Nothing New Under The Sun!
By Will Roche, via the RocheonRetail Blog
Ecclesiastes 1:9 (NIV) What has been will be again, what has been done will be done again; there is nothing new under the sun. This has always been for me a very interesting quote from the Bible. What does this have to do with retail you ask? Retail was forever a service business not a product business. A change occurred somewhere shortly after WWII with the huge economic boom that followed and the commoditization of retail in the form of lower product prices over service. Everyone can now be “rich”! At least that was the dream.
The switch from service to product was subtle and took a number of years to fully catch on. It was a race for who could get big enough to control product price. In retail the focus until late has always been about operational optimization in the form of product costs vs price sold. Nothing about customers or service was focused on because the value proposition was the lowest price. Hence customers like Wal-Mart grew to be gigantic and the good old great service companies I remember like Sears became a shadow of what they once were or gone. The problem is most companies followed this model which they were in many ways forced to and found themselves in a death spiral. We know who they are, JC Penney, Sears, Kmart, Montgomery Wards, Circuit City, Borders and soon to be Barnes and Noble for example.
Barnes and Noble is a very interesting study. They did it all you might say, online, in store experience (remember Starbucks), customer service/brand loyalty and even gadgets like Nook! One word, gives us that answer, Amazon. It took 10 years or so but with the advent of electronic books easily downloaded at a great price along with Amazon’s personalized and convenient way to purchase, market share then moved away from Barnes and Noble like a vacuum. But what about omni-channel, mobile, customer experience theory that many retailers are being told to go run off and do? Would mobile phone applications or tablets for the store employee have stopped the flow of red ink? What was it Barnes and Noble should or could have done differently? Were they just collateral damage from a market change unable to re-invent themselves?
There is no simple answer to this question and no silver bullet to the problem. The answer does lie in understanding your customers and doing something that makes them feel good about spending money with you on a regular basis. How do you do it? First you are not going to out “Amazon” Amazon and the fight for lower product prices is a non-starter. What does Amazon have? I can tell you from my point of view. It is selection (you name it they have it), reviews and trusted advice, convenience (one button shopping a great 2 day free delivery on most items) and many other things such as movies, tablet devices, etc. Amazon’s Prime is very sticky!
You must think like a customer. Why buy from you? Why would I go to a store to purchase anything? The biggest reason is I want it now. That means you better have inventory that I can see and acquire on-line and quickly get into my hands without a hassle. The shopping experience is a very social thing and still very sticky as well. I am motivated by many things when it comes to shopping. The Brand, are you in or out? The location, is it convenient and clustered with other stores/brands I go to? Are your products unique and satisfying to me and my social network? Do you know me and treat me special when in your stores? Do you give me preferential treatment (This is a big one)? Do you give me deals or services that let me know you are thinking about me? If you do these well, then you can give me all of these neat things for my phone and on the web but not before.
Technology is critical to execute in such a fashion. You must have real-time operational access to all this customer information for delivering that great service at that glorious point of impact. Remember you are selling a service the generation of revenue from the sales of an item is just a by-product. Focus on how you can provide a unique and differentiated experience and then look how technology can serve you.
Read the original blog post and more here.