Results Count ... everything else is conversation.: 3 Questions retailers must ask, and answer in order to survive

In times of disruption, old habits die hard, but can lead to demise

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Change is hard. Really hard. We are creatures of habit, and we depend upon those patterns of behavior to get us to where we are today. Habits become safe and efficient, because we can fall back on the things that we know best … those things that usually work. Retailing is a business of habits built upon centuries of experience. From the very first shops in open air markets, retailing evolved into the science of how to sell things via the 4 Ps. So, what changed? The consumer and the marketplace. The last decade has been the greatest period of disruption in retail. A retailer's ability to survive depends upon their ability to both ask and answer 3 core questions … questions that disrupt the status quo of old habits built upon 4 Ps.

Why this is important: In the words of Charles Darwin, survival depends upon the ability to adapt to change. Future survival in an age of disruption depends upon the ability to ask different questions to find ways to adapt rapidly changing conditions.

A legacy of product centricity in retail

While it is hard for some to imagine, there was an age before the internet. Actually, retailing existed for millennia before the age of ecommerce. Retailing was essentially a simple business of merchants acquiring products, collecting them in one place, and selling them to consumers for more than they paid for them. Whether it was a simple cart, stall, shop or store, retail was synonymous for a place where retailers merchandised and sold products. Other than growing your own stuff, or barter with others, retail was the only place people could shop and purchase products.

Said another way, retail's heritage is selling products. Product was king. Success was based upon who had the best products to offer, the widest assortment, and ultimately the best prices. In the centuries of product centric retailing, the focus of the business was all about attracting consumers to stores, and then convincing them to buy some product to take home.

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The legacy and baggage of the 4 Ps

While some consumers were able to make their own goods, the vast majority of consumers only had the choice of going to a retail store to learn about, and purchase products. A choice that consumers did have was to go down the road to a different store to search for better products or cheaper prices.

In order to compete and thrive, retailers developed the science and habits of the 4 Ps:

Products – Features and assortment
Place – Merchandising and display
Price – Product price plus various discounting
Promotion – Ads and offers designed to drive traffic to stores and convert sales

As retailers grew larger, the science of the 4 Ps became more sophisticated. But, the 4Ps also became ingrained retailing habits. If sales did not meet expectation, you ran an ad to drive traffic, and then offered a promotion to incent a purchase. If that didn't work, you took a pricing action. If that didn't work you did final closeout markdowns so you could bring in and merchandise new products.

The ultimate retail disruptor – You the consumer

You can still see these 4 Ps in practice every single day in retail. Retail stores are still running a ton of ads in print and on TV, despite declining audiences for these traditional media. Retailer ads tout the widest selection, best products at the best prices. Retailers are constantly updating their stores in an effort to attract consumers with better merchandising and more compelling displays. In short, the 4 Ps are alive and well … and in fact, are still the guiding principles for most bricks and mortar retailers today.

So, what's the problem? What's changed that suddenly makes these 4 Ps "old habits" that are no longer effective, or as effective? What's changed is you the consumer, enabled by the internet. You are now omnichannel … you shop anytime and everywhere. You are not dependent upon stores to learn about products. And, you can probably purchase a wider range of products online, at cheaper price, and have them shipped for free to your door.

The ultimate disruptor of retail is that the power has shifted to you the consumer.

You can now get the 4 Ps yourself anywhere, without having to go to a store. And, you are talking and sharing your experiences with everyone you know on social media.

3 Simple Questions that retailers must answer to adapt and thrive

Retailing is not rocket science. Never has been and never will be. But, it does take some courage to abandon the old habits and practices of the 4 Ps. And, future survival will require enlightenment to realize that in a consumer centric world, you need to be able to ask and answer some very different questions. Questions that are NOT 4 Ps centric, but are now focused on who, what, where and when of consumer behavior.

There are 3 simple questions retailers must now be able answer, and many don't know even the questions:

What are your consumers saying?

Consumers are not only gathering information from retailers (online and stores), but they are talking to other consumers. One of the most powerful aspects of Amazon is customer reviews. The key is what consumers are talking about AND how they are saying it. Consumers don't typically talk in jargon or product feature language. They use their own terminology to describe not only the product, but how it works for them.

Retailers need to LISTEN to consumers talk. They need to capture the phrases they use in everyday language. Retailer communication needs to be SHORT and MEMORABLE, phrased in "consumer speak" that consumers would use with family and friends.
Who do they tell / who do they listen to?

It is estimated that there are now 2 billion people on social media. So, the simple answer is that consumers tell and talk to everyone on their social networks. That is not entirely true. Each of us have a close circle of contacts for our priority areas. I don't talk to my wife about my camera gear, but I rave and rant cameras to my photography buddies.

The real key to answering this question is understanding "raving fans" and who they communicate with. Word of mouth marketing really becomes effective when you understand the affinity of groups, and who are the core influencers. To survive, retailers need to move from "telling" the "masses" about products, to "engaging" consumers in dialog. The key is "participating" in their conversations within their networks– when and where they happen.
Where do they talk?

The cold hard fact about the 4 Ps are that they are a one sided conversation of the retailer telling consumers about products, trying to compel them about benefits and price, to ultimately sell them something. The 4 Ps were never designed or intended interactively engage consumers.

Where do consumers talk? Where they can be heard, and where they can interact. The primary media of todays' consumers has shifted to social media. Old habits die hard for many retailers who still want to "message in ads". Consumers do still go to stores, because they are searching for an opportunity to interact and communicate with people. So, even without embarking on social media, retailers can leverage consumer talk by focusing on how to engage them through staff and experiences in store, and in chat sessions online.

It is not the strongest or the largest retailers that will survive … it is those that are most able to adapt to the changing omnichannel consumer, who is now in charge, and controlling much of the "talk".

The best ways for retailers to adapt is to challenge old habits by:

Thinking like a consumer, not a product merchant
Listening to consumers and how they talk … learn "consumer speak"
Engaging where consumers want to talk … beyond the store
Don't just message, advertise and promote … move beyond "tell to sell"
Talking with consumers about what they want to talk about, in terms they use, when they want interact, and where they want to engage

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