Retail in focus – what's the state of play among leading brands?
Retail in focus – what’s the state of play among leading brands?
Wed, 08/14/2019 – 06:46
- The specter of Amazon swamping the retail market may still send the chills down some retail spines but they don’t have it all their own way.
As the most visibly impacted by digital trends, retail is top of mind. But it’s not just about Amazon. Far from it. In this edition, we focus on success coming out of experimenting with an expanded customer experience but also highlight how some retailers are woefully poor at understanding what needs to be done.Â
Experience trumps all
Phil undertook a detailed analysis of what is working at places like Primark and Best Buy. On Primark he said:
Covering 161,000 sq ft over five floors, it occupies the entire site of a former shopping centre and comes complete with a Disney-themed cafe, a barber’s shop and beauty studio, as well as Primark’s standard fare â€” affordable fashion.
What’s interesting here is that Primark is not a premium brand. On Best Buy, he noted that:
An important focus is on helping consumers with smart home initiatives, including setting up Amazon Alexa, capturing Amazon as an ally rather than a rival. By last year, Best Buy had signedÂ an exclusive deal with Amazon to market Fire TV-enabled smart TVs, and had become the only retailer where consumers could try out demos of Facebook’s Oculus Go virtual reality headset.
Working with the enemy? Not at all – providing an additional outlet that benefits everyone but comes out of the relationship Best Buy fosters with its customers.Â
As I pulled together the various strands of this article, I was reminded of one of the first articles I ever wrote for diginomica, just after we launched. In it, I mused on the varous ways in whichÂ clicks and bricks would work together in the future of retail:
The general rule for retail success in the digital age seems to be that you either make visiting the store an experience, or a convenience.
What I would add today is to put that within a framework of continuous engagement. Modern digital technology allows brands and businesses to maintain relationships with consumers or buyers through aÂ virtuous cycle of iterative engagement, monitoring and improvementÂ of their experience. This XaaS Effect first surfaced in the technology industry but is now spreading to all kinds of products and services, and so XaaS stands for Everything-as-a-Service.
Phil’s story noted something Den referred to inÂ his analysis of Lidl and Aldi, two low costÂ retailers that have thrived on quality from a reduced own brand selection. If you haven’t read it then get hold of Retail Disruptors.Â
Apart from the experience factor, one thing stands out for those retailers enjoying growth – location, location, location. Ever it was so.Â
Winners and Losers
The last couple of years have seen storied retail brands topple or crumble. Macy’s is a case in point and a story that Stuart has followed. We have a library of 16 Macy’s related stories with many more referencing this once famed store group. the latest?Â The omni-channel transformation at Macy’s is finally working, just as Trump’s China trade war comes along to complicate things.
If ever there was a retailer that can’t seem to catch a break then it’s Macy’s. As Stuart said:
Youâ€™ve got to feel a pang of sympathy for Jeff Gannette, CEO of US retail institution Macyâ€™s. Heâ€™s slashed redundant real estate, reduced headcount and invested heavily in digital to pull off a turnaround at the troubled brand.
Now, just as it looks as though that multi-year effort might be paying off, along comes Donald Trump pitching his trade war with China to threaten the recovery of a great American company.
Then there’s Walmart about which we have a library of 38 direct stories. As the US’s largest retailer, all eyes are on them each quarter. They serve as something of a retail bellwether and especially in the adoption of modern technologies to support their market position. How well is it going?
In 2018, Walmart looked to be in all sorts of mess. Remember this?Â Walmart bombs as Wall Street gets a bad case of ‘Amazon panic’Â 18 months on and the tale is hardly better. InÂ Walmart restructure seeks a more integrated omni-channel balance, Stuart quotes the company:
Obviously bricks-and-mortar stores are one thing. E-commerce in some ways started out feeling like an independent channel or an independent business…we fell behind and have been playing catch up and have been doing a number of things to accelerate that progress and learning along the way and getting better as it relates to the customer experience…Weâ€™re very focused on creating a seamless experience for the Walmart brand, bringing the stores and e-commerce together. Stores have some advantages and weâ€™re trying to make the most of those.Â
It’s not the greatest of optics.Â
Starbucks isn’t everyone’s favorite but they’re getting much more right than they are wrong. The latest? Sous videÂ eggs:
How good is that?Â
We’ve had plenty to say about the innovations Starbucks has triedÂ the last few years but we’ve been relatively quiet the last few months. Even so,Â Coffee to your door as Starbucks makes delivery its latest digital gambit – is a good example of experimentation the company is not afraid to undertake. And as if to emphasize the experience point, CEOÂ Kevin Johnson said on the most recent earnings call:
The focused initiatives we are driving to enhance the customer experience and deliver beverage innovation are both complemented and amplified by our digital initiatives. Because of the long-term strategic importance of digital, I want to provide some perspective on our strategy in this area and the underlying initiatives that are fueling our progress and supporting our Growth that Scale agenda.
Two years ago I shared my view that the two transformative elements of modern-day retail, our experiential retail and its extension to digital customer relationships.
Modern-day retailers must create a unique and meaningful customer experience that ultimately becomes a destination that customers seek out.
If you thought Amazon had retail sewn up then you’d be wrong. Yes, Amazon represents an important existential threat but in China for example Alibaba reigns supreme. In the UK, we’ve been following the Ocado story.Â It’s not all been plain sailing. Most recently, Stuart reported mixed fortunes inÂ Ocado singed by warehouse fire, but partner deals and “immediacy delivery” bode well.
Retail provides many lessons about the wider move to digital, the impacts digital has on the people who work in that sector coupled with the changing preferences of customers.
As you’ll probably tell by now, technology is only a piece of the puzzle and while omni-channel provides a convenient coverall term, there are alternatives. If retail teaches us anything it isÂ that modern business isÂ about developingÂ models that genuinely put the customer at the center of an experience that keeps them coming back for more, understanding the demographics into which customers fit along with their preferencesÂ and then assessing the outcomes that can be expected from following a particular sets of initiatives. That requires focus but as we can see, retailers are willing to experiment with many models and modalities. Â
We shall continue to follow this unfolding story but in the meantime, here are some additional resources you might wish to peruse:
- Bed Bath & Beyond – generally a mess
- Target – getting it right by degrees
- Marks & Spencer – oh dear
- Williams Sonoma – lurching from side to side
- Sainsbury – an uncertain future
- William Hill – beating the odds
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Image credit – Augmented reality marketing and face recognition concept, by @Zapp2Photo, from Shutterstock.com. via Sameer Patel’s Twitter feed,