Eleven Things Retailers Just Said About The Future Of The Store
An Ikea AB store sits beyond agricultural fields where the Europacity shopping and leisure complex, developed by Auchan Holding SA and Dalian Wanda Group Co., is planned in Gonesse, France, on Friday, May 12, 2017. Gonesse is the future home, local officials hope, of EuropaCity, a 3.1-billion euro ($3.4 billion) shopping and leisure complex being developed by grocery giant Auchan and Chinese billionaire Wang Jianlin’s Dalian Wanda. Photographer: Christophe Morin/Bloomberg
Last week I attended the Future Store event in Seattle. I had the privilege of attending the very first one, in a small conference room in Dallas, and it was very gratifying to see it occupying a ball room and some breakout rooms this year.
Influencers in the industry, including myself, have a lot to say about the future of the store. So I thought you might be interested to hear what retailers themselves have to say. Here are the top takeaways from the event.
(Note: quotes are approximate. I was more focused on capturing the intent than word-for-word. Any misquoting was not intentional.)
1. Customer experience is not an initiative. It’s a mindset change. – Ruth Crowley, VP Customer Experience Design, Lowe’s
What customers expect is constantly evolving, so to say that you can meet their expectations with “a project” is laughable. Lots of retailers talk the talk of putting the customer at the center of the enterprise, but then have marketing report in to merchandising, or underfund customer data initiatives in favor of more investments in supply chain.
What Crowley did not say, that I will add, is that this mindset change has to start from the top. And it has to come with some real self-examination, because a lot of times, what gets in the way of a good customer experience is the company’s own policies or systems. “I can’t help you because the system won’t let me” is not putting the customer at the center. Retail executives need to empower their employees to do right by customers, so that they can overcome the internal barriers that already exist while retailers struggle to tear those barriers down.
2. “Omnichannel” as a term is dead. – Many, many speakers.
I can’t attribute this quote to any one retailer, but there seemed to be general agreement among attendees that the term “omnichannel” is dead.
I have mixed feelings about this, myself. I get that while “omnichannel” promises a way of engaging with the consumer, the reality of that engagement can be ugly behind the scenes. And that it’s important to distinguish between the ugly reality of how omnichannel may be delivered today vs. the seamless, unified experience that everyone wants and which should be on retailers’ roadmaps for the near future.
But I also get that it’s hard enough to get a lot of organizations to accept and embrace the need to be omnichannel – and all that this entails to deliver on omnichannel promises behind the scenes. I sometimes encounter a sense of weariness when this topic comes up: “Really? We’re moving on from omnichannel now? Already?” Trying to kill the name can sometimes hurt the cause more than it helps it.
So it was interesting to see so many people agree that the term “omnichannel” should be killed. The most common reason given was that consumers don’t really know the term or care about it – “They don’t care if a retailer is omnichannel or not. They just want to engage with the retailer how they want to engage.” While that may be true, and while retailers should be customer-centric in how they approach their strategies, that doesn’t mean they can’t call all of the activities they’re doing to meet customer expectations a term that consumers don’t really use. Consumers don’t really care about retailers’ supply chains either, but I don’t see people trying to kill that term.
In the end, I don’t think it really matters what we call it. We have to promise customers frictionless engagement on their terms, and we have to deliver on that promise. If you want to call that seamless commerce or unified commerce or purple unicorn tears, consumers aren’t going to care. They’ll only care if you mean it, or if you miss it.
3. Everyone understands that there is no such thing as a 100% hit rate for products. So why do we expect a 100% hit rate for IT projects? – Courtney Graybill, VP Customer Experience & Product Management, David’s Bridal
I loved this analogy, and it’s one that I think retailers really need to take to heart. I’ve long held a theory about retailers, which I call my theory of competitive transparency. Retailers in general are pretty uncommunicative about their strategies, which is why I never envy the people who put on a conference like Future Store because it is notoriously difficult to get retailers to speak, and to get them to say anything of importance even when they do.
I find this unwillingness highly ironic, because you can pretty much shop a retailer’s store and digital properties and get a sense for what their strategy is, or at least how well they’re executing, even if you don’t know for sure what they’ve set out to promise consumers (something can always get lost between what was intended vs. what was actually brought to market). But the more a company’s strategy is on public display, the less willing they seem to want to talk about it. And retail is pretty much an extreme example of that.
With that kind of pressure, retailers have historically expected perfection, especially in a store context. It’s expensive to change stores, so you can’t do it all the time, and when you do make a change, you better get it right the first time so you don’t have to go back and do it again – which is more expense piled on top.
