Research from Deloitte demonstrates that the retail industry is undergoing significant disruption — both positive and negative. Bankruptcies, store closings and financial woes have shaken the industry, yet Kasey Lobaugh, Chief Retail Innovation Officer at Deloitte reported that holiday 2016 also was the strongest retail holiday season since 2011.
“Over the holiday, we found both online and brick-and-mortar grew by roughly $12 billion,” said Lobaugh during the Retail Innovation Conference (RIC17) panel titled, Escaping The Trap Of Convention: How To Rethink Retail And Regain The Customer. “The growth rate was different: online grew 12% and stores grew 2.3%. But the growth is still there.”
These apparent contradictions have the industry wondering what’s really going on. According to the panel, the answer to the question, How should retailers rethink competition in order to regain the customer? boils down to just that: the customer.
The panelists included:
- Chau Banks, Executive Vice President, Chief Information Officer and Channel Integration, New York & Company
- Jason Morris, Vice President of Retail Technology, Walmart
- Rose Hamilton, Chief Digital Officer, The Vitamin Shoppe (former)
Omnichannel: An Evolution
The retail buzzword to end all buzzwords is: omnichannel. But no buzzword is more important than: customer.
“You can come up with any name you want, but at the end of day, it’s still all about the customer,” said Hamilton. “It doesn’t matter if you’re a small company or a big company, you really need to be able to understand the customer journey, and where customers are leaking out. More importantly, audit and understand that, and then figure out what you’re doing differently/uniquely in your experience that really makes you not a commodity. You can come up with interesting, technical terms, but at the end of the day, the data that exists to understand customers gets smarter every day. Going back to prioritizing and putting the customer first, and figuring out where to put your effort, is where the challenge is.”
It’s no longer about being omnichannel, it’s about being able to turn your customer into an omni-customer, according to Banks.
“You have to have thorough inventory visibility and be able to look at it across any selling point,” said Banks. “That’s common and a goal we’re all working towards. I don’t think we’ll ever be 100% there. For me, the struggle every day is how do we get omni-traffic to our stores and continue to build that. It’s looking at the big picture and understanding when is the best time to reach that customer with that product, and to be able to help that customer be a repeat customer. That’s what it has become for us: Making her an omni-customer. It’s not about the way we sell it, but about the way she buys it.”
The Shift In Competition
Lobaugh noted that there has been a fundamental change in the industry around the proliferation of new sources of competition.
“I use this analogy sometimes: If you’re out hunting with a friend and you see a bear, you don’t have to be faster than the bear, you have to be faster than your buddy,” Lobaugh said. In some cases, the bear is the customer, and your buddy is the competitor.”.
“This idea about competition and who we compete with is a missed component in the industry,” Lobaugh added. “The fact is that we’re shifting market share from the concentrated bigger companies to a really long tail of very small controlled competitors. The race we’re running is very different.”
The panelists agreed that competition is healthy.
“We’re a single brand product company so essentially we compete with ourselves,” said New York & Co.’s Banks. “It’s about how quickly you can evolve — not just with product, but with the destination point for the customer. We recently started selling on Amazon because that is another channel for us. But we only compete with Amazon as a product company — we’re leveraging their technology and fulfillment channel as an opportunity for us. It’s healthy.”
Walmart’s Morris also noted that when retailers compete, the customer wins because everyone gives their 110%. “We’re trying to optimize the products the people want; we try to provide them to them in a way that they see value in them — whether it’s price or personalization,” he said. “Then, it’s about getting the product to the customer. So, whoever can optimize those three pillars of retail best will win. But others will win also, because winning is not exclusive.”
The moral of the story is, focus on the customer and steer away from all these conventional wisdom words, because they won’t tell you how to win in the marketplace.
“Never bring a knife to a gun fight,” said Lobaugh. “Conventional wisdom doesn’t understand what fight you’re fighting.”