Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.
It’s no secret that consumers are armed, promiscuous (largely) and well-informed – increasingly favouring quality of offer over the size of a brand. Being relevant, customised, mobile and quick.
In all facets of a retailer’s relationship, the experience provided to and with a customer has achieved greater priority and focus than ever before.
Scale and building networks of physical sites are now under scrutiny as “coverage “ and “ecosystem” become part of the retailers strategic vernacular – the traditional organisational model of internal silos.
Building a shop in every centre is becoming less attractive, even passé as ‘communities’ of customers are courted, encouraged to visit retail epicentres to touch, taste, smell, listen and be inspired while tuning into the brand story through all other channels.
What can we deduce in building retail growth for our clients?
- Designing emotional connection to your brand is vital and more so than ever. Whether it be by building cause, community, aspiration, scarcity, underpinned by social proofing and the voice of the advocate.
- We need an even sharper point of difference than ever before. Some would describe this positioning as the business “story”. If imitation is the greatest form of flattery, then retail has many flatterers as stories become copied and often enhanced. Consumers in such a complex and changing environment seek out new stories, more rapidly and objectively than ever before and so now, as a consequence, we see terms such as reinvention more firmly centred on the retail CEO’s agenda.
- Reinvention, innovation, change management, whatever the buzz term – simply put, the capacity and environment to take perspective and constantly reinvent the core proposition is definitely a success factor and can’t be underestimated. Look closely at the businesses that are falling and it’s simple to understand the role that this factor alone did or didn’t play.
- Strategy rules; strategy without proper robust consumer insights is like surgery with a blunt scalpel. It’s messy and nearly always will miss its mark. There is no such thing as strategy without underpinning insights – and many of us don’t want to invest in understanding, rather spend on doing. Customers are way too idiosyncratic and behaving in hugely different ways to their parents – attempting to interpret this with opinions and past behaviour patterns – leaves us with cleverly crafted opinions in some cases , but not strategy
- In more generous times, some retailers could simply get by with a largely undifferentiated offer. Copying the look was fairly common and having two or three poor seasons or ranges could be managed. Now we see that the margin for error has decreased substantially, such that one season or similar metric can be all it takes to topple over. A decrease in sales somewhere between 5-15 per cent over a period of longer than 12 months with a decrease in finished gross margin of between 2-5 per cent may be all it takes. Add to this the cyclical patterns of exchange rate fluctuations and the factors begin to aggregate.
- Globalisation and online growth (principally as a research tool) are well documented and remain constant reminders that a sharply, sustainable, differentiated offer is simply an entry ticket into retail today. Competition is simply not looking down the road anymore. The battle is won in the moment.
- A model that is just not replicable above its current size showing a lack of clear systems and frameworks, processes, needing increased executive capability in retail (far too much reliance on the owner or too much dominance by the owner) and basically running a multiple of business units as single units and not an aggregate channel.
- Just to be great at all the “Fit for Business” basics still escapes some retailers with variable customer service, out of stocks, and the like plaguing their performance.
For those caught in the quicksand that is the “middle ground,” size can matter although perhaps the reality is that a sharply differentiated, sustainable “ecosystem” story with a capacity for reinvention, supported by systematic and replicable frameworks and systems consistently delivered delivering an on story offering to known and targeted customers – is a more significant investment than looking over our shoulders.
Noticed that I haven’t mentioned Amazon once?
Brian Walker is founder and CEO of Retail Doctor Group and can be contacted on (02) 9460 2882 or [email protected].