But, as Graybill points out, that expectation may no longer be realistic. Especially if retailers want to get faster to meet the speed of consumer expectations. If you’re seeking perfection, that’s a race you’ll never win.
4. Consumer apps don’t have a roadmap. Facebook doesn’t notify us all that a big change is coming, it’s just there. And that’s clearly not how we manage our stores, or how we deliver customer or employee experiences. – Marc Jamieson, Director, Store, Experience, Design, and Marketing, TELUS Communications
Along the same theme as Graybill at David’s Bridal, Marc Jamieson of TELUS expressed concern about retailers’ ability to keep up with consumer expectations. He’s right to compare consumer demands to what they have come to expect from a company like Facebook. Big consumer tech companies rarely get it right the first time, but they have built an expectation that they will be constantly evolving, and that the evolution will be consumer-friendly enough that no published roadmap or setting of expectations will be needed. People will see what’s new, and they’ll use it.
Sometimes new things work out great and are immediately adopted, and sometimes there is an enormous amount of pushback. If retailers can approach tech innovations from the perspective of “live and learn”, then they’ll have far more opportunities to evolve their customer experience than if they try for perfection the first time. But you have to design for consumer-friendly use, whether it’s consumers using the app or employees – and that, too, is a significant shift for retailers.
5. The store is moving closer and closer to technology. You can’t be effective on the business side if you don’t understand technology. – Srinivasan Rajamanickam, Senior Director, Technology, Strategy, and Innovation, Tapestry
Rajamanickam of Tapestry did a thing that no one else did at the event: he showed a technology diagram of the business, and it even had the words “API Gateway” on it.
More power to him. While the pendulum must swing, we have come from a place where IT had too much control to a place now where IT does not have enough. Another retailer, whom I will not name in the quote, said that they were implementing a council across business groups and IT in order to coordinate and prioritize IT investments across the business – and she said it like it was something revolutionary. In the meantime, I’m thinking to myself, “Isn’t this IT Governance 101? How has it gotten this bad?”
Retailers need to become digital businesses. Sometimes that statement gets interpreted to mean “Oh, you mean we have to become like Amazon”. No, not true. But you can’t be a successful retailer today of any size without technology, and the knowledge of how technology works and can potentially be used to enable the business can no longer live exclusively within the IT department of the retailer. Business users need to understand not just how what they have works, but how technology works in general. That can be a let down for someone who wanted to get into retail in order to buy beautiful things or just help customers, but that’s where we’re at as an industry. And cheers to Srini for standing up at a business conference and saying it.
6. You have to put new technology in stores. That’s just the reality. – Cedric Clark, VP, Operations, Sam’s Club
Along with Tapestry, Sam’s Club’s representative at the conference talked about the importance of technology as a business enabler. But the way he went about proving it was beautiful, with before and after videos of process (and technology) improvements at the warehouse stores’ checkout stands. I’m a business process engineer at heart, and I ate up both the problem identification as well as the way the team went about driving improvements.
But he opened his presentation with the statement above, and I thought that was important too, because there is so much opportunity in retail today that is held up by not just cost – capital cost, or finding the ROI. There is a lot held up by retailers who won’t make new investments until they have exhaustively depreciated the old, and this is a critical barrier to stores.
However, you don’t have to just throw tech in stores for tech’s sake. Watch customers shop, watch how employees engage with customers (or don’t), identify the friction in the process, and test and learn to figure out the best way to remove the friction. Sometimes that’s not reinventing the wheel, sometimes it’s simply changing a staffing model or a policy about how work is divided up. But if it does require a change in technology, the question rapidly becomes, are you going to do right by your customers or not?
7. Let your store associates be active on social. “Friendorsers” are more important than paid models in showing our clothes – social influencers, but also our store associates, who are 100% our customers too. – Emily Watkins, SVP, Real Estate & Construction, Charlotte Russe
A couple of weeks ago on RetailWire, there was a discussion about Macy’s program to reward employees for social influence that results in sales – basically, an affiliate model. I was surprised to see many of the BrainTrust (the regular panelists) pan the idea, saying that consumers don’t trust store associates, they want to hear from friends and family.
But what if one of your friends happens to be a store associate? Many retailers will tell you that their employees started out as customers – and not just “meh” customers, but enthusiastic brand ambassadors. That’s half of what made them an attractive hire in the first place.
