Retailers come in many shapes and sizes, but all have to compete for the consumer’s share of mind and wallet as each chain strives to meet financial expectations. On top of this highly competitive rivalry and the blurring of formats in the consumer’s mind, the integration of mobility and convenience in the lives of consumers are challenging retail industry’s pace of change. About ten years ago, I read what has become a seminal paper on ‘change’ by Professors Karl E. Weick and Robert E. Quinn at University of Michigan. These experts state that “change starts with failure to adapt and that change never starts because it never stops.” This says that change is open-ended, comes from many directions, from all levels, and is likely to surprise. This might help us to better understand the consumer-driven changes happening today in retailing.
Driven by the consumer-side of the equation, mobile technology has exploded on the retail scene in the past year after a few years of incubation as in-store model. Consider that the global number of smart phones is expected to quadruple by 2015 to two billion units. In the US, half of the population will be using smart phones by end of 2011 (and that is up from 1 in 5 at the end of 2009). Facebook has over 600 million active users and more than 700 status updates per second. Consumers love to share their experiences at the rate of 50 million tweets per day, or about 10 years worth of reading for the average person. Consumers get offers from social shopping sites such as Groupon, Living Social, and woot.com; they compare product prices and availability, check out promotion codes, buy online, pick up in store – these are the new and profitable ‘omni-channel shoppers’. Customer-centricity is not new, but now retailers are exploring what such an engagement-centric model might look like and require. Ability to analyze social media and market sentiment become a “must have” rather than a nice to have (e.g., see Mantis) as well as empowering your workforce by delivering analysis on any device, anywhere (e.g., see Roambi).
Covering the recent Retail Connections Business Executive Summit, Paula Rosenblum provides a compelling example of the use of social media by Tory Burch. She also noted some voiced skepticism from some of the retailers around the relevance or endurance of mobility for their business. Retail is a paradox of long-standing traditions that are difficult to change (think of Retail Method of Accounting in the US) and yet retail is at the leading edge of consumer lifestyle trends and shopping experience.
Traditional internally-driven retail strategies and tactics based on what you do well are just not sufficient in this new retail environment. Strength in sourcing or prowess in delivering product to shelf at lowest total cost are good, but not enough if you are not engaged with your changing customers, their lifestyle, and expectations. Retail is unforgiving: consumers vote with their ‘pocketbook’ each and every day, they naturally choose value (product, price, availability) and convenience (access anytime, anywhere). Lose sight of that magic formula and you will join the failed retailers in the dustbin of history.
These are tectonic shifts in how consumers spend their time, how they connect with friends, and how they experience buying any retail product or service. There is no ‘end state’ at which you can aim, and the path is unfolding in ‘real-time’ – this requires increased flexibility, an ability to listen, a willingness to take on risk, and ever faster cycles of change. Consumers are demanding a new model of engagement, they (including you and me, our children, and our parents) value convenience and immediacy, it’s all about them.
Is your consumer engagement strategy one of digging in your traditional heels or are you already embracing the change that is all around you?