[Music] Hello everyone, I'm Brian Ameral and welcome to the Clientelling podcast. In each episode, we'll be talking to the retail industry's most knowledgeable and successful executives, those luminaries that are creating value with the intersection of retail and technology. In every episode, you'll hear about new, innovative and transformational customer-centered ideas that are redefining shopping and creating high-value customer experiences. If you haven't already done so, be sure to subscribe to the podcast and let your friends know by liking us on social media. So, let's get on with the show. [Music] Well, welcome back to the Clientelling podcast. Today we're going to do something a little different. I had the pleasure of speaking at retail X at the retail touch points live event this past summer. And I did a presentation called the Retail Landscape of 2021, Who wins and why. And I've had several people say, "Well, did that ever get recorded?" And unfortunately, it didn't. So, what I thought I would do today is kind of cover some of the high points from that presentation. I'm talking about my vision of what's happening in retail and what we can look forward to in terms of new innovation. And those retailers that will be deploying new ideas, new thoughts, new opportunities in their business in order to really kind of survive and thrive in the future. So, you know, this all really kind of comes down to this idea around digital transformation, right? This retail digital transformation. We've all heard about the retail apocalypse. And that's of course, you know, pronouncing the end of retail as we know it. But that of course is not what's really happening. Retail is certainly changing. And, you know, it's sort of a similar impact to what we saw with regional malls and the consolidation of department stores that started to kill Main Street back in the 1970s. malls back then were exciting new lifestyle spaces that were entertaining. They had dining movies, at one point a lot of them had skating rinks. And these were venues for exploration around new products and services. It was a new way to engage customers inside of a physical environment. You have to remember that at its core retail stores are really a distribution platform for physical goods and services. And to get consumers to visit those stores retailers need to think of an equation where it's convenient, entertaining, and delivers incremental value over any kind of alternative options. How are people going to use their time most effectively in that whole shopping process? Well, unfortunately much like Main Street traditional book bricks and mortar has gotten quite stale. How that lasts 15, 20 years. And, you know, enter online marketplaces and highly efficient and personalized digital channels. And we know what's happened since then. So it's in very much like what happened in the old days. We're seeing this evolution of retail with a better distribution platform. So the good news is that digital has a major role to play in our stores kind of going forward. Though it's going to require letting go of some of the old paradigms of understanding and rethinking retail strategy in general. We're going to have to start with a digital first mindset. And as often as I've heard it said, kind of shift from doing digital to actually being a digital organization. Now this is going to require some new business models and engagement approaches. They're going to meet the needs of today's millennials and adding a digital layer to their physical stores that delivers personalization and relevancy, enhanced product visibility, improved operational workflows. And really some greater management insights. We're fast becoming this always on, always connected kind of environment where consumers have this desire for immediate gratification and infinite choice. And we can think about Amazon and how Amazon Prime is kind of supporting some of that. Well, to enable this new model, we need to start to think about how people, data and commerce are coming together and what we can do with all of them. But this new journey, we have to think about it as a transformational journey. Right? And every journey begins with that first step of articulating the attention and then becoming that intention. So if you start with having that intention, really knowing where you want to go and then articulating it clearly throughout an organization and aligning every part of your organization, if that matter, your life with that intention. So we really have to start to look at is how do we basically bring all the pieces into alignment around this articulated intention and how do we transcend the present and become amazing for tomorrow. That's really the goal behind all of this. But everybody is talking about these things and they're doing it in very fragmented ways. And I think often enough, they don't have a really clear picture about what digital transformation really means. So we hear a