So I was glad to see Watkins endorse letting store associates exercise their love for the brand beyond the store. When she said it, there was a definite stirring of unease in the room, though when the audience was asked if they let their store associates use social media for the brand, more people raised their hands that they already did that than I expected.
It comes down to a very basic question: if you trust people enough to put them in a store filled with thousands of dollars of merchandise, and talk to consumers one on one, then why is it you can’t trust them online? And if you still feel strongly that “it’s different” or that they just can’t be trusted with good judgment online, then why did you hire them in the first place?
8. We are in the Uncanny Valley moment of retail: the technology has progressed to where it feels like it’s interfering with the customer experience. But it will evolve beyond that, to where the technology can soon step back, and let the customer experience shine. – Brian Gill, SVP Technology, Nordstrom
The Uncanny Valley is a concept that is very well-understood in the robotics world. Basically, there is a curve that looks a bit like a Gartner Hype Cycle, where as technology becomes more capable, its value to people increases, except that it gets to a point where it gets capable enough that what it does enters a territory of “creepy” – it’s lifelike, but actually not lifelike enough. That is the depth of the Uncanny Valley (and then tech rebounds back to such extreme usefulness that people don’t really think about the technology, they just have the positive experience.)
Gill applied this concept to customer experience technologies in retail, using chatbots as an example – they are helpful, as long as the conversation stays on the rails. But if you diverge at all from expected responses, then things can go off the rails very quickly, and the chatbot rapidly becomes useless and annoying. This is Uncanny Valley territory.
What’s important to note is that, if he’s right, then we can expect some more years of awful, annoying experiences (like getting into an argument with Alexa, for example), until suddenly they will get appreciably better and more valuable. Which means if you’re not learning how these technologies work today, when they do come out of the valley, you might find yourself left in the dust.
9. If we don’t change the way we think, we will lose a whole generation of consumers. – Nicholas Cooper, VP, Property & Retail Establishment, IKEA
Cooper and his team laid out a future of urban-dwelling Millennials who don’t have cars and are unwilling to drive out to, as he put it “a blue box in a potato field somewhere”. To me, what’s most remarkable about what IKEA is doing is that they are trying to disrupt themselves – they’re not really waiting for the business to show the stress of changing consumer expectations before they make a change. Certainly, everywhere that IKEA opens a store today, there are still long lines of consumers waiting to get inside. And my local IKEA is still a zoo on the weekends.
But IKEA not only recognized the demographic and behavioral shifts that will eventually leave their big blue boxes in a tenuous position, they’re working now to create the future. This too is an important lesson for retailers: don’t wait until your stores are in desperate straits to figure out how to change. It takes a long time to change stores, and if it’s not Millennials that will disrupt you, then Gen Z certainly will. You can play it safe and die, or you can stay relevant and find success.
10. Some online pureplay retailers are finding that it’s cheaper to open a brick and mortar store than to acquire new customers online. – Shilpa Shah, Cofounder and CXO, Cuyana
Wondering why so many online retailers are moving to open brick & mortar stores? This tidbit from Shah of Cuyana definitely caught my attention. Because Facebook and Google dominate for digital ad budgets, and more and more ad dollars are shifting over to digital advertising, the pressure on prices and demands for consumers’ attention will only go up. At some point, the cost of customer acquisition online will exceed the cost per customer of supporting a store location – and thus, it makes good sense to open stores.
The most interesting part of this idea, though, is that you approach stores not in terms of sales or ROI, but on cost of customer acquisition. When you frame the cost this way, it’s no wonder that non-traditional retailers are doing non-traditional things in their stores. And it’s something that I would strongly recommend to brick and mortar retailers to consider: what is the cost of customer acquisition for a store versus online?
11. It’s very challenging to justify investments in innovation without proving value to executives. But innovation has to move beyond one person’s title at the company. It has to be part of the company culture. – Srinivasan Rajamanickam, Senior Director, Technology, Strategy, and Innovation, Tapestry
This quote came from a much larger panel discussion about innovation, but this quote sums up most of what was covered. Just like with Graybill’s quote above about IT projects, retailers seem to expect that innovation is something that should have a 100% hit rate. But when you look at the people who live full time on the edge of the innovation frontier – like venture capitalists and angel investors, they don’t expect 100% hits. They might invest in ten projects expecting seven to fail, two to break even, and only one to hit it out of the park. Retailers need to approach their innovation projects with the same mentality.
Otherwise, there will be no innovation at all.
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