Future of Business

September 14, 2017
 

How Retail Can Survive and Thrive Through Digital Disruption

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Written by: Ross Quintana
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How Retail Can Survive and Thrive Through Digital Disruption

Well, retailageddon is upon us, and there is no denying that digital and ecommerce are disrupting retail. As if the latest Walmart moving into a community wasn’t enough to send fears into the hearts of small business owners trying to keep the lights on. 2017 has seen 9 major retailers filing for bankruptcy, 1000’s of store closures and mall closures increasing. This is happening while Amazon goes from $16 Billion in sales in 2010 to $80 Billion last year. So what can retailers large and small to do? Are they expected to just close up shop, board up the malls, and accept that people will just order it from Amazon? Well, not really. The change in technology, society, mobile commerce, and the commoditization of products with real-time expectations is real, but let’s not count ourselves out just yet. Allow me to explain why the change itself should not cause retail to panic, then I will list the 5 ways to survive and even thrive in this new retail reality.

The change is real, but this change can create as many opportunities for brick and mortar stores as it can problems. It really depends on how well you understand it and how you can position your business before the market runs over you like a soccer mom in a hummer texting her friend. One thing is sure in business, if you ignore change you will become a casualty of it. Silver lining? According to a recent retail industry survey from the U.S. Census Bureau, retail sales grew over last year about 3.9% which is considered good growth. Online retail grew at about 10.4% which shows shopping is growing but how people shop is changing. When you went into business you had an understanding of the market and what you might offer in that market. When the market shifts, you have to treat your business like a startup again. Where is the market, and how am I positioned in the market? Giants have power, and yet those who are not giants have other power. This goes back to marketing and business basics that we learned in a SWOT analysis. What are your strengths and weaknesses? What are your competitors strengths and weaknesses? What changes are happening and what are those strengths and weaknesses?

So the world is going mobile and digital, what are the strengths and weaknesses of those changes? The world is digital, that means two things: physical only thinking has no place or a limited place in a digital focused world, but also it provides a contrast and opportunity in a digital world. It’s like direct mail. If nobody is sending actual physical mail, then there is opportunity and less competition in the direct mail strategy. It becomes a point of differentiation which creates relevance in a competitive marketplace. If everyone is reading digital books, this makes the experience of a physical book either nostalgic, or more tactile. Time to see some major ways retail stores can adapt, adopt, contrast, and thrive in the digital world. In a great post from the Atlantic on The Retail Meltdown, they talk about how mobile shopping has grown from 2% to 20% since 2010. More importantly, you have to look beyond the numbers to understand the reasons, factors, and affects driving these numbers and how you can position yourself to benefit from market changes. So let’s look into the 5 things retailers can do adapt and innovate with the times.

1 – Create Real-time Demand – We have heard of showrooming where people shop in physical stores then get on Amazon and buy the product cheaper. This gives us key data about customers. First , they want to touch and try the product. The drive and time is not such a factor that they are not interested. This is huge because many people think convenience is a driving force behind the rise of ecommerce and subsequent decline in retail, but the data doesn’t exactly say that. So at that moment of truth when they find the product they want, you aren’t winning the sale. This means creating real-time demand for that customer to walk out of the store with the product. This is an opportunity, not a problem.

Carri BugbeeWhen I asked Carri Bugbee, Marketing and Retail Analyst how retailers can use technology to stay competitive she said, “Brick and mortar retailers will improve their mobile apps to help shoppers who are in their stores. Apps will be offering more deals along with product location and information designed to make sales in the moment.” This is an example of using technology to enable business goals instead of having an app for the sake of having an app.

She goes on further to say, “Ecommerce merchants will look for a way to minimize online returns via mail. Those that have brick-and-mortar locations will create dedicated places for pick-up and return of online orders this holiday season (a few already do), but they won’t typically be located near the front door. This “convenience” feature will be designed to get shoppers into stores to spend more money.” Retailers need to maximize the fact that they have the customer physically in their stores and that garners attention that ecommerce sites can’t guarantee.

Then the task is getting them to take action while you have them. If you need price matching, exclusive buy now bundling and real-time deal making then integrate that in your systems. Most people inherently want something once they see it and try it so if they are willing to walk out of your store and wait a day, it isn’t about price, it is about a hands off unresponsive store and sales structure that is waiting for customers to buy instead of selling them. Don’t close them because you want the sale, create compelling reasons and value that demands a purchase now.

2 – If You Can’t Beat Them, Join Them – Don’t sit back and watch someone respond to market needs and take your customers. In their latest survey, PWC Global found 37% of U.S. shoppers said they shop less at retail stores because of Amazon. If you think Amazon is taking your customers with free one day shipping, you have free same day pickup or local delivery! They can try it today and go home with it. Turn what seems like convenience around as an inconvenience. If you let the disruptor control the narrative you are simply failing to defend your market interests. If they can find anything in one place, offer more items, or find out the actual items your customers care about and get data-driven on giving them more of what they want. People don’t buy all of Amazon, they only buy what they want. If they like to compare top options with reviews, make sure you have reviews integrated or a crowd-ranking system in place or piggyback off of Amazon’s reviews so instead of them using your store to try the product and then buying it from Amazon, they can use Amazon to review your product and buy it in your store. You can even sell your products on Amazon so they can check out your reviews then buy it in the store because you carry the best product in that category. Learn your customer’s reasoning for using any channel or outlet and then meet that need in a better way than your competition. Exploit the weakness in it or utilize it and add to the value.

