Strong Brands do not worry about Retail closures
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Strong Brands do not worry about Retail closures. Retailers and small-medium size companies will need to have a very thoughtful, long-view, and expert Growth revival plan, if they are to stay in business. We don’t refer to the pastry, cafe, and ‘impulse’ lifestyle stores, but to those that have much more heritage and history behind the Brand name. To quote Darwin: “It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.”
Strong Brands do not worry about Retail closures, but the situation becomes tough
Marks and Spencer to close 100 stores by 2022 saying reorganisation “vital” for firm’s future https://t.co/2LBhVTOMgD
— BBC Breaking News (@BBCBreaking) May 22, 2018
More and more retail shops close-down, or change their scope and plans. Recently, Esprit closed 40 shops in Europe. The retailer struggled with a net loss of US$121.9 million. Retail became associated with high operating expenses, real estate cost (over-priced?), and the metropolitan high-streets. Not anymore. Now consumer flock to the internet highways.
UK Retailers are already troubled with cost-cutting, further store closures and more job losses. A published research by the British Retail Consortium found that the number of people visiting shops is decreasing a lot (Jan. 2018).
Independent is reporting that thousands of workers have been laid off, with Debenhams becoming the latest high-street name to announce job cuts. The 240-years-old department store has joined Marks & Spencer, Tesco, Sainsbury’s, Asda, Morrisons and B&Q which have all set out plans to shed staff.
Will physical stores disappear?
The short answer is, we think, most likely not. As we know, shopping is not about merely buying things, but instead, it is an emotional and experiential journey that makes you (or you wish to feel) happy. This applies to both the digital and the physical shopping experience. This social aspect of shopping can’t disappear overnight.
However, the role of the store must for sure change. We might see more concept stores, while the ‘heavy’ traffic will be turning online, on-the-go, 24/7, even on Sundays or at night.
In the meantime, Amazon rules
From the Jeff Bezos’ 2017 letter to shareholders, we find that the Brand recognition list for Amazon is indeed long:
- The American Customer Satisfaction Index recently announced the results of its annual survey, and for the 8th year in a row, Customers ranked Amazon as No1 in all criteria.
- The U.K. Customer Satisfaction Index ranked, for the 5th time in a row, Amazonas No1.
- Amazon was named the No1 business on LinkedIn’s 2018 Top Companies list, which ranks the most sought after places to work for professionals in the USA.
- Harris Poll released its annual Reputation Quotient (surveys more than 25,000 consumers) on a broad range of topics from workplace environment to social responsibility to products and services, and for the 3rd year in a row, Amazon ranks No1.
This shows something. Amazon didn’t become No1 out of luck, or because they’ve started first. Amazon has outpaced Wallmart due to its Customer obsession, ingenuity, and commitment to operational excellence from click to final delivery.
Why is it difficult to copy the good Amazon practices?
Because not all retailers can have the same stamina, personal ethics, the long-view business plan, the updated 5-years Growth plan, a co-creation strategy in place to unite with others, the same culture, etc etc.
In other words, not all companies have the qualities to excel. This small-medium-size mentality and the family-owned approach has killed for long, at least in Europe, innovation, evolution, and excellence. Can you tell an SME that follows committed KPI’s every year? Can you tell a small-retailer making tough business choices, or simply they follow the routine pattern of the years back?
You won’t find many. In the same path, you will not find many retailers owning a truly professional content strategy, or product and service unique points. Are they learning through the years, or they simply act as if they are salesmen of bulk imports?
What you should worry more…
Amazon and its model (replicated by Alibaba and others) will finish off the Retailers that don’t own a strong Content Strategy. Have you read for the Toys “R” case, one of the most famous toy stores? With Toys ‘R’ Us closing, it’s not only a retail casualty. All consumer products that were targeting parents with kids 0-10 years have lost their distribution and a major revenue stream.
We will see more similar examples in the years to come within the Transformation. But we should worry more about the fact that in our economies, we don’t see strong Brands. Preference. Affinity. Customer reputation and word of mouth through unique service. No SME thinks of these things; they still believe it is a task for ‘multinationals’.
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Strong brands in the commercial & retail sphere should:
- Rethink your Blue Ocean. Now it’s the time for τοθγη business decisions. Will you stay in business? With which star proposition? With what unique story? Will you focus on few, or sell everything? In the latter (mass) approach do you have the capacity to invest online and in many resources?
- Take your Power Back. Brands need to double-invest in CRM / ERP analytics connecting their employees, the counter, the logistics, and the sales / end-results’ analysis. You can’t do business in blind-mode anymore. They should focus on e-mail management building a database management and implementing Customer Value Optimization strategies. No, it’s not anymore enough to own some capital and a good bank… Earn your consumer’s contact info, digital identity, and permission to communicate with them directly to drive actual sales.
