re-earn your position in the marketplace, you can’t guarantee your presence in 2020.
2- If innovation is not part of your DNA, then start nurturing it.
Not Everybody is Steve Jobs or Howard Shultz, and innovation is not something one can force to happen. We’ve seen companies’ trials to create breakthrough changes but unfortunately resulting in failures. Here are some reasons why:
If you are solely relying on market research to advance your business, it’s very likely that you will end up disappointed with surprising failures while you thought that what you are doing is what consumers want. I always quote Henry Ford: “if I had asked people what they wanted, they would have said faster horses.’”
In other environments where we have also observed failures, innovation attempts came with a purely top down approach: an executive team meeting with few consultants, throwing down ideas on their subordinates to execute. Without participation, you will see resistance to change; ideas will end up poorly executed, and far from giving the promised expected effect.
How can you revisit your corporate values so that innovation can happen seamlessly? Making innovation part of your DNA is very important. Had Steve Job launched the “Think different” campaign without the serious belief of each of Apple’s employee in this spirit, Apple wouldn’t have been what it is now.
Hire driven employees, but make sure you invite them to bring their ideas to the table. Nothing can be more taken seriously than concepts that come with employees’ ownership and belief. Each team member, from the janitor to the CMO should believe that they can make a better world.
3- Location, Location… Application. It’s time to revisit your real estate expansion strategy.
One of the major retail real estate mantras is “Location, Location, Location”. Retailers are constantly looking for the best corner on the busiest street to attract the highest numbers of walk-ins. Many good locations get dropped, due to inappropriate footprint, or very expensive rent. Nowadays, this factor has become less important than it has ever been. If your expansion strategy is solely relying on physical presence, starting to allocate budget to the app industry is a no-brainer.
The US trends show that generation Z will constitute 40% of 2020 customers and therefore Gen Z will drive the US business. This generation is born with tablets and can’t breathe without the constant consultation of a smart phone. Moreover, in 2020, the world will be busier than ever, and consumers will actively be looking to accomplish more in less time.
The shop being in the consumer’s pocket constitute a great competitive advantage and retailers offering the option of home delivery can maximize their reach. Moreover, less inventory on shelf to manage means more savings for you.
While the digital store will never replace the brick and mortar store, integrating online shopping within the store, can solve the obstacle of acquiring small footprints. It goes without saying that you have to relook your supply chain model.
While online purchase has proven to be successful in the fashion retail and electronics industry, very few early adopters have shown interest in the grocery business due to the nature of fresh products. A smart way to overcome the “fresh food” delivery risks, is the “Click and collect” concept. Consumers can now create their shopping list in the morning, and pick up their purchase including fresh items on the way home. While big retailers like Tesco or Loblaws have already implemented the “click and collect”, it’s expected for this practice to grow.
4- If you are just selling products, it’s about time to offer magical experiences.
The ubiquity of information, the rising cost of living and the speed in which we live in, is pushing consumers to practice “showrooming” rather than buying from the store. While we’ve read many articles saying the store will be dead by becoming a showroom platform, that’s still not true, and is very unlikely to happen in 2020. One sure thing is that customers are constantly looking for value, speed and maximizing the return on their dollar.
If you ask the CEO of Starbucks Howard Shultz what business is he in, and you except him to answer that he’s in the business of selling coffee, then you’ve got the wrong answer. Starbucks provides a third place between home and work. As long as consumers see value by visiting your store, they will keep coming. Your job is to provide magical experiences. George Ritzer defines “Retailtainment” as the “use of ambience, emotion, sound and activity to get customers interested in the merchandise and in a mood to buy.” Coffee shops offering free wifi, have more chances to increase the stay of their customers, and therefore increase their purchases. Retail environment is key to make the consumer want to come to your store, stay longer and convert.
The birth of kindle and ebooks had a great negative impact on paper book purchases. In order to remediate this issue, bookstores created seating lounges and integrated coffee shops in their stores allowing browsing before you buy. Find ways to extend your business while entertaining your customers. Walt Disney once said: “I would rather entertain and hope that people learned something than educate people and hope they were entertained” What about entertaining people and hoping they will buy more?
5- Sell the way people live, and not the way people shop.
