Another week, another retail failure… and now we have the Bank of England warning us of impending doom being brought on by the ‘Fourth Revolution’, suggesting that Artificial Intelligence is likely to render many of the current jobs fulfilled by humans as ‘obsolete’. It’s enough to make you want to snuggle back under the duvet on a misty Monday morning and hope that things will sort themselves out in the end!
However, there is another and more exciting and empowering way of viewing the rapid changes that we can see happening all around us in business, if we view them through the lens of ‘Business Darwinism’. Now I know that Darwinism has sometimes had a bad press, especially when associated with some of the more sinister politically motivated social ‘pogroms’ of the past, but at its heart is still the idea of the evolution of the species which has some useful pointers for how we as business people might achieve long term survival and growth in the current situation.
Change is a fact of life, but the ongoing conversation about online vs offline seems a little wide of the mark, as it relies on a basic assumption that in order for one to survive and grow the other has to be killed off. This is patently not true in Nature (which is where the crocodiles and ferns come in, in case you were wondering!) and will not be the case in business. The High Street is not dying – it is simply evolving, but all businesses do need to be ready to face into this Change, accept it with open arms, run towards it not away from it, and embrace new technologies such as AI to help them critically review all aspects of their operations and consumer interactions.
As a key part of this, the specific channels themselves need to be able to adapt to the new commercial environment, becoming flexible and agile in their changed way of servicing the consumer, and really understanding what delights them and what honestly just pi**es them off. The demise of the mid market department stores, such as House of Fraser and Debenhams, illustrates what can happen if you either do not see, or see too late, the consumer tide turning against your way of operating. My recent post about a less than endearing experience at a major retailer clearly resonated with a large group of business leaders, and the overwhelming sentiment was of agreement: you have to make every touch point in the customer contact journey not only efficient but enjoyable, no matter how brief.
Whilst for many the concept of ‘omni-channel’ doesn’t get much further than retail and online working better together, there are many more opportunities for growth. However the usual default to ‘Disruptive’ change is not necessarily the best (or only) option; ‘Adaptive’ change involves less risk and more clarity in understanding your own brand and its relationship with the consumer. Working out what your brand can do better than anyone else and delivering that in a distinctive way is vital, so knowing the role of a channel in that journey is fundamental to getting it right in future.
We can break this down into the 5 main ‘buckets’ as I outlined at a recent Retail Week breakfast briefing: Recruit, Engage, Replenish, Socialise, and Educate, all of which come under the banner of ‘Customer Experience’.
Firstly, let’s look at how we ‘Recruit’ customers to our brands. For many people the web is the major source of new customers, with the casual visitor being either intrigued or put off by the experience they have online in the first instance. The web has the greatest potential to recruit more customers than any other channel and of course we need to consider that when making decisions regarding the levels and types of investment and resourcing that we put into this channel. However for many retailers, despite the phenomenal growth that we have seen in recent years, branded e-commerce still only accounts about 10-15% of total sales, but we have seen huge and, in my opinion, disproportional switches of investment from stores to online, so it’s no wonder that many of the stores feel under-invested and lagging behind the times. Linking up the online reach with the offline presence in ways that offer different ways for the consumer to experience the same brand is very powerful, so getting the investment balance right is essential to total brand health.
Next is the ‘Engage’ part, and this is where deep understanding of the consumer is non-negotiable. If your FD suggests cutting the research budget in response to difficult trading results, push back HARD! Gathering data from all different sources – social media, loyalty cards, online surveys, etc – needs to be continued and coordinated in order to develop compelling and actionable consumer personas, that in turn create defendable (and more profitable) propositions. A twice a year ‘dip’ into consumer awareness is no longer enough; you need ongoing and ‘live’ data to remain relevant. This is where Artificial Intelligence can come into its own, drawing all of the consumer ‘threads’ together to get a more rounded and nuanced appreciation of the consumer needs that your brand fulfils. Only when you know what interests and motivates your consumer can you truly engage them in ongoing conversations and build propositions that they value.
An often over-looked channel for branded retailers is that of Wholesale through third parties, but this can have a crucial role in the third area, that of ‘Replenish’. Whilst we would all love to think that consumers are going to return to our stores when their favourite product runs out, the reality is that unless we are in a commuter environment (such as a rail station) or part of a planned shopping trip, they may go elsewhere, particularly for regularly purchased products such as shampoo, shower gel and hand cream. Developing edited range distribution agreements with selected partners in the grocery, variety store, or online marketplace can help fulfil the needs of the shopper, and protect you from losing them to a more readily available competitor.
The fourth area is part of an emerging trend – to ‘Socialise’ your brand. How do you get people creating shared memories, recommending products to friends, and buying in a relaxed and sociable environment? It’s no surprise that the home direct selling model has become a preferred way of selling for Millennials, 30% of whom now have such a business as their main source of income. It’s flexible and fun, allows them to extend their friendship circle, use technology to sell through Facebook in virtual parties as well as in relaxed home workshops, and positions them as experts within their social group. Nowadays ‘Socialising business’ goes far beyond social media posts, so how could retailers, especially with unused space in the evenings, develop this style of shopping for their consumers?
The final area is ‘Educate’. It is a noticeable trend that many consumers not only want ‘less stuff’ and ‘more experiences’, but they also want to ‘learn more’, so thinking about how you can develop a different ‘learning environment’ that adds specific and added value through your own expertise will be an important part in how consumers experience your brand in future. No doubt this is what’s driving more brands to add educational courses to their offer, whether that is in soap-making, aromatherapy diplomas, or baby massage, all of which create a distinct memory and deeper consumer engagement that can help protect the brand’s role in the consumer’s repertoire for longer.
‘Business Darwinism’ is a demonstrable fact, where the survival of the fittest is defined as those who can adapt themselves to changing environments. We only need to fear the ‘Asteroid of Consumer Choice’ if we are intent on being dinosaurs, and so fail to change with the times.
The next time you see a crocodile or a fern, bear this in mind: they didn’t need to be disruptive to survive, nor are they the prettiest or most interesting to look at. They just needed to be flexible enough to get through the changing times – and so do we.
Something to think about:
Here are 3 things for you to ask yourself about your ability to adapt and survive:
- How well do you know your consumer, and have you identified the key role of your channels in their journey?
- Have you changed your commercial model and invested appropriately to deliver growth now and in the future?
- Where is the Fun in your brand experience? What makes you memorable?
And as a final thought until next time….
“When you’re finished changing, you’re finished.” Benjamin Franklin
Have a great week.
Lead Consultant & Founder – Primaverita