lot about it. What does it mean? Well, from my perspective, we have to think about a few different things. Digitalization is disrupting virtually every industry. But since retail is really a distribution platform for physical goods and services, digital transformation is not about, you know, as it has been another certain other industries about making a physical product digital, we can think about things like Spotify or accessing a network of people with capacity to provide a competing service service like Uber, Lyft, Airbnb. It's really about creating demand and enabling efficient commerce with physical products. But when we talk about disruption, we need to be thinking about what's really happening in the store. And unlike the past, the physical store is no longer the best way to learn about a product. It's no longer really the destination of choice to get information on a product. So guess what? Store traffic is down. Transformation really requires bringing the best of technology to a physical space and engaging in a way that creates wow. So we really have to bring the best of both worlds together in the physical store. So let's talk a little bit about, you know, how retail is shifting as I like to say, retail is trying to get it to shift together. But, you know, so let's talk a little bit about where this is disruptive opportunity in retail. The answer really lies in understanding what basic assumptions or principles need to be challenged. The traditional approach to retail has been very product-centric. It's been that whole by-low, sell high and drive the cost out of everything else. Now, the merchant princes of yesterday swore an oath to this, right? With that additional axiom perhaps, it's all about location. We've all heard location location location. Well, the underlying idea is that you would try to dominate a category. Be that destination of choice and essentially be everywhere. And we saw what happened in the department store space with kind of overstored and all that consolidation of buying them up and trying to own the entire marketplace. Well, today getting economies on the buy side are really kind of limited to those mega merchants. So this whole issue of buying low, you know, it's somewhat difficult for anybody but these mega merchants. Selling high doesn't work because as an educated consumer who is not going to tolerate that today. You know, between online channels and some of the other channels that lack the same kind of cost structure, they can actually compete more effectively with a smaller profit margin. And in almost all cases, there is precious little to squeeze out of this this overall equation. You know, as matter of fact, I believe that well, I'm going to say that the mentality of this by-low sell high compounded with short term profit seeking has ultimately forced kind of reduced staffing. And the thing is created the sea of sameness and diminished that overall quality of service and retail. And we've seen that happening really over the last 20 years. This isn't a new problem. And it's really the result of a model that stopped working. So, you know, if we think about how traditional stores were really designed, they were designed to herd customers through them, right? And hopes that some of the inventory would be found appealing and that maybe someone will buy something. It's always been about optimizing the store to meet the retailer's needs, not necessarily to meet the customer's needs. Now, if stores were designed for convenience, expediency, and we're really entertaining and worthy of exploration, what do you think would happen there, right? Well, that's, I might be getting ahead of myself, but that's really the future of what we have to be doing here in retail. We'll talk more about that in a couple of minutes. But I'll sum it up like this. The merchant mentality of the recent past thinks in terms of having a portfolio of products that it needs to find customers to purchase. And in lighten mentality, we'll think in terms of having a portfolio of customers from whom it will carefully curate products and experiences and really give customers what they want. So the asset really becomes the customer. And to build a responsive business model around all of that, it's going to thrive in the midst of all the societal and technological change ahead. That's the real challenge, right? So real transformation is moving from a product-centric model to a customer-centric model. And being customer-centric means taking absolute responsibility for the customer satisfaction through that entire wanted and buy it and use it experience. That's pretty tall. So let's talk a little bit about how we might get there. So the first step of the journey really is around data, right? And really understanding what is the data telling us? I'm always fascinated by the lack of real knowledge about customer needs, desires, behaviors, and even the level of satisfaction that exists in these work.
