Article
Retail reboot: The changing face of retail worldwide
The evolution and tide of consumer change is global ... and is escalating.
May 13, 2013
This article was written by retail educator Dr. Chris Petersen, who will be leading a session at this year's Retail Customer Experience Executive Summit. You can get up-close access to Chris and all of our educators in this intense day-and-a-half event, August 13-14 in San Diego. Advance registration pricing is currently in effect.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” — Charles Darwin
Darwin’s famous theories of evolution often get misquoted or misinterpreted as “only the strongest survive.” Actually, the underlying premise of Darwin’s work is best captured in his quote with referring to “adaptable” as the trait which enables a species to best survive in a changing world. The tumult of change facing retail today indicates that the retail survivors might not be the biggest or the strongest, but those that can most quickly adapt to tidal wave of change. What is unique about that change is that it is precipitated by the consumer.
There have been many new terms added to the lexicon of retailing in the last couple of years. “Showrooming” is a classic example of a change in consumer behavior, which impacts the retail heritage of bricks and mortar stores. While consumers still shop stores, their journey typically begins online. They are now able to shop online with their mobile devices, while standing in the retailer’s aisle AND make a purchase from their phone.
Today, consumers literally expect seamless integration and high quality consumer experiences. They expect both choice and convenience across channels: being able to buy online and pickup in store orpurchase in store and ship home. While price is always a consideration, the real value for consumers today is in the experience and retail ecosystem of service both at the moment of truth, and after the sale.
The evolution and tide of consumer change is worldwide and escalating
As a part of IMS Retail University, I embarked on a two-year journey visiting six continents to study and work with retailers. In a sense, it was the metaphorical equivalent of Darwin’s voyage on the Beagle. What I found was an emerging mosaic of retail undergoing a tsunami of change worldwide. Big box retail stores no longer dominate, nor are they necessarily profitable. However, the extinction of bricks and mortar stores is not inevitable.
Retailing has changed more in the last two years than the previous two decades. While the natures of the changes vary from country to country, there are some clear patterns which suggest that retailers cannot afford to slowly evolve. In fact, much of retail is at a tipping point based on a “perfect storm” of changes in technology and consumer behavior. The key evolutionary breaking point for retailers is:
Shopping is now a continuous stream of events across multiple channels, not a singular moment of truth in a store.
Rebooting retail: Retailers can no longer afford to evolve “slowly”
In Darwin’s theories of natural selection, species evolve over time. Those that are best able to adapt have the greatest chance of opportunity to thrive. Prior to 2000, the pace of retail change was relatively slow. Incremental changes in the 4 Ps of retailing (Place, Product, Price, and Promotion) enabled big box retailers to thrive in a product-centric world. The largest retailers could gradually tweak their models and beat their competition.
The change to a consumer-centric world has turned retail upside down. Even Walmart is now scrambling to build smaller, cost-effective stores. In 2013, it is not a question of being able to evolve, but one of literally “rebooting” strategy and systems. The best cases of adaptable retail innovation are often not found in the U.S. Three dramatic worldwide trends include:
Omni-channel is the new normal.The best retailers are rebooting their retail philosophy and systems to enable consumers to shop when and how they want. A great example of an “old stogy” retailer rebooting is John Lewis, who has integrated a seamless consumer experience from top to bottom.
From clicks and bricks to apps and bricks.In this new age of omni-channel, it is not a question of website or stores. Adaptable retailers are quickly finding that you can beat showrooming by engaging consumers with retail apps to get them to the stores and convert sales while they are standing in the aisles. Tesco’s Home Plus in South Korea brings their store to consumers’ smartphones in the subway and bus stops.
From store assortment breadth to virtual shelf.In the past, big box retailers won on assortment breadth within their stores. The Internet levels the playing field. The smart retailers in Europe are rebooting their merchandising using the stores to feature a smaller number of products, but then remaining competitive with a vast virtual assortment that enables consumers to make a great choice, and convenience of home delivery.
Adapting to change is not a choice; it is a prerequisite for survival.
In Darwin’s world, it was the forces of nature causing species to adapt over decades or centuries. In the case of retail, the force of change is far more ruthless. It is you the consumer who votes with your wallet/plastic/Paypal every single day. To survive in a consumer centric world retailers don’t have time to evolve. They must hit Ctrl-Alt-Del to reboot and change fast enough to meet shopper needs and expectations.
(Photo by Jennifer Lee.)