Fred Faulkner IVFred Faulkner IV, Director of Marketing at ICF Olson, poses the question many consumers may be thinking, “Why do we need department stores anymore? We have Zappos and Amazon Prime and even these subscription services like Stitch Fix. Buying clothes is a hassle for many, a job and lifestyle for others. But for many who just don’t have the time, the simpler the better. I don’t have time to go to the mall or a department store to shop. That’s why I go to Men’s Wearhouse once a year with xmas gift cards and get 5-6 new shirts that last me through the year. I buy jeans at Costco because I’m there for other stuff. And I just subscribed to Stitch Fix to try to update my wardrobe with a fashion consultant. But, for many it is still an experience. And that’s where retailers need to go. Make their stores an experience, even if the purchase isn’t made there. Partner with the subscription services.”

Not everything needs to be an old way vs the new way. Find things your digital competition is doing and see if you can add it to your store like an onsite stylist to help you find the right outfit, or use the tools available and then recreate the outfit with your products just like price matching.

3 – Get Social – This means the days of products on shelves and warehouse thinking are gone. You can’t afford to just have some mediocre products on shelves and let people come buy them. You need to create experiences, engage your customers, know them and create relationships. I can tell you, relationships will always win over impersonal experiences. Even if they want no-hassle processes of getting products fast, you can wrap that into personalized, predictive, hassle-free buying locally. Social still matters, create something they can’t get on a website. Focus on social aspects, including friends, experts, and shareable local experiences with their friends and family. Digital personalization is cool, but physical personalization is luxurious.

4 – Take Them Beyond the Screen – Understand the limitations of experiences on the screen. Your 5 inch mobile no matter how cool is not the same as an in-person experience with sights, sounds, smells, and touch. No matter how cool augmented reality is to pretend to try on that shirt, it isn’t the same as actually trying on the shirt and hanging out with your friends while you shop and sip your lattes. Like most good sales you need to invoke the senses and immerse them in the shopping experience. This goes beyond customer service and gives new context to customer service because finally the smiles matter but this time you have to think like Disney. Knowing your customers and having local experts, musicians, or demonstrations make shopping something your customers won’t forget and won’t get on a mobile phone. Mobiles are personal shopping experiences, so make sure your store provides that personal shopping experience. This includes integration. Shop in-app and pick up at store. Redbox did this to create convenience with movie rentals. Now people can stream digitally, but if they created a more special physical experience it could add value that you couldn’t get with streaming alone. Don’t assume all digital is the only future, we are physical beings.

Barbara ThauBarbara Thau, Forbes Contributor on retail and consumer trends says, “Amid the growth of e-commerce, legacy retailers are working to bring added convenience to shoppers whose purchasing journeys increasingly span digital and physical touchpoints, be it their smartphone, desktop computer or in-store.  They’re working to bridge the digital/physical divide by expanding perks like buy/reserve online, pick up in store and same-day delivery, while adding services and experiences that can’t be duplicated on the web, from “meditation spaces” at yoga chain Lululemon to in-home visits from Best Buy. Some retailers are even partnering with the enemy, so to speak. This month, Kohl’s for one, opened Amazon shops in 10 stores, selling the online giant’s exclusive devices and accessories.”

5 – Mashup for Cashup – Something as simple as combining things can create unique experiences. For example, if Redbox teamed up with Starbucks people could stop for a latte and grab a movie. AI could help rank the movies they will likely be interested in, send them notification when they are likely to watch a few suggested trailers, one-click rental waiting for them at home or picked up with a drink at lunchtime. Find out what your customers “also like”. This is a strategy I use for content curation. If you are just self promotional all the time nobody will follow you or they will ignore you because they already know what you do. If you extend your focus to delivering other value you gain share of interest and attention with your customers and also naturally increase relevance and personalization. You can’t do this if you don’t understand or know your customers. The good news is there is almost endless ways to get to know your customers with social media and analytics. Selling to strangers is over.

These are just the start of integrating smart strategy into your retail business to adapt and position yourself for the future. You have to protect the capital and assets you have invested in your business. This means having market awareness and the desire to shift, learn, and reinvent your business to stay competitive. If you want to learn more about the shift in commerce and how to market in this evolving landscape of retail and ecommerce, watch this free webinar from Brian Solis and Sameer Patel on What Every Marketer Needs to Know About the Next Phase of Modern Commerce Disruption.

I thank all the contributors to this post and the people who provided research. Give them a follow and leave your thoughts below. What trends do you think matter in the retail industry? Do you think retail will survive or not and why? Finally, what advice would you give retailers to carve out a future for their businesses?



About the Author

Ross Quintana

Founder of SocialMagnets, I am passionate about social media, influence, innovation, strategy, and marketing. I love to help people learn and understand the digital world. I stretch people’s thinking and share my analysis of information, tools, and strategies in social media. Let’s connect





 
 

 
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