I get a chance to audit stores quite often and there's a disconnect between what the salespeople see and what management thinks is happening and That difference can be staggering. I'm often You know hearing one story from management about what they think there is going on in their stores And when I go in and sit down with the managers of these stores and the salespeople and these stores and really hear about the way They're engaging and what customers are demanding and what the expectations are this is huge gap between the two So these are these are really often interesting audits and the information that comes back is is Is really quite surprising often retailers are making decisions based on outdated truths and and really assumptions from years ago and if you don't understand your customers needs In terms of how they shop or why they're shopping then you can't even begin to think about Creating a retail environment that creates real value And now that the customers in charge and they're armed with a device That's really the front door to all your competitors. What do you think is going to happen if you're not really addressing Their demands their needs and their expectations So the foundation of transformation is really based on good data good information retailers need to collect every bit of data about product and performance about customers about location And turn that data in a meaningful insights and then turn those insights into effective action Now what I'm saying is the digital transformation starts with a deep understanding of what's happening in your business So you can begin to reengineer every process and touch point to meet the needs and desires of your customers Now you need to map all of those likely journeys and and all of those engagement points within the business And then look at the data to help you craft new ways to create To create opportunities to meet customer demand Based on the data that we're learning and that we're having access to Now I was listening to a Another podcast recently and there was an executive that was on from JD.com Which is the largest retailer in China and the topic was around autonomous shopping as per the Amazon go and Not only is JD doing this but over a hundred other retailers in China Are doing this today as well. So it's it's actually much more pervasive than what we're seeing here I do know that there are some new things coming on on board right now. We're seeing more and more of Of these cashier lists sorts of environments but It's clear that there are Retailers particularly in Asia that are approaching innovation and transformation in ways that the West has been afraid to do I have a few vendor clients that I've worked with are doing some fascinating work using sensors and cameras To codify the various stages of customer engagement for for product for for category for actually an entire store But what I find most intriguing is the enormous amount of data that JD and Amazon and all these others Are amassing regarding how consumers really shop we're finally at a point where we can start to demystify What is happening in the store and gain the insights to make better decisions and take actions to reinvent retail in the image of what customers Really want in the way that they really engage so we're no longer relying on Basically uninformed assumptions So let's talk a little bit about you know the numbers behind all of this When we look about when we talk about transformation in retail You know there are there's some key areas around transformation that I think we really need to to understand the metrics behind one Interesting quote that I recently read was at 75% of consumers are more likely to make a purchase From a company that knows their name and purchase history and recommends product based on their preference ties back into this whole idea around client telling in one to one customer engagement and really having the tools to empower The the enterprise and the one-to-one sales associate to engage with customers 55% of retailers like a single view of their inventory 78% don't have any kind of real-time view There's between 40 million and 75 million is lost per billion dollars in revenue due to auto stocks today Which is just really you know shouldn't be happening certainly with the ability with order management and We should be even able to do a better job of getting our sortments right and having our inventory levels rights That when customers do come into our stores that we have a way to address that 85% of decision-makers say that it you know 24 months is all they really have left To make inroads are they're going to suffer financially so there's an awful lot of urgency around getting these sorts of things right And you know I found this very interesting the inadequate enablement of the frontline workforce Cost retailers 11% of their annual revenue so everybody's driving towards comp stores sales trying to see what they can do to get three or four percent Maybe five or six percent lift We have 11% that could be addressed immediately Just by empowering our frontline workforce, which is obviously an area that I'm very passionate about So those are some of the numbers that I think that are you know kind of validating The importance of getting this transformation on the road quickly But you know there are a lot of ways that retailers are failing to make that transition And what I'd like to talk a little bit about here is you know the 13 ways that I'm seeing right now That retailers are failing to make this transition And the first one really is around lack of clarity you know far too many retailers are lost sheep The transformation and competitive challenges this new customer expectations are coming at them you know little too quickly And and they're having a difficult time knowing where to start I believe the real problem is this lack of clarity for what good looks like You know what is the future really going to look like what is our vision of what our brand will be kind of going forward Unfortunately That clarity doesn't exist with most retailers today The second thing is that there's this some culture issues right They just don't have a culture that is driven by real world insights So a better future state can't even be imagined instead of bad decisions or partly instead I think what we're seeing is bad decisions are being made