We’ve all had at one time an Ikea couch or table in our homes. We all also know if we had paid few more bucks, we could have gotten better quality and design. Why is Ikea such a success? While Ikea is a furniture store, it’s not only in the business of selling couches, beds and mattresses. By displaying “real” living spaces, Ikea arouses in you the feeling of wanting to live a better everyday life. Let your store provide inspiration for your customers, and there will be more chances for them to love you. Understand the lifestyle of your main prospect, and sell the way they live. If you are a supermarket, inspire people to make great meals, rather than selling them food. If you are a sports shop, make people feel they are champions. While it’s hard to predict how lifestyles will be in 2020, keeping watch on psychographics instead of focusing on demographics can guarantee a better way of understanding what consumers strive for.
6- Focus, simplify, and make peoples life easy, or else you are skipped after 4 seconds.
“By being everything to everyone you end up being nothing to anyone”. Why do brands like Louis Vuitton, Apple, Lacoste and Mercedes survived the test of time? It’s because they are focused on their essence. People come to you, because you are the expert. If you store doesn’t have a brand essence, a set of values that people can clearly identify, you are then just another one.
Don’t keep adding endless features, options, bells and whistles to the point of confusing consumers. Narrowing down the choices is beneficial to your business. In a Harvard business review on how to retain and covert customers into buyers, Spenner and Freeman talk about one single biggest drive : decision simplicity—“the ease with which consumers can gather trustworthy information about a product and confidently and efficiently weigh their purchase options. “
The Human brain has a very small attention span. Even worse, according to recent market research, Gen Z have the attention span of a gnat: they have an 8 second filter. In 2020, if you are not straight to the point and let the experiences be intuitive, you have less chances to survive. The YouTube commercials offer skipping the advertising after 4 seconds. You now have 4 seconds to get your message through, or else, you are skipped.
7- Personalize, Surprise, and reward. Invest in your consumers, transform them into advocates.
We all need to be loved and feel special. We appreciate rewards and remember surprises. Gen Z is born with a “Like” button under their thumb. They seek immediate validation and acceptance through social media. They want personal services, they love surprises, and loof for instant rewards. The master of these three attributes is Starbucks. I will never forget the first time when a Starbucks barista wished me a “Happy Birthday!” and offered me a free drink. Of course, the Starbucks app is developed to surprise you and reward you, therefore keeping you hooked, and wanting you to buy more. When you are called by your name to pick up your drink, you feel special. You even tweet about it when your name is spelled wrong, therefore advertising freely for the brand.
Personalized services do not have to cost you a lot, but can bring great value to your customers. How disappointed are you, when your favorite clothing store doesn’t offer alteration services?
For rewards to be effective, they have to be personalized. I don’t need discount on diapers if I am not a parent. Loyalty programs can now track customer behaviors, and preferences. Based on a customer purchase pattern, a retailer can predict what and when will be their next needed item. Imagine a loyalty program that can tell your customer that they will soon run out of deodorant, and offer them a deal right on time. How rewarding is that?
8- Retail design, Retail design, Retail design: The store, an advertising live platform.
Last but not least, retail design being my profession, I can go on and on about this, but I promise to be brief. Have you ever observed how certain stores have an appeal that makes you want to spend more time there, while others are either boring or flat and depressing? That feeling comes from a combination of corporate culture and retail design.
By combining physical layout to good display and relevant in-store communication, paying attention to retail design can reflect your business’s essence, and is key to drive your sales.
Exposure and appreciation to good design is growing. 2020 consumers will be even more sophisticated and demanding. While design was long time ago seen as a luxury, brands are nowadays offering appealing and accessible products. The demand for better design and the willingness of customers to spend a bit more in better environments has allowed the growth of what we call in marketing a “Masstige” niche. “Masstige” is described as “prestige for the masses”. In their book Trading Up, Silverstein and Fiske show that consumers are willing to pay slightly more, for better designed products, displayed in better designed environments. Several example support this view: Bath & Body Shop that sells lotion for $1.13 per ounce versus $0.30 per ounce. Pottery Barn is considered a premium home décor store, but is widely available at attainable price points well below super premium brands…
The store is the last advertising platform for your products just before consumers make the decision of purchase. With a sophisticated Gen Z, having an appealing look and feel for your store is a must for survival. In 2020, you want to make sure your store is inviting, clean, organized, well lit, that merchandising is tantalizing, the flow is right, and most of all, the environment reflects the essence of your brand and values.
Now that that you have a nimble team focused on innovation, you have tapped into the digital opportunities, your store offers magical experiences, addresses consumers lifestyles and their personal needs, you have a good simple design and your brand is seamlessly reflecting its essence through all its channels of communication, there is no reason why you should not be ready for 2020!
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