By Tony Giudici
Blending Retail is a special series on the ExcelerateBiz blog, detailing the new path to retail business success.
In part one of Blending Retail, I discussed what the new retail experience is becoming and how relevant retailers are evolving and changing. In part two, we're going to look at "transformative" or "disruptive" companies like Amazon, Apple, and Microsoft, and how these well-known juggernauts are also heading deeper into the traditional retail environment. Think about the Amazon acquisition of Whole Foods as one example and retail stores of Apple and Microsoft as two more. They are pushing toward retail and not running away from it because retail as an industry continues to grow. The path has changed and continues to morph, but retail is here to stay even with the ever-expanding digital space.
It's All About Reinvention
Now, this doesn't make it any easier for yesterday's successful companies to transform. Every retailer should know that their future depends on whether they can reinvent themselves. Reinvention is the key. New companies with new ideas have a much easier time since they don't have to change the meaning of their brand in the mind of the customer. However, they do have to create and build a brand identity, which has its own challenges.
Take the aforementioned example of Amazon now owning Whole Foods. This alone demonstrates how the grocery business and industry is now changing and how things will become much easier and significantly different. Technology will now be primarily used to improve the experience and WOW the customer. Traditional grocers, who once led with self-checkout counters, are now falling behind. Newer and smaller grocers like Trader Joe's and Sprouts let customers check-out with their smartphones and customers never have to touch the keypad. So on one end, challenges come from Amazon Whole Foods, but they also come from the newer and smaller competitors like Trader Joe's using new technology and offering new ways of doing business. This means traditional grocery stores are under pressure to adapt or die.
But remember, traditional retail has been going through this same kind of transformation and reinvention forever. Think of how Blockbuster grew from videotapes to DVDs, but eventually failed as technology moved to getting movies online. So sometimes companies can adapt and continue to grow, and other times they try and just can't. While the retail industry continues to evolve and is not going away, every retailer should know that their future depends on whether they can reinvent themselves. Reinvention is the key.
Retail Openings and Startups Balance High-profile Closings
Retail closings and bankruptcies made headlines throughout 2017, creating an impression of desperation. But! All is not as it seems, and the closings that made the news are only half of the story. 2018 will continue to see high-profile closings, bankruptcies, and empty shopping malls, but we will also see a wave of new retail openings and launches to balance them out.
The retailers experiencing growth are the ones who specialize in a certain demographic. They're the much discount-oriented and off-sale oriented, like TJ Maxx and Marshalls, who are talking about lots of store openings; as well as dollar stores. The retailers that are closing are the mall-based stores.
Closings are increasing not because people shopping less, but rather because they are growing more and more bored with cookie-cutter retailers that have little differentiation; the feel is the same wherever you go. If you go back and look at what happened twenty years ago, there was a huge buildup of retail with tons of malls constructed in suburbia and lots of strip malls in rural areas. Now, there is an over-saturation in the market given today’s demographics and where their spendable income is. The large retailers caught in the shutdowns are generally located in the less popular malls and have failed to differentiate themselves.
Big Data Delivers a Better Customer Experience
How to differentiate is a huge challenge of course. A large component that's more important than ever to a retailer's ongoing success is their customer experience. How retailers implement their customer experience is shifting from a purely person-to-person approach to something much more automated. When done right, those automation tools supplement and enhance the human approach, delivering a vastly superior and much more personal customer experience. This is the essence of blended retail.
An increasing reliance on things like analytics on the back-end and virtual reality on the customer-facing end has also been largely misunderstood, with resistance driven by a fear of technology. Customer analytics is the foundation of allowing a retailer to understand who their buyer is. The amount of data that is out there, and the retailers’ ability to really use that data, is the key to creating the right kind of marketing with the right kind of appeal to customers. Finally, retailers are getting much smarter at that.
In upcoming Blogs, I look forward to highlighting retailers who are embodying the New Blended Retail Experience by providing unique solutions and services in 2018.
Tony Giudici is a Director of Market Development for Excelerate America, a second-stage business accelerator that helps small businesses go next-level in the digital economy. If you know of a retailer that exemplifies the New Blended Retail Experience, let him know and they could be showcased in an upcoming article. Just shoot him an email at email@example.com.
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