The news is brimming with assessments that retail is dead. While the trend is away from malls and traditional storefronts, the news is not all bad. This article discusses the information and strategies businesses must adapt to evolve and survive.
According to Annabel Acton’s Forbes.com article Retail is Dead, "The glory days of retails are over." Just type in the phrase ‘sad mall’ or ‘dead mall’ to see a litany of the bittersweet hallmarks of yesteryear.…While these closures spell the end for many businesses entirely (adieu Radio Shack and its 552 stores) it presents a chance for many others to right size, and reimagine their role and purpose in a rapidly changed world.”
What’s Crippling Retail
With skyrocketing retail rents, the crippling costs associated with failing to appropriately strategize inventory optimization and supply chain strategy coupled with customers being less than satisfied by insufficient in-stock inventory, if you’re not Walmart, what’s a business owner to do? The New York Times, asking Is American Retail at a Historic Tipping Point?, makes this argument, “E-commerce players, led by the industry giant Amazon, have made it so easy and fast for people to shop online that traditional retailers, shackled by fading real estate and a culture of selling in stores, are struggling to compete. This shift has been building gradually for years. But economists, retail workers and real estate investors say it appears that it has sped up in recent months.”
Not Dead, but in Need of Transfusion
Retail is neither over nor dead. However, it is incumbent upon businesses intending to survive to creatively reinterpret their roles and their relationships to today’s and tomorrow’s customers, from brand strategy to transactions, and at every step in-between. It’s about value proposition and about brand.
What is a value proposition? Put plainly, your value proposition is your differentiator. It is a clear statement of what your business delivers to improve a customer’s situation, solve their problem, or deliver a specific outcome, better, at better value, or in less time than anyone else. Former entrepreneur turned venture capitalist and author Michael Skok says, “a value proposition is a positioning statement that explains what benefit you provide for who and how you do it uniquely well.”
It’s not enough to complete on price alone. Some of the most enduringly successful retailers, think Nordstroms, understand both their brand and its value proposition. Nordstrom’s is not interested in winning the race to the lowest price, although that is a competing strategy. Since 1901, they’ve actively delivered “the very best service, selection, quality and value.” Having been around for more than a century, they’ve mastered their place in the retail pantheon, consistently delivering on that sole expectation. They appeal to the consumer set generally having more money than time, whereas those willing to shop for a bargain generally have more time and less money. Each approach has value and the opportunity to be successful. Again, the key is constructing and leveraging your relationship with your market.
Let’s begin by talking about brand. While branding is its own discussion, for our purposes, a business’s principle obligation to its brand is to know what it is. HubSpot, a leading inbound marketing company, understands and teaches the value of brand. They describe brand as “one of the most valuable assets of a business…the representation of your company’s reputation through the conveyance of attributes, values, purpose, strengths, and passions.” Amazon’s Jeff Bezos further makes the case, saying “Branding is what people say about you when you’re not in the room.”
Once businesses clearly define who they are, that informs every position they take in the relationship with the people they currently do business with, customers they are pursuing, and those they will acquire going forward. Is Retail Dead? Not if you do it right.
Another lesson from Annabel Acton’s assessment of retailing as presented in “Retail is Dead,” retailers expecting to evolve during this dramatic shift in the marketplace and navigate forward with promise must allow consumers to not only “experience their brand” but also “be inspired by their vision.” This makes it critical for businesses to not only understand who they are as brands and to whom they appeal, but to learn and habitually live everything about how to say, sell, and deliver inventory/services/experiences.
From Who Are We to How Do We Make You Feel?
The growth of Emotional Marketing supports retails challenge to remain relevant. For retailers to survive, and ultimately thrive in this new marketplace, it is no longer enough to have what people need when they need it. The chief differentiator is the capacity to create successful long-term relationships with consumers. We’re talking about engagements that make them feel better about themselves, even those customers who are currently only aspirational, taking your brand from message and product status to lifestyle companion. Companions are not things. Things are what shoppers buy. Acquiring “Lifestyle Companions” fundamentally changes the way consumers feel about themselves.
So, who’s getting it right? Take Nike for example. Google them, and you not only get their site, but the message “Inspiration and Innovation for Every Athlete in the World.” They know their brand and their value proposition, and if you don’t feel inspired that they’re speaking directly to you, even if the most athletic thing you’ve done recently is multi-task the remote, then you may not have a pulse.
Nike masters the art of emotional marketing. By making every single person who encounters their brand a hero, no matter where you are in your health and fitness journey, we all have a common enemy, indolence. Given the choice, which side would you choose?
We Want to Become Part of Your DNA
So, how do successful brands and those seeking longevity secure their positions? Consider these steps as you assess your market, your competition, and how to build a business designed to last.
Who are My Customers?
Everybody talks about it, but do you know your market? Have you spent time considering your customer archetypes? When crafting messages, when locating your enterprise, be it brick and mortar, eCommerce or some hybrid, do those people and their networks know who you are and where to find you? Can they articulate why they need you? Think more about the experience and the ongoing relationship and less about the transaction. I heard a long-time entrepreneur explain his relationship with his customers in this way, “we’re in this together.”
We’re in This Together
What kind of relationship are you pitching? Is yours a “one and done” experience or will this engagement last a lifetime? When customers are making buying decisions for the longer term, when your product is something other than widgets, a purely a commodity, consider this-someone else will always be cheaper. Studies show that consumers believe that the cheapest product is often just cheap. People are willing to pay more for quality, even if they perceive that they’re receiving it at a discount, if the acquisition makes them feel good about themselves. Remember, brands with a long-term view see themselves are part of their customer’s DNA. Loyal customers feel the same way.
Listen to Your Loyalist. Make Them Evangelists.
You can say whatever you want about your brand and your value proposition. People might believe you. Some will not. Consumers in the digital age are far more informed than pre-digital shoppers whose primary decision levers were price, accessibility, and time to acquisition. Today’s consumers are more likely to purchase based upon social proofs, or the concept that people conform to the actions of others AND that those actions reflect the best behaviors or outcomes. It’s the evolution of our natural human ability to look where others are looking, and to be attracted to what appears attractive. Ever find yourself standing in line to get into a restaurant or nightclub? Ever look up because you encounter a crowd and that’s what everyone else is doing?
For Retail, What’s Next?
The shift in consumer behavior to online first places traditional brick and mortar only business in jeopardy. While some services will only ever be able to be delivered offline, most models are changing. Additionally, eCommerce business are coming offline, either with retail boutiques, pop-up locations, or so called in-store experiences. It’s becoming the era of omnichannel, and omnichannel, meaning retail that integrates a variety of methods available to consumers, is evolving as quickly as consumers themselves.
Only retailers willing to adapt, listen to, and learn from the people they serve and desire to serve will get it right, by becoming customer-led. Evolving into a customer-led organization absolutely means knowing your customer base by building your brand and then living by your value proposition. Mastering those skills is essential to your business survival.