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Retail is Broken – Here’s How to Fix It

Recently I had the pleasure of doing a series of presentations with Apple Canada on the topic of mobile-enabled customer service excellence. We discussed how retailers and others can use digitally-enabled tools and practices to enhance the customer and employee experience and create sustainable differentiation.
We explored why retailers need to evolve, and what they should consider in response. How they respond tactically will vary by retailer, but here’s some food for thought

Why Re-think Retail? Consumer Expectations are Changing

 Consumers are making their voices heard like never before. Here's what they're asking for:

  • Immediacy: Like the fictitious Veruca Salt. consumers are saying “I want it now”. One hour Amazon delivery, Uber on demand and streaming media are all responses to  - as well as drivers of - this demand for immediate gratification. And delivery expectations will only continue to accelerate. 
  • Personalization:  Consumers are saying “I want what I want.” They are expecting more personalized and customized services that cater to them as individuals. Whether it is personal stylist recommendations from StitchFix or Le Tote, custom portfolios and investment products from online financial advisors or artisanal coffee at their local cafe, consumers expect retailers and other service providers to deliver solutions that are uniquely targeted to them and their needs. 
  • Ubiquity:  Consumer are saying “I want it wherever and - however - I want it.” Although the term omni-channel is quickly becoming hackneyed from overuse, consumers do want to be able to use whatever channel they want, in the ways they want, at the time that best suits them, not the retailer. They also want to conduct transactions on their own terms, defining how they want retailers to interact with them (from full service to completely self-service) at any given time.
  • Information Control: Consumers are saying “I have all the information I need… now I want to be edu-tained.” Consumers are inundated with information. Brands and retailers no longer define themselves. Rather, they are being defined by customers who have access to peer reviews, blog posts and more information than ever before. Given the overload of information, consumers are looking for retailers to help make sense of it all… and to cut through the clutter by entertaining them and keeping them engaged. 
  • Congruence:  Customers want their retail experience to fit into the broader context of their lives, and to be seamless across channels. They want their service providers to recognize them no matter where they enter a transaction or how they choose to interact. Put simply, they are saying “I want a unified experience.” 


Implications  - What Consumers Need

 Given these changing expectations, retailers must provide customers with solutions that address their well-defined needs:

  • Context – “Understand me where I am. Fit into what I am trying to do.”
  • Empowerment – “Give me the tools to be a smarter consumer, and to lead a better life.”
  • Engagement – “Entertain me; my attention span is short and lots of people are competing for my attention and my time.” 

What to Do About It:  Retail Response

We think that the way to address these needs is to bring disruption to the retail value chain. As consumers interact with retailers, many incremental steps add value to or subtract value from the experience. Disruption is about increasing the ratio of value-adding elements throughout the path to purchase.

We propose that there are three possible strategic choices when creating disruption to drive value

  • Disrupt the product delivery value chain – Find ways to reduce the non-value-adding steps between the time a customer identifies a need and the time that the customer uses the product which addresses that need. For example, Amazon Dash allows customers to order certain products with the touch of a button as soon as they realize they need them. 
  • Disrupt the customer experience value chain - Understand customers’ transactions within the context of their whole lives, and address the broader set of needs beyond any individual transaction. For example, ALDO uses “look books” at the point of purchase to help customers understand how a pair of shoes might into a complete wardrobe, or work for multiple different wearing occasions. 
  • Disrupt the retail model value chain – Challenge the notion of what it means to be a retailer. This might mean becoming a clearinghouse for consumer-to-consumer transactions and/ or expanding the definition of retail to create new means of entertainment and engagement. Domino’s Pizza Mogul program in Australia has managed to do both. 

These options provide an initial framework. Each retailer needs to tailor its response with an approach that is anchored in its own unique brand promise. Couple this with investments in the business processes and enabling technology to create strategic differentiation, and retailers will open a host of new ways to address changing customer expectations. 

Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.

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