and they rely on myths You know and what they think they know about their customer and what he or she wants And often it's based on decades old perceptions of truths without that current data that really speaks to the contrary These myths are ultimately going to be perpetuated So we've got to get away from these these ideas of outdated knowledge get fresh data fresh information And start to build an organization around that Larger established retailers were also plagued with what I call fiefdoms right and it's in it's a problem that that actually proliferates All the way into disparate data that makes it impossible to establish one version of the truth across the enterprise They also tend to rely on what I call an ROI mandate um And the real problem is that This ROI process doesn't take into consideration Learning something new about the customer engagement. There really seems to be a A challenge in many retailers getting a budget unless they can explicitly define how it's going to move the needle Now by contrast if we take a look at Amazon, you know, they're collecting data and then they're seeing what they can they can find in terms of ROI versus the other way around The real challenge here I think is if the answer must already be known Before an investment is going to be made then there's really going to be nothing new that's going to come from it If we can you know if we're trying to build from that side of the equation We're not going to learn anything new so I think it's very very important to start to look at Where is this ROI mandate? Underlining our ability to truly innovate When I look at kind of the fifth area where I believe that there's a A fifth area where retailers are feeling to make this transition. It's really around risk adversity Many retailers have what I'm calling a lack of leadership right it's They don't really have the right leadership in place related to innovation and business model reinvention current Executive management in a tends to be older They obviously aren't digital natives and they are only experimenting with a few innovative ideas There's a lot of risk in trying new things Can't really late career execs seldom want to take that chance. So that becomes you know kind of a real challenge Now many established retailers have a culture of Protecting their organizational structure. This is kind of the next big area where they're having a problem unfortunately transformation Has to be something more than a project. It's a complete rethink of what the business is and that requires Looking at the organization differently and creating new organizational structures We tend to see a lot of dysfunctional lack of alignment bad process and competing agendas Where we see you know pitting functional areas of the business against each other and undermining new initiatives And I've seen many projects fail because of this lack of organizational alignment I think it's one of the biggest problems so between this risk adversity and an organizational structure That really is not supporting this transformation. We have some some really big air big challenges here and an opportunity for improvement That when in transforming that entire business getting everyone pointed in the same direction with this org structure um, you know It's really what what it's going to come down to as being the critical differentiator seldom do we see retailers that have a really flexible agile business process that allows
for evolution of what comes next. And they become paralyzed. And they're not able to really respond to market shifts because the existing structure is what we designed for the old way of doing business. While it's improving, there still is a general lack of what I would call customer experience, store sign customer experience insight, and expertise. So that's kind of the next area. This is causing an inability to execute customer experience strategy across all the channels. Generally, this is being undermined by these organizational silos that I was talking about just a moment ago. So it really becomes a problem. And store level execution of new initiatives often fail with it becomes these organizational problems, right? It's further exacerbated by a lack of real time transparency of what's happening in the store. So that kind of takes us through number eight, is this failing of store level execution because there really is no top down mandate and no bottom up transparency. I would say the ninth way that retailers are failing really is this underinvestment in technology. It really is perhaps the greatest inhibitor transformation. And more specifically, they don't have the tech to gain the insights that are gonna drive the reinvention of the business. Now there are still many retailers that don't value technology as an enabler. And accordingly, their initiatives, if there happen to be any, tend to be random pilots of what I'll call whizbang technology. And often enough, these projects are being paid for by the vendor, right? The vendor comes in and is just trying to drive a pilot of something new, some new category of solution. But there's a lack of unified strategy for the technology. The real problem is that, and it's just a store problem inside of retail, that when times are good, retailers don't think they need to make an investment. When times are bad, they really can't afford it. So when we look at, you know, underinvestment, IT is getting too bogged down. They don't have the people, the resources to do more. They get too bogged down with really the basics, just keeping the lights on. And that means minimal innovation because it lacks the resources to really think that way and to go off and do these kinds of innovative projects and to start to think about transforming the business. And without a strong tech team, retail cannot build an insight-driven organization. That just, you know, that's just a reality. So this is gonna, you know, ultimately create many of the other areas. All of these things interrelate in various sorts of ways. So there's no single view of what's happening. And that's another issue. I would call that kind of the 10th area of failure. There's no single view of what's happening with all these disparate systems that exist in the organizations today. This ultimately resulted in consistent and reliable and pretty fractured data. There's no insights and