Results Count ... everything else is conversation.: Consumers don’t think in terms of channels

"Point of purchase" is everywhere in a seamless world

Image: DigitalArt; Freedigitalphotos.net

As I prepare to meet with a number of groups and retailers around the world, their #1 question is about predicting what must change in retail to be successful. Many of the retailers want to know how to sell more effectively online. Most retailers are asking how to re-merchandise their stores in ways to draw more customers. What suddenly struck me was that retailers think in terms of managing multiple channels, consumers never do! For today's consumers, the experience is seamless and across devices, locations and time. Tomorrow's retail winners will make your experience painless, personal, interactive and incredibly convenient.

Most retailers are still carrying Baggage of the Past à Product Centricity

Retail is built on a heritage of "curating products". The very nature of a store is a "container", or place in which retailers merchandise the space with collections of products that attract shoppers to come and make a purchase. As the size of the stores grew, merchants expanded assortments to appeal to a wider range of consumers. The very nature of "mass merchants" is founded on the premise of appealing to the "masses" based on assortment breadth and competitive prices.

With the advent of online retailing, the assortment is no longer contained by the "box" or the store. The "aisle" has literally become endless offering you millions of items for purchase online. Retailers however, still think in terms of assortments or collections of things for purchase. And, many still plan separately on how they manage the products and distribute them by channel. It is surprising how many retailers still have separate merchant teams for their store channel, direct channel and online ecommerce. Managing products and hierarchies for different channels is a reflection of both the baggage and heritage of product centricity.

Omni-Channel experience is the new Normal

Customer_freedigitalphotos.net_David Castillo

Image: David Castillo; Freedigitalphotos.net

One of the most popular headlines I've seen recently is: "The Consumer is the new CMO". Consumers are deciding where, how and when they will shop. It's not an "either or" choice between store or online. It's not even a question of using a smartphone to "showroom" while in the retailer's aisle. Consumers are shopping from their living rooms, bedrooms, even their bathrooms. They are shopping while watching TV, at sporting events, while flying on airplanes. For consumers this means channels disappear and their experience can become seamless across time and place.

We posted recently how changing consumer behavior is changing expectations – Retail survival will require both consumer & product centricity. A retail purchase will no longer be at a specific point in time or place. Consumers now expect a "seamless" experience of starting their journey online and continuing in store. They also expect choice and flexibility. They are just as likely to buy online and pickup in store as purchase in store and ship home. For retailers still curating product assortments and thinking in terms of channels, this is a huge challenge and major disadvantage. In fact, most product centric retailers are ill equipped to survive in an omnichannel world.

Many retailers are ill-equipped to deliver seamless consumer experience

I first ran across a new study by EKN in one of my favorite retail sources: RetailCustomerExperience.com (RCE). RCE summarized the findings from EKN's "First Annual Future of Stores Study". The overall survey findings are profound. Most retailers are simply ill equipped and unprepared to compete in a seamless world, where consumers are focused on an interactive and personalized experience. This is especially true for retailers who are still focused on the core product centric tenets of: product, price, promotion … and supply chain management for channels of distribution.

Key EKN Survey findings indicate that most retailers are ill prepared to deliver, and are not investing to deliver the personalized experience that today's consumers demand:

Only 1 in 3 use stores as a delivery hub for online orders
Only ¼ offer smart devices to their sales associates assisting consumers in store
Only 10% have features in a mobile app that are useful in a store
Systems focused on the consumer (e.g. loyalty) have lowest integration
IT spending on store technology integration is projected flat for next 3 years

Gauray Pant, research director for EKN offers this astute summary on the current, as well as the future state of retail:

"Consumers don't think in terms of channels. Retailers still do. The future of the retail store is no different than the future of all retail — seamlessly integrated, technologically enabled and personal."

Retail's single biggest retail obstacle = Product culture and mindset

In most retailers I meet with, "Merchants are still Kings". There is nothing inherently wrong with retail buyers per se. Products still need to be purchased, managed and sold. But, the very job title of "merchant" is reflective of the past heritage of buying products and putting them on shelves. Few retailers have contemplated an equivalent to an EVP of Merchandising with a title focused on the "EVP of Consumer Experience", across "channels or stores".

Bottom Line - Fundamental point and prediction for the future or retail:

Consumers simply don't think of channels anymore. To be successful, retailers need to realign all of their "channels" and resources to create the seamless experience consumers expect today, and return for time and again.

My favorite captain of the Star Trek series was Jean Luc Picard. His famous line to the crew was "Make it so". The transformation to "experiential retailing" certainly must start with leadership from the top, as well as the courage to abandon the historical comfort of product management.

Unfortunately, most retailers have not yet realized that to "make it so" also requires a lot of work, systems, and sizable investment focused on what the consumer cares about most.

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Sources:

Retail Customer Experience: Study: Retailers are ill-equipped to deliver omnichannel experience; July 8, 2013
Barcode Image: DigitalArt; Freedigitalphotos.net
Customer Centric Image: David Castillo; Freedigitalphotos.net