As retail looks forward to returning to normal, most of the attention is focused on which brands will be opening stores, and what the new omni channel models might look like.
However, we might be overlooking what else needs to change. Will post pandemic retail simply be a rollout of the way we always did things? Or wil brands reimagine new ways to connect with consumers so they can drive both sales and profits.
According to Andrew Smith, a transformational retail leader who focuses on the future of retail and customer experience, and his co-founder and managing partner of ThinkUncommon, a retail innovation think tank, any disruption, certainly one of this scale, is going to shift the dynamics of an industry.
“Consumer expectations are being reset across industries. We often are too focused on how my fellow retailers are disrupting the customer experience when we should be looking at how is Google, how is the restaurant industry and how is the hotel industry or the travel industry resetting the expectations of what consumers are looking for as well,” he said.
The Core Challenge
The biggest single biggest existential crisis facing retail is the ability to change and to change fast and as broadly as possible, said Mr. Smith, whose company has worked with both established retailers and startups to develop action focused strategies to help them thrive in highly competitive markets.
“If you can have that ingrained ability to adapt to a disruption, then you can survive any existential crisis that gets thrown at you. The brands that had focused on innovation were able to pivot really quickly in 2020.
“We have this persistent negative narrative in the industry that says ‘retail is dying, it’s being taken over by online’, which in my view is utter rubbish. Retail isn’t dying, it’s growing. Online isn’t killing it, it’s growing it and the brands that can adapt to this are growing along with it.”
Redefining Retail Performance
The way we operate and measure retail performance is old, according to Mr. Smith. ”We’ve been doing it the same way for decades. We’ve watched the world change around us, we’ve watched the way consumers interact with our brands change around us, we’ve seen this kind of uptick in all of these digital ecosystems, yet we still performance manage our frontline teams in our stores, and our field teams the same way. Unfortunately this is not measuring what proper growth for a brand right now looks like. We need to think differently about what success now looks like when stores play a different role and when you have blended ecosystems of online and offline. It no longer is only comparable stores sales year-on-year,” he said.
“We know from plenty of brands’ experiences that if you put a store into a location, your online sales go up. If we know that then why isn’t that part of the measurement system and the way we operationalize our store teams and our local teams?”
Innovation – It’s All About the ‘How’
The successful brands have been focused on the ‘how’ part of innovation, and that’s what sets them apart and defines their reactions during disruptions such as COVID.
“Innovation is not the first language of retail, execution is. Therefore we get very quickly caught up in the hype of what it is that we’re doing and focus too much on just getting products out there.
“The art of innovation comes from testing, it comes from data analyses, and that comes from 1000 experiments before you find the actual thing that works and has that really powerful impact. Retailers aren’t naturally equipped to have that mindset,” said Mr. Smith.
Brands like Nike experiment, hypothesize, collect data, test, and test again. Then they refine it down to its essential perfection, and then roll it out, according to Mr. Smith.
The Pathway to Change
“You need to disenthrall yourself from the way you’ve always done things. Be a little more patient with what the early phases of your innovation pipeline look like. Because that will mean that you’ll get much greater change and much broader change at the end. You need to be willing to experiment and try things and put them out in the real world and see what customers think all of it – and bear with things that make us really nervous and introduce risk, or sound expensive. Reframe your thinking of the power of innovation as a process and look at how it can help you create incredible experiences at the back end, which is going to be tested and proven. Innovation, when it’s done best is measured and driven. It’s not big, huge blue sky creative. It’s just a measured, driven process of execution that enables you to find the best things to do – and then do them brilliantly, said Mr. Smith
The best retailer innovators always do incremental change, very few have big sweeping changes. Even new brands that look like they sprang up overnight typically have 10 years of struggle behind them.
“You don’t see the mess when you’re not in the mess.
“Your best performing, most agile retailers have transformed their operations to support constant change. They do it in a measured and driven way. One thing that we consistently have found is that when a retailer can reframe change to be something that they embed into their business, and focus on the ‘how’, rather than the big shiny ‘what’, then they do well,” said Mr. Smith.
The Importance of Putting the Customer into the Conversation
Too often we get distracted by the next big thing, those shiny objects that wow us. But how much do they mean to our customers?
“We see new technology and we think ‘this looks great, I’d love to do that. Let’s do that.’ Well, you’ve not put your customer into this conversation whatsoever. And you don’t necessarily know whether this is going to add business value. So why do you run with it? All too often it feels like the safe thing to do is to just follow what everyone else is doing.
“But you haven’t tested whether it’s going to add value to your customer and value to businesses, or if it’s even aligned to your business purpose. If you don’t tick those three boxes within innovation, you should never do it,” said Mr. Smith.
We run things because we feel like that’s the safe place. However, it’s not.
“The safe place is focusing on having a team of brilliant people who can assess those three things.
“Business value – is this going to help me grow or add value to my business – it could be cost out, it could be growth up, it could be whatever does it enable customer value? Will the customer see benefit in this? Will it help them to see growth in our brand and increase brand awareness?. And then is it aligned with our purpose, with our brand story? If it’s not, then you shouldn’t do it,” he said.
Why Retailers Need to Learn Parachute Jumping
“When you’re in a plane sometimes it feels like the safest place to be is in the plane. But if that plane is crashing, or falling out of the sky, please don’t stay in the plane, parachute out of the plane. It’s better to get out of the plane safely and watch it disappear into the distance than to stay in there and hold on tight in the hope that you were right. Instinct is wonderful and helpful, especially in retail. But it isn’t everything and it isn’t objective,” said Mr. Smith.
If we are aware of this bias towards instinct, we can overcome it with process and discipline, according to Mr. Smith.
“Many of us have blinkers on that I call ‘the forcefield’. We forget that our customers don’t live and breathe our brand the way we do. They don’t know why we are doing what we are doing. All they see is the outcome. The best way to overcome the forcefield is by talking to people, especially customers, as well as your frontline team. They can give you those critical insights into what you need to do to be the brand your customers want you to be,” he said.