ultimately no flexible processes to adapt these new insights. So that becomes yet another issue. And then there's this problem with aging systems. You know, a response of infrastructure requires it. Retour is migrate to the crowd, it's pertinent to the cloud for enterprise applications. And, you know, doing so is gonna positively impact the total cost of ownership. And General Redrews reduced the complexity of managing all of these systems. But all of this requires capital. And the lack of it means that retailers can't acquire the systems and the personnel to adequately address omnichannel customer centric workflows and these opportunities. And finally, number 13 is hoping that technology alone will send all the problems. Well, you really need more than a point solution. What you really need when you start to think about how technology is gonna impact this business is you need a platform that is gonna underline a transformation of the operating models and a new set of business processes. I like to think of it in terms of this ever improving flexible underlying architecture that the organization has the opportunity to leverage insights and then have an underlying platform that it can tweak and change and use in lots of different ways in order to address what the real demands are and the real expectations their customers are and to be able to share that information on a global basis. Of course, all of their stores are, you know, throughout the enterprise. So, all of this, there's some problems there, right? 13 reasons why these retailers aren't moving forward with transformation effectively. Well, I think that we can look at those problems and we can start to develop what I call the new organizational manifesto. So, you know, key things around all of this is you need to start with data and then capture more data, right? And then see what you learn and validate your assumptions with yet even more data. Customer behavior preferences, channels, locations and anything else related to how the customers engage with your brand is critical. Use the truth to create a new vision for the business and break down silos, the bunker myths, learn something new and reinvent and gain alignment from the bottom up. It's all about leadership and retail management needs to leave boldly and defy convention. You need to hire the best customer experience people you can find and get that part of it right and focus on creating value and drive the agenda from the C-suite down. And don't, whatever you do, leave digital to IT. To transform and thrive in the years ahead, retail is a really gonna need to invest digital first and start with this mobile first sort of thinking, right? So it's all about digital first, mobile first thinking. Okay, so let's talk about the manifesto. First, make it easy. We need it to be fast, efficient, frictionless and flexible. All right, unified view of inventory, unified view of the customer order management systems, ease of payment, make it happen on the associate's device on the consumer's device, but make it happen. The second one really is around, tell me what I want to know but don't abuse my data. Provide transparency into orders and delivery, share the truth about the products that I'm looking at and use my data all to enhance my experience. The third part of the step of the manifesto is make it mine. Express my individuality and identity through your brands and through your products. Give me the ability to customize, personalize, show me unique offerings that I can't get anywhere else. But make it mine. This is whole process around personalization and people really wanting things that they can express themselves through products. And we're seeing some brands do that very effectively. Engage me in fun, memorable experiences. Create novel and innovative, what I call, digital, kind of the blending of physical and digital experiences using things like AR and VR and other kinds of interactive technologies. Make the exploration fun. When they come into the bread and to the store, whether it's online or in store, really make it fun. Allow the consumer to engage and learn and discover more about the product and to become emotionally connected with that product. The next one really is about letting me drive. But be there when I need help. So don't be intrusive in that experience with a customer but incorporate the best concepts from online and in store and enable that at every touch point, particularly on the in store part of it. Bring self-service, way-finding, digital display and content, some wardrobeing, and support to the bricks and mortar via either the customer's device or the enterprise device. The next one is really about knowing shop or DNA and what it takes to make me happy. Learn from every interaction with a customer, and curate products, and offer clientele like experiences that are going to ultimately wild the customer. The next one is, I'm social, I'm digital, I'm always on, you should be too. That's really what customers are saying. Be that pervasive presence, think, direct to consumer on digital platforms and make every engagement and transaction part of the normal daily experience. You've got to be where they are all the time. And then let me become part of a community of wildly passionate advocates. Consumers want to be part of something. So create experience and formats that connect people and immerse them in a brand narrative. Leverage social channels and allow customers to have a voice around your brand and really become the passionate advocates of what it is at your brand market. So that takes us kind of to the next idea. And that's really around. So how does this all manifest? We can do all of these things. Who's doing it? Or where are we starting to see new formats and new operating models? And what's working and why is that working? Well, I break it down into kind of four big areas of new formats and models. There are showrooms and discovery zones, personalized and customized products, storefront as a service, and this immersive, digital storytelling. Quick way to talk about new formats and retail models. Let's say this way. We've heard a lot about people like Benobos, right? And for some time, they've been out there and people have used them as an example. But the concept of a smaller store that carries little no inventory and fulfills that transaction online.
