Retail Tsunami: Surviving the Aftermath

Retail Tsunami: What’s Next

Retail Tsunami: Surviving the Aftermath

“Retail Tsunami: What’s Next”, was the keynote presentation by Robin Lewis at The Underfashion Club’s event at the Harvard Club in NYC on March 28th.   It was very timely that I had the good fortune to attend this event.  This is a subject that I am pretty opinionated about and one that seems to keep coming up for me in various conversations.

Robin began by pointing out how the mobile phone has been the catalyst that has changed the world and how devices as well as an imbalance in supply and demand are changing the game.  The US had explosive growth between the 1950’s -80’s.  In the early part of the 80’s when demand sloped downwards, supply did not.  Retailers continued to ride that wave even though the retail market was completely saturated by over-distribution.  Robin reports that today there are 26 sq. ft. of retail space per capita.  Clearly a case of oversaturation.

Today there are 26 sq. ft. of retail space per capita.

The Consumer Wants a Good Product and a Great Experience

Retail Tsunami: Surviving the Aftermath

The captains of industry were in denial that they were over-fishing.  This is not a concept that is exclusive to fishing, or retail for that matter.  All around us, different industries are struggling with issues of over-consumption and pride.  They must find a balance to ensure a future or face extinction.

This reminded me of the Sigmoid Curve.  I learned about the Sigmoid Curve a few years ago, from reading Bjork Ostrom’s work on Pinch of Yum.

The Sigmoid Curve is an arc depicting the different lifecycle stages and the point at which a business needs to jump off its current curve and start at the bottom of a new one, avoiding the inevitable decline.  It conceptualizes the need for a business to embrace change.    This little video below does a great job explaining it:

With the news of thousands of department stores and other retailers closing in 2017, it was surprising to hear Robin report that these retail giants think they have a handle on things.  It is a testament to their size and strength that these dinosaurs still exist, despite a drastically changing landscape.

While thousands of retailers are closing, outlet stores are popping up almost as quickly in their places, but It isn’t sustainable and retailers can’t continue to compete with low prices alone.  They need to figure out how to evolve and serve the modern consumer.  With the world’s technology in your pocket, wherever you are, is the new POS (point of sale).

Robin made light of the acronyms that this new generation of shoppers throws around and this is where I lost some interest in what he was saying.  He was talking about youngsters using words like AI and VR and being laughed out of the room by CEO’s.  Well, those CEOs can laugh all the way to the poorhouse because this new language isn’t going away.  It is an evolution, and these old timers should start paying attention.

It’s not a new thing that the consumer wants a good product and a great experience.  These giants just recently stopped getting away with providing crap products and an even worse experience.

It's Not Me, It's You

It’s Not Big Business, It's Bad Business

Retail Tsunami: Surviving the Aftermath

I recall my last visit to Macy’s over 5 years ago, it was shortly before Christmas. The store was a ghost town and I quickly saw why. There was one employee in the vastness of the entire department store. That employee took us over 30 minutes to find and was unable to answer any questions we had. That employee had to remove a security tag for us to check out and because not all registers were equipped equally we had to walk the perimeter of the entire store to locate the correct register. I won’t go into the rest of the boring details, but I will say, good riddance. Why would I do that again? Why would anyone?

We have a catch-22 here. From Macy’s perspective, why would they put more employees, waste more money on an under-performing store? From the customer’s perspective, why would they choose to spend money in a place they only associate with a terrible experience? But, did they ever try to invest in one of those B stores? To see if adding more staff and changing the customer experience could make it profitable again, before throwing their hands up in the air? I suspect not.

Robin goes on to talk about these new consumers not liking big – big business, big government, big corporations. There is some merit, but he misses the big mark.

It’s not new consumers, it’s all consumers.

It’s not big business, it’s bad business.

It’s not big government, it’s corrupt government.

It’s not big corporations, it’s immoral corporations.

A New Level of Transparency

Retail Tsunami: Surviving the Aftermath

Smartphones have added a whole new level of transparency to the game and when you can research a business in seconds, it’s the responsibility of the business to present something worthwhile to find.

Smartphones and internet connectivity have given the world two important things that we all want and love. Every time we see these concepts take shape throughout history, they’ve changed the world. Those two things are connectivity and choice.

Think about how transportation changed the world. The ship, the railroad, the automobile the plane. These things made the world smaller, brought us closer together and made connecting people, goods and ideas possible and in less time. It happened again with the invention of the computer, email and now the mobile phone.

The same thing happens with choice. Each time the world became smaller and faster it gives people ideas, it presents the individual more options, more choice. Choice is powerful. Choice starts revolutions and ruins those unwilling to change.

“There are major changes in the culture. Now they expect these brands to contribute to the world, be ethical in their behavior, to represent their lifestyle, be made locally with environmentally friendly materials.”

-Robin Lewis

Connectivity and Choice

Create a Personalized Experience

Retail Tsunami: Surviving the Aftermath

Robin talks about the industry’s ability to understand the importance of big data and to aggregate, analyze and implement that data, as only 2 or 3 out of 10. We agree on that. It’s why we’re in this space helping business understand and use that data effectively.

There was a lot of focus on personalization, but it seemed that the big point was missed. Personalization is not limited to product alone. It’s just about creating a personalized product, it’s about creating a personalized experience. It’s about putting the customer first and thinking about what’s in it for them. It’s about your products being the answer to their questions. It’s about believing in something more than the bottom line.

Retail store images attributed to Nicholas Eckart, via Flickr, under the “sharealikeCreative Commons license.

Erin Harris
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