Ever since the early 90s, doomsayers have heralded the end of the physical retail. In our age of digital disruption, stores would crumble under the weight of the e-giants. The high-street would all but disappear.
I didn’t buy it back then, and I'm not buying it now. Sure, video stores are gone, and high-street bankers better rethink the way they do business. High street real estate may even experience a dip. But the concept of shopping isn’t going to disappear any time soon. It will merely evolve, just like it has been doing since the first market trader opened their stall in ancient Sumeria. And if you don’t take my word for it, read Gen Z shoppers like physical stores.
The challenge to brands and retailers isn’t that retail spaces will disappear. It’s that they need to be reinvented for a new shopper reality. This comes down to answering three – existential – questions:
These are hard questions. But for anyone who directly or indirectly profits from the cash-register’s ring, answers must be found. To do so, brands and retailers need to let go of industry orthodoxies and embrace a number of new perspectives.
As a thought experiment, I’ve outline seven mind shifts to be considered. If you have more or different ones, let me know!
MIND SHIFT #1: OMNICHANNEL IS MERELY A ‘QUALIFIER’
Endless aisles, home delivery, in-store pickups, chatbots and self-service tools may make for exciting projects. Being easy may even turn some customers into promoters. But tomorrow, these initiatives will merely be qualifiers to play the retail game. So rather than look at them as strategic change programmes, we need to consider them as must dooperational programmes. They may provide a temporary, tactical advantage. But they remain operational hygiene factors like GDPR compliance andinventory management. I.e. We know it’s complex, but let’s just get on with it.
MIND SHIFT#2: FROM STRATEGIC CHOICE TO ‘FUN’ AS THE ONLY VIABLE OPTION
Shoppers want price, convenience and fun. Theoretically this gives three axes of differentiation. But for most players, there is only one viable strategic option. As a qualifier, convenience isn’t sustainably unique. Anything you invent today will be copied tomorrow. Price is a game that can only be won by one or two players in every category (increasingly named Amazon). So, unless you’re fully committed to becoming the Aldi of your industry, that’s off the table too. Which leaves fun as the only remaining path to sustainably attract shoppers at healthy margins. And I realise fun can mean many things. But they all require retailers to learn the art of making customer interactions enjoyable, surprising and enriching.
MIND SHIFT#3: FROM LOCATION BASED TO TRANSMEDIA STORYTELLING
A retail store has always been a tactile storytelling machine. It connects to shoppers and relates the values, purpose and aspirations of a business. This makes it a great platform to provide the fun I just described. But in an omnichannel world, retailers need to master telling this story across all channels. Learn that in this transmedia approach the store merely becomes a piece of a puzzle. It showcases a proposition, communicates the brand and builds a relationship with customers. However, whether these customers then purchase on-site or on their mobile phone, is irrelevant.
MIND SHIFT#4 FROM TRANSACTIONAL TO RELATIONSHIP ECONOMICS
Retail efficiency metrics like profit/m2, shopping cart value and comp store sales worked well when customers had to exit by the cash register. But when sales can come from anywhere, this won’t do any more. Retail operators should think in terms of customer lifetime value, dynamic pricing, personalised discounts across channels and Netflix style subscription models. This also means that the physical space needs to be accounted for differently. As the physical cash register becomes inadequate to measure retail success, new metrics should assess the financial contribution of physical space. This will be the only way to truly assess whether bricks should be kept or abandoned.
MIND SHIFT#5 FROM STAFF TO AMBASSADORS
Customers can find all the products and information they need online. So when they decide to speak to a human they want more than mainstream service. Retail staff needs to become ambassadors that help people enjoy themselves. Geniuses that provide specialist information which you cannot find on Youtube. This requires a mindset shift in talent management. Store operators must review the way in which they attract, develop and retain the right type of people for their customers. And figure out how to offset the inevitably more expensive payroll with the smart use of technology.
MIND SHIFT #6: FROM MASS TO INDIVIDUAL
Retailers, and to a lesser degree brands, are number machines that try to track everything. But most of their analysis describes what customers (plural) have done (past tense). To personalise experiences across channels, this conversation must become forward looking. Predictively adapt offers to what a given customer (singular) will do (future tense) .This isn’t just about technology. It’s also about letting go of the mindset in which stores are seen as conduits to get products and services to a faceless mass of shoppers. They should be seen as places where individual customers get an individualised experience.
MIND SHIFT#7: FROM INCREMENTAL INNOVATION TO REINVENTION
The ‘disruptions’ we’ve seen so far are merely a prelude to societal, environmental, supply chain and digital changes that are coming our way. So, when looking beyond the horizon of next year’s profit plan, it’s time to let go of cautious incremental innovation. Every brand and retailer needs to boldly explore ways to reinvent themselves and their category. And no, this doesn’t mean outsourcing the business to Amazon.
It does mean challenging every orthodoxy that we know to be true. After all, who says that stores need to look like stores. Can’t they be immersive experiences, community centres, bars, spas or pop-up art exhibitions? Do they need to be located in high-traffic locations? Triple the amount of staff on the floor? Eliminate staff completely? An age of change brings risk, but also endless opportunity.
So, who will be the Mr. Selfridge of 2025?
This is a thought experiment, so if you have criticism, extra insights or violent levels of agreement, don’t hold back 😉. I’m not interested in ‘being right’, I just want to get closer to the right answer.
Also, if you’d like a explore ways to reinvent your brand or retail experience, feel free to get in touch. If it’s complex or ambitious, I’m in.
About this blog
Whenever inspiration strikes, I use this space to share my thoughts on customer experience management, storytelling or what ever else crosses my mind.