An Alert From World Retail Congress, 2017
By now, if anybody in the entire retail and consumer facing industries, from C-level executives down to the janitor working the night shift, is not aware of the fundamental earth-quaking changes going on across all of commerce, they are a “dead man walking.” In fact, they all should just declare themselves dead, period, and crawl into a hole somewhere. Moreover, the 24/7 cacophony of the new language around the concepts of new and old world, digital, physical, technology, VR, AR, AI, new consumer values, e-commerce, omnichannel, personalization, conversational commerce, IoT, experiences, small vs. big, social media, bloggers, brand ambassadors, and globalization is so deafening and repetitive to the point that one would like to scream, “I’m mad as hell and I’m not going to take it anymore,” as news anchor Howard Beale did in the 1975 film “Network.” Seriously, it’s time to stop talking about all of these earth-shaking, disruptive, “killers of the old world,” and start doing something about it. How about transforming and adopting the reality of these disrupters as absolutely essential to compete and win in the new world. And if businesses don’t do so fast, faster and immediately, they will soon not see the sun rise.
So on that sour, critical personal note, I do admit that most of the major retail and consumer businesses, at least those that have not disappeared, have been evolving. But evolving is not going to make it. This is not a marathon. It is now a hundred yard dash.
At last week’s World Retail Congress (WRC) 2017, the entire range of transformative concepts and models for the future were once again presented and discussed by the leaders of some of the largest and most successful companies, from both the old and new worlds. From Macy’s, PVH and Adidas, to Google, Alibaba Group and Casper, and hundreds of other companies from around the world, it was clear that the consumer and retail industries has indeed, reached yet another level of better understanding all of the disruptive forces and the need for transformation. However, even among those companies that would be considered well into change, the majority expressed a sense of urgency and the need to move faster.
This logic grows ever stronger as the businesses better understand the new world of millennial and Gen Z consumers. This next biggest consumption cohort simply will not wait for old world companies to change — because they don’t have to. They have infinite selection, delivered in a mobile nanosecond or in the numerous cool, personalized and entertaining places they choose to hang out in all day.
Urgency is an Understatement
The first phase of a study commissioned by the research firm, Green Park, and WRC, titled “The DNA of The Retailers of Tomorrow,” benchmarked organizational readiness for transformational change through a comprehensive survey and in-depth interviews with over 150 global chairs, CEOs and senior executives from the retail sector.
If you want to understand the urgency for change, as your business loses those young consumers to a cooler place across the street, check out some of these survey findings.
- 80 percent of retailers understand the need for transformation. (A no-brainer, right? The other 20 percent are the “dead men walking.”)
- Only 60 percent of retail employees feel their leadership understands how disruptive forces are impacting their organizations.
- Only 24 percent of leaders know what transformation means to their business on a day-to-day basis.
- 62 percent of retailers are yet to start their journey or are at the very beginning. (WOW!)
- Only 7 percent of retail leaders said they were where they need to be to start their journey (DOUBLE WOW!)
Talk about stopping the talk and “walking the walk.” They must start “sprinting the sprint,” or they will disappear.
Here are a few more revelations indicating the old world’s sclerotic thinking plus a call to action (with my commentary):
- 47 percent of retail leaders believe that keeping up with, meeting and understanding the changing consumer is the key strategic priority (OMG! That number should have been 100 percent. These young consumers are driving everything, and if you don’t understand and change to serve up what they want, they will drive you right out of business.)
- 18 percent believe focusing on and differentiating the customer value proposition is the most important factor (OMG again. Right after understanding the consumer, there should be 100 percent agreement that the value proposition should shift accordingly. Am I missing something here?)
- A further 18 percent believe that identifying and attracting the right leadership, skills and culture to drive successful transformation is a top priority (Again, am I also missing something here?)
My point in expressing surprise and criticism of these rankings is that there is not enough time to address these priorities sequentially, or even according to their ranking. They must be addressed simultaneously with 100 percent effort behind each and every one. Accordingly, I would strongly suggest to all of those companies participating in this study that they reboot their priorities, and put them all at the top of the list.
The study concludes with what it called the Five DNA Blocks of Transformation.
- Meeting changing consumer needs and behaviors.
- Differentiating the value proposition.
- Responding to the increasingly competitive environment and new entrants.
- Identifying and developing the right leadership skills and culture.
- Increasing market reach globally.
Plus, the Five DNA Operational Capabilities
- Developing digital and technological capabilities.
- Optimizing proposition, range, price and promotions.
- Building brand strength.
- Optimizing and rationalizing channel/format portfolio.
- Leveraging data analytics strategically.
How could anyone argue against any of these strategic and operational imperatives? I just want to repeat that there is no time left for an orderly evolution. These must be a 100 percent all-in simultaneous revolution.
Personalization and Experience
The other two major themes that threaded throughout the three- day conversation, along with transformational urgency, were personalization and experience. These have also been ongoing central topics of many of my articles in The Robin Report. And every brick-and-mortar legacy retailer in attendance at WRC heard that these are two necessary requirements for success in the new world.
As I have so often said, the legacy retailers have the potential for enormous competitive advantage over the e-commerce pure players like Amazon and all of the Amazon wannabe startups. The advantage for the legacy guys is being able to operate on both physical and digital platforms, which has been proven to increase consumer spending by three to four times more than for retailers operating on only one platform.
However, there is a paradox. While the legacy retailers may achieve that spending increase from many of their customers, the declining traffic and revenues across the sector would suggest they are losing more customers than can be offset by those whose spending has increased.
Once again, the logic of “why would a young millennial or Gen Z consumer take the time and effort to come to a big building overflowing with stuff, when they can digitally scan and buy in a nanosecond?” The simple answer is they are not.
So creating a personalized and compelling experience is the answer for how legacy retailers can reverse their “so-not-cool” image among young consumers; it might leverage their spend to five or six times more than shopping solely online.
The problem: closed loop back to the fact that time is the enemy. As the new and largest young consumer segment finds personalized and compelling experiences elsewhere, and as the retiring boomer segment downscales and buys less stuff, those legacy stores have an urgency to transform. And that is a massive understatement.
You may say “yada, yada, yada.” I say, let’s hear it one more time: Act now, or die.