- Tough decisions on Brand experiences. Offer the same experience in-shop and online. Can a business do both? It should. Customer journeys are happening in parallel off-and-online. For B2C and B2B buyers.Value-exchanges? Add-on benefits? Happy customers? Social media Content that adds value and engagement to happy communities?
- Co-creation & partners’ Strategy. Test new products as a joint effort with other brands (similar segment), open-up to new geographies, but do it with partners. It’s not an effort to share costs, but a smart selection to grow and revive your organization’s brain… You can also build partnerships with companies in the Hospitality, Travel & Tourism, and Child Care industries to reach new segments while delivering added value to the partners.
- Turn the off-and-online shopping experience in a pleasant journey. We have all visited e-shops missing on product info, characteristics, reviews, and education info, right? But at the same time, we’ve visited sites with enough things to discover, making us feel it worths our time and effort. You know, with so much volume online, the retailer/e-commerce leader has to really excel…
Small-medium size business owners and Retailers should realize that whenever there are disruptions in the supply chain or in the consumer habits and insights, the Brands should consider new ways to mitigate risk. The disruption downstream with Retailers is going to continue big-time.
“People are always going to go shopping. A lot of our effort is just: ‘How do we make the retail experience a great one?'”
We should worry more about the fact that in our economies, we don’t see strong Brands. Preference. Affinity. Customer reputation and word of mouth through unique service. No SME thinks of these things; they still believe it is a task for ‘multinationals’.
For Retailers, it will be hard to keep up with technology and social media/presence investments. It’s not only a matter of hiring 2-3 community managers, but it’s about investing in a company policy for GDPR (consumers’ desire for more anonymity is evident), and an expectation for meaningful personalization solutions (see Macy’s example in the US).
The answer for Retailers will be investing in CVO strategies, the new approach to segmentation that integrates advanced algorithms and machine learning into the retail business process that govern planning, inventory and pricing.
Data and the Role of Technology
Gone are the days where a small business owner was calling himself a “Merchant” and the key competence was to plan for money and products. It’s much more sophisticated nowadays. Now the real game is Loyalty…
Technology has a key role in driving connection and convenience in loyalty programs. Retailers, however, need to walk a fine line between enabling deeper connections without being invasive (stop the spam – thank God, we have GDPR soon). Do you want to see the inconsistency gap? Here is some evidence:
- 30% of consumers find receiving recommendations for products or brands based on social influencers subscribed to as unappealing (compared to 90% of retailers that think this would be appealing to consumers)
- 26% of consumers find A.I on a mobile device that gets to know the user through voice recognition and is able to make intelligent recommendations based on this as unappealing (compared to 91% of retailers that think this would be appealing to consumers)
- 91% of consumers noted that being able to accept or reject offers so that the retailer loyalty program can learn what products and offers are of most interest as appealing
- 86% of consumers note a personalized experience with retail brands where staff and customer support know personal preferences to better serve customers as appealing
- 81% of consumers say they’d consider removing their personal information if they could and 53% are concerned that their data is being passed onto third parties
Four Loyalty Typologies
The Oracle consumer report Retail 2018: The Loyalty Divide (Download the full report here) was conducted in Feb. 2018 among 13.000 consumers and 500 operators across retail, hotels and restaurants in five regions: EMEA, North America, Latin America and JAPAC (Australia and China). We can uncover four typologies of consumer behaviour including:
- The Broadcaster who may flit between brands but shouts about their experiences good or bad (47% would feature the retailer or its products on their social media accounts in exchange for offers/rewards)
- The Enthusiast an engaged retail brand follower who is loyal but not loud (only? …1 in 5 consumers (20%) will follow their favourite Brand on social media)
- The Lazy Loyal typically unengaged but tend to be loyal to brands because it’s easy to be (72% think an effortless loyalty program where points are automatically redeemed is appealing)
- The Seeker who likes to shop around for the best value and holds a little affinity to retail brands (56% would exchange personal details in exchange for a personalized offer or promotion, and 53% would always ‘shop around’).
You need a serious Transformation (Business, Tech, Marketing) plan
If we sum up all of the above Retailers and small-medium size companies will need to have a very thoughtful, long-view, and expert Growth revival plan, if they are to stay in business. We don’t refer to the pastry, cafe, and ‘impulse’ lifestyle stores, but to those that have much more heritage and history behind the Brand name.
To quote Darwin: “It is not the strongest species that survive, nor the most intelligent, but the ones most responsive to change.”