Retail guru Steve Dennis
For many retailers it’s later than they think
There is a lot we know about what innovative companies do–and way too much to go into here. But it’s readily apparent that most traditional retailers have ignored a great deal of it and are paying the price right now.
While no one has the gift of prophecy–and most would likely agree that few could have imagined the degree and speed of disruption we are experiencing–there are plenty of things that should have been obvious years ago to anyone paying attention. Here are just a few that were being actively discussed at the retailers I worked with at least five year ago and, in some cases, over a decade ago:
- Physical retail space was being overbuilt and a consolidation needed to occur
- Customers who shopped in multiple channels were far more valuable than single channel shoppers
- Emphasizing the growth of e-commerce without tight integration with the overall brand experience would have unintended negative consequences
- Shopping influence of digital channels was critical to physical store success, and vice versa
- Data, organization and process silos needed to be busted to provide an integrated (I like to call it “harmonized”) experience
- High rates of returns and high customer acquisition costs would make most pure-play brands profit proof and unsustainable
- You can’t out-Amazon, Amazon and the middle is collapsing. The focus needs to be on remarkable, scalable, “ownable” experiences, not engaging in a race to the bottom
- More innovation and experimentation is essential to stay ahead of the curve and best manage risk
- A premium needed to be placed on deeper customer insight and on translating that insight into more personalized offerings and experiences.
I have no idea what percentage of retailers were aware and accepted these emerging truths. I do know that very few acted on them. I do know that very few retail brands have anything that looks like a robust innovation process. I do know that the notion of an R&D budget and having a senior executive responsible for driving innovation is absent at the vast majority of top retailers.
If I told you I was going to successfully run a marathon next year without doing any training you would tell me that I was crazy and wouldn’t be surprised in the least if I failed miserably. Yet apparently most Boards and CEO’s thought that somehow all this innovation would magically appear without a strategy and the resources to make it happen. Hope is not a strategy and counting on a time machine to go back and fix things doesn’t seem all that workable either. It’s easy to blame Amazon for the problems of most retailers, but that would be wrong. Most of the wounds are self-inflicted.
For quite a few retailers the bullet has already been fired, it’s just that the full impact has not been realized yet. Unfortunately they are in a dive from which they will never recover. Dead brand walking.
Others stand at the precipice, where their fate is not yet sealed, but the pressures to radically transform grow stronger by the day. The answer will not be to try to out-Amazon Amazon, to finish second in a race to the bottom. The answer lies in striving to be more intensely relevant and remarkable, to get out of the stands and into the arena, to understand that it is far more risky to hold on to the status quo than to embrace radical experimentation and transformation.
As the Chinese proverb says “the best time to plant a tree was 20 years ago. The second best time is today.”