Retail evolution is speeding up … and waits for no one
Retail has been described as the world's "second oldest profession". But, that doesn't mean that retail is not changing. In fact, some of the most well-known retailers in their categories suddenly went extinct. The forces that caused these retailers to vanish are yet again evolving at an even faster pace. Darwin's law of survival is even more relevant for today's "retail dinosaurs" on the verge of extinction. For those unwilling or unable to adapt, there are at least 7 major disruptive trends which will cause the next wave of retailer casualties.
Why this is important: Habits from the past can actually spell doom in today's rapidly evolving marketplace. The mantra "Differentiate or Die" has a new corollary … Rapidly adapt to change, or get run over by disruptive innovators.
25 Retail Dinosaurs vanished in the last 25 years …
Dinosaur is the perfect iconic description for some of the major retailers who have vanished in recent years. Many of these extinct retailers were large "giants" that literally dominated their category or channel. Others were retail innovators in their own right, until they were outgunned by new disruptors. Longevity, size or specialization have NOT guaranteed retail survival.
Normally, I do not think of Entrepreneur as a primary retail source, but they recently had a great piece on "The Retail Giants That Disappeared". Starting with Circuit City, the article runs down the list of 25 retailers that have disappeared in the last 25 years … and what led to their demise:
- Circuit City, Comp USA
- Blockbuster, Borders
- Iconic institutions like Tower Records
In reviewing the list of dead retail dinosaurs, Darwin's law of survival would seem to apply to retailers as well as natural species …
7 Major Disruptive Retail Trends – Adapt or face extinction
There has never been a time of more disruptive change in retail. Retail today is not in evolution, it is going through revolution. We have posted previously that "Retail has changed more in the last 3 years, than the previous 30". There are at least 7 major disruptive trends that are forcing retailers to adapt, and adapt quickly, in order to survive.
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Omni-channel is the new normal
We have posted on this topic, and will continue to talk about the major force of change in retail is the consumer. What is changing retail the most today is the consumer who now shops anytime and everywhere. While stores remain a destination for experience, the consumer journey starts online. The successful retailer of the future needs to not only master online and offline, but how to connect with the consumer across many touch points … especial social media.
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BOPIS required, not optional
BOPIS is a new acronym in retail that describes both consumer expectations and behavior. BOPIS = By Online Pickup In-Store. Actually, consumer expectations now exceed BOPIS – more than 50% expect to shop online and see if stock is available in store. This not only requires new integrated technology, but re-engineering of processes and staffing to be able to both execute, and capitalize on the omni-channel shopper who is now in charge of both where they make a purchase, and take delivery.
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Virtual aisle = Endless Shelf
The reverse of BOPIS is just as important trend and reality. Omni-channel consumers now fully realize that stores can't begin to stock every model, style and color. While consumers can see hundreds if not thousands of products in store, they know that there are millions online. Even Walmart is now realizing that stores are becoming distribution points for online. They have joined the big rush to build smaller stores, much smaller and less costly to operate. But, for small to be successful, they also need to be able to offer the consumer an "endless aisle" through a virtual shelf. The very best disruptors are literally creating a seamless experience between online, store and mobile apps so the consumer can "have it there way" anywhere, anytime.
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Consumer Experience rules
Ecommerce giants like Amazon helped to kill off the previous retail dinosaurs based on price and selection. But, Amazon also created a new trend and high standards for consumer centric experience and service. When consumers can shop anywhere for the lowest price, products become commodities. The biggest challenge for retail dinosaurs is a product centric heritage of building big box stores for displays. The number one reason consumers today say that they shop stores is for the experience and interaction with staff. It's not a question of either or, but both … no make that, all of the above. Consumers are looking for personalize experience across all channels.
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Connecting with the "WE"
Consumers have gone social … worldwide. While the major platforms may vary by country, omni-channel consumers are heavily invested in the "WE" of social networks. Social has become a primary source of research and validation on what to buy. Today's consumers are 14 times more likely to believe the advice of a friend, than an ad. Today's major brands are spending more dollars on social media than traditional media. It is not about point of purchase for today's sale – it is all about creating and sustaining relationships. It is also not just about Facebook. Disruptors like Pinterest are being use to forecast consumer purchase trends and actually sell stuff.
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By being able to access retail worldwide, consumers today realize that choices are almost unlimited. Innovative pioneers like Nike have shown that consumers value and will pay for building their own customized shoes. New disruptors are emerging with "mass personalization" opportunities to custom tailor your clothes, or curate your personal wardrobe assortment and send it to you. One of the fastest growing online retailers is Etsy. They enable artisans to sell very personalized goods, even made to order styles, to millions of consumers worldwide. Why buy "stock" on the shelf when you can have something unique and personally tailored for you.
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Mobile Majority
The latest stats show that there are now more cell phones in use than people on this planet. Smartphones now exceed 4.5 billion. Mobile is the majority, and will be the preferred screen for shopping. How many retail dinosaurs have optimized online for mobile search and purchase? The retail disruptors are not only optimizing for mobile engagement, they are broadcasting offers and connecting with consumers where ever they are. The store of the future will not only have "beacons" to connect, but to track traffic via mobile as well.
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Saying your omni-channel is one thing, executing is quite another
The one major disruptive trend that is changing the face of retail is consumers and their behavior across many channels. To us as consumers, it is not just mobile, social or any one thing. It is all about a personal, seamless experience across our journey to explore, evaluate and purchase, with services beyond that. The retail dinosaurs must be able to adapt quickly. And, the answer is not a choice of picking one of the 7 above … the answer for survival lies in executing some form of ALL OF THE ABOVE.
So, which retailers will survive … and which dinosaurs will die?
One only needs to peruse the headlines to see retail is a tough business! Even Walmart's comp sales are down, and the mighty Amazon has slowed in growth and earnings. But, there are definitely some retailers with dinosaur traits that are candidates for the next wave of extinction: Sears/Kmart, Target, and Radio Shack.
Which retailers do you think will fail to adapt and become the next retail dinosaurs? I would like to hear your opinions @chrishpetersen
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Sources:
- Entrepreneur Magazine: The Retail Giants That Disappeared, Courtney Reagan; August 10, 2014
- RetailCustomerExperience.com: Five disruptive retail trends to watch for, Kristen Gramigna; August 5, 2014
Future customers will be subject to higher requirements in terms of service and expertise. The retail sector needs to become much more customer oriented. The knowledge of how best to approach customers, ending in the manual, but starts out somewhere else.
Posted by: Joel Carlsson | September 08, 2014 at 02:46 PM