is a great example of rethinking the retail model. Once fit in the quality or assessed, customers are able to continue to purchase for that brand online. Central to the model is mobile client telling in a highly trained staff that can offer personalized style and fit advice. I personally came out of the custom clothing industry about 30 years ago and started building early technology around those ideas. And the logical extension of personalized recommendations and service is personalized product. The Gintichino is doing a great example of custom apparel retailer taking this technology and support of the approach. A second growing model is called Storefront as a Service. Beta showcases some new exciting products. If you've had an opportunity to go into a beta store. And using a combination of cameras and touch screens, track engagement and product demos for their brands, we're also seeing people like Macy's has been doing some projects around curated themes and artists and quality products. But more importantly, the consumer knows when they go into these environments that there's going to always be something fresh. The idea of the Storefront as a Service really is about new discovery. People come into it specifically for discovery to learn more about new products that they might not have otherwise learned about. And finally, retailers becoming more and more about the narrative, drawing out that distinction in the product, the philosophy or the culture of the brand. There are several brands like Tom's. It's done a great job with getting customers emotionally connected with their product because of the good work that they do with the profitability of their business. Nike and other sports brands are also doing a great job creating some interactive environments to experience their brand and to feel connected with the athletes that they sponsor. So I think it's an important thing to keep in mind. So as we look ahead into 2021 and perhaps into 2022, what do we think we should look for in these winners of tomorrow? Well, I think the first thing we're going to need to think about is really, do they have a data-driven culture? Are they really driving insights over their own perhaps updated instincts? Are they, do they have a clear vision of where they're going and are they designing their experience around how their brand makes a difference in the lives of the customers they're engaging with? Are they creating a learning environment? Are they making sure that they have the right tools in order to really satisfy customers? The second thing is I think that they're, these retailers are going to be thinking about synergies and collaboration. They're going to start to break down the silos, get rid of those fiefdoms, articulate the strategies that everybody in the organization is aligned around the same things, create these synergistic partnerships across the business, communicating constantly across that enterprise, so that everybody is completely clear on what it is we're trying to accomplish, so that what's happening in marketing is being executed at the store level, what's happening online, every other part of the organization knows about. Cross-functional teams with end-to-end accountability are two times more successful when these transformations start to take off. And the third area really is around customer relationships and experiences versus being transaction-centric, right? Identifying or remove friction out of every part of the shopping process, and know what your most profitable journeys are and focus on optimizing those. That's really where retailers need to start. So I hope this has been helpful, as I said, it's kind of a recap of a presentation that I had the pleasure of doing at retail touch points and retail X this past summer, just kind of a high level overview of all of that. Thank you very much for taking a couple moments with me. If you have any questions, feel free to reach out to me directly. The information will be here at the end of the podcast, and I'm gonna create a link to the slide deck that went with all of this for those of you that'd like to see it. So thank you for listening. (upbeat music) Well, that's today's show. Thank you for listening. If you like what you heard, be sure to subscribe to the podcast and like us on social media. Or drop me a line at
[email protected]. If you'd like to learn more about what we do at ClientWrite, visit www.clientricity.net. Until next time, stay well and go do something amazing for your customers. (upbeat music)
PodcastTranscript AI