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Redefining what "good" is, when the goal line keeps moving

August 23, 2012 by Chris Petersen — Owner, IMS

Bricks and mortar retailers have to be shaking their heads. Just when they think that they've stemmed the tide on one challenge, the standard moves higher. It's not that the older retail metrics no longer apply. They still do, especially in execution. It's just that the levels of service and consumer expectations are changing so fast it feels like someone keeps moving the goal line. There are a number of salient cases that illustrate how both technology and consumers are redefining what good is today ... and what it will take to be great tomorrow.

An evolutionary case study of redefining what good is: Online retailing

In the "good ole days of retailing," consumers were literally just happy to be able to find the product they wanted to purchase. In the days before e-commerce, retailers built "big boxes" in order to expand assortments and selection. In the hay days of large retail stores, good meant that you could find everything you wanted in one location. And, if you could find it at a good price with some level of service, that was good enough to create retail giants like Sears and Walmart.

Consider all of the ways that Amazon has changed consumer expectations of what is possible, and what "good" is in terms of standards of service today:

Long tail – Almost limitless assortment in many categories
Best prices if not the lowest price
Convenience of comparison shopping in your living room
Ability to check prices in a store against best deals online
Free or low cost shipping to your door, no hassle of driving to a store
Immediate purchase confirmation AND immediate shipment tracking
Delivery in two days or even in 24 hours for some items
Ability to purchase online and pick up at a store or a locker in a convenience mart
Very simple, low hassle ability to return products ... from home

Most consumers didn't even know these levels of service were possible 10 years ago. Today, these services literally define what good is in standards for e-commerce, as well as the rising consumer expectations for bricks and mortar retail stores.

A revolutionary case of redefining what good is: Mobile payments

While I have deleted a number of email subscriptions to unclog my email while I travel, one that I religiously read is the Morning News Beat. Kevin Coupe and crew have an uncanny knack of highlighting consumer and retail trends. As I was thinking about the rapidly changing expectations and standards for what constitutes "good" customer service, I ran across an article posted by Coupe titled: "Mobile Payments Technology Gets a Jolt of Caffeine." It immediately struck me that this is a prime example of how disruptive technology can suddenly raise the bar on standards and expectations for customer service within retail stores.

According to the New York Times, Starbucks is investing $25 million in Square, a mobile payments company. This seems extremely odd when Starbucks has its own mobile payment app and already processes more than a million mobile payments a week! While payments by mobile phone have been relatively slow to catch on, I had no idea that more than a million customers a week were already slapping their phone down to pay instead of cash.

In his post, Coupe makes some interesting observations about how Square's mobile payment app has the potential to create new standards and expectations for consumer service and experience at Starbucks:

After an initial bar code scan, GPS can automatically alert the store you are present
Square allows payment without having to take the phone out of your pocket
There are no receipts or waits in line at the cash register
You can have receipts sent to your phone or email
The Square system has to potential to "know you" and what you usually order so that barista can simply ask "Would you like your usual"

The whole can create an experience greater than the sum of the parts

Sometimes, it's all the little things that add up to significant change in service levels and consumer expectations. No, not everyone will pay by phone. But, imagine what the Square technology does for Starbucks and other retailers focusing on their best and most loyal customers. This new standard of service through mobile phones enables differentiation and enormous competitive advantages:

It enables the retailer to know when the best, high volume customers are in store
It enables personalized service and offers
It enables efficiency by eliminating standing in line at the cash register
It enables CRM and customer tracking at the local store and regional level
It enables electronic loyalty programs without the loyalty card no one remembers

There is one constant about retailing ... the consumer is always right. At the end of the day, it's their vote that counts, especially in terms of their purchases. One only needs to look at Amazon's growing revenue worldwide to see that consumers are increasingly voting for the convenience, prices and services of shopping online.

Will mobile payment and check-in technology be the new standard of what "good is"? Time will tell, but the fact that Starbucks is already processing a million mobile payments a week is evidence that a significant number of consumers are already voting for a new standard. The potential of Square mobility payment is a "tipping point," which has the potential to be the disruptive force that raises the bar substantially higher in personalized service.

To survive and thrive will require more than "paving the cow path"

The challenge with many bricks and mortar retailers is that they are operating on historical legacy and "incrementalism." Their focus is on making adjustments to existing merchandising and processes. Innovative stores such as Apple have removed cash registers and are now scanning purchases in the aisle. If given the choice, do you want to waste time standing in line, or get exactly what you want, pay by phone scan and be on your way?

It is no longer just about choice of products or even the lowest price. Consumers are voting for both value, and the new standards of service and convenience. There is an old saying that it does little good to pave the cow path if it meanders through the woods. While the cows might come home cleaner on pavement, it takes just as long to get to the barn as it did before.

Retailing is definitely a moving target, and the speed of change is accelerating. What was good enough in the nineties will not begin to meet the new standards for consumers, who literally live on their smartphones today.