Finally, retailers have come together as an industry to stem the Race to the Bottom, a phrase TRR coined in the 90s based on Robin’s observation of the inexorable descent to the madness of markdowns and price matching as a business strategy, plus the accompanying loss of merchandising and service as differentiators. At NRF’s 106th annual Big Show (attracting 35,000 attendees and 3,300 retailers), the NRF Foundation along with 30+ leading retailers launched a certification program for retail, RISE Up (Retail Industry Skills and Education), intended to offer training, credentials and a path to a retail career for entry-level job seekers, GenZ.
Investing in your team, what a concept! This is a first step in the right direction, implying belated awareness of the importance of the in-store sales staff and their pivotal role in the customer experience. Considering consumers’ growing sophistication, we at TRR have said today’s sales associate really needs an MBA. Retailers would do well to take a page from restaurateur, Danny Meyer’s, playbook, whose first stakeholder in order of importance is his staff. Keeping them happy is pivotal to keeping his customers happy.
The mandate is that retailers invest in technology. After all, the Expo part of NRF’s Big Show showcased miles of retail technology. To cut through the clutter of the 510 retail tech exhibitors you have to ask yourself, what is the single biggest problem retailers facing today? It is how to compete with Amazon, which spent more than $15 billion on innovation in 2016, more than the top 20 retailers (excluding Walmart) combined? The stores of 2017 and beyond must create positive shopping experiences that drive repeat store visits. Shoppers must want to shop!
According to analyst firm IHL Group, retailers spend about 75 to 85 percent of their IT budgets simply on maintaining and upgrading existing systems and are totally outgunned by Amazon when it comes to IT spending. Retail CIOs project an average 4.7 percent increase in their IT budgets this year according to the IHL survey, however these same executives believe increases ranging from 87 to 236 percent are necessary to effectively compete against Amazon and Walmart. IHL calls this the Technology Innovation Gap In Retail, TIGIR for short.
The good news for many retailers is they don’t have to out invest Amazon or even beat Amazon, they simply need to outperform their weakest competitors. When IHL looked at technologies that move the sales needle, investments are in three core areas: a single order management system across channels; a single view of the customer across the enterprise, and updated POS technology. These foundational technologies provide the base technologies that drive greater customer experience at the stores and online. And in keeping with the topic of employee education, the IHL study reveals that associate training/tools is a top priority among retail leaders (195 percent higher priority) and amazingly, sales growth is 7.6X higher for retailers that provide Wi-Fi for associates. Getting smart people on the sales floor is a winning strategy all round!.
So investing in staff and investing in tech are fundamental to retail success today, but that’s not enough. Personalization across every retail touch point is necessary to delight today’s discriminating shoppers. Know me, what I like and how I like it. Less is more. Curate your assortment, your menu, to reflect what you do best and then engage with a like-minded community. The days of being all things to all people are gone. More is not better, in fact too much leads to the tyranny of the paradox of choice. Endless aisles on the internet and at your store are paralyzing. Stand for something, have a point of view, be genuine and authentic. Have a relationship with your customers, one-on-one. Use technology to remove the obstacles between your store staff and the customer; use it to provide access to information about the likes and purchases of this consumer and to connect with this consumer in a personal relevant way. Danny Meyer said it all at NRF, “People just want to feel loved, businesses need to create a sense of belonging.”
In sum, retailers, invest in your people develop their skills, and invest in technology that reduces the number of mind-numbing store tasks and that provides real time data for personalized experiences. Accentuate the human connection; this is your competitive advantage. When you step back, it’s pretty much retailing basics, wouldn’t you say?