We are living in a shake-up moment in history. One of immense opportunity for those retailers, mall owners and brands who can transform their models. Shoppers are looking to be entertained, engaged, educated and immersed. Our digitally driven customer is now retail-first and quite frankly many on our shore have been slow to respond.
Perhaps it is a resistance to change, a lack of money, a lack of leadership or a sheer lack of ability to transform how organisations work cross-functionally. Internationally we are seeing extreme retail transformation from hyper-localised retailers to data driven enthusiasts. We are seeing flagship expressions and format experimental unlike ever before. We have retailers and brands where the shopper goes, when the shopper goes.
As our changing market and shopper moves at such a relentless pace, many of us look to the traditional leaders of our industry for directions, for inspiration, for reassurance. But the shackles of large, cumbersome and YOY dividend focused business are struggling to create more engaging, entertaining, interactive and ultimately more profitable experiences.
If as retailers we need to serve the shoppers growing desire for discovery, inspiration and shareability, through their journey, then our own recognised 'retail leaders' need to up their game and need to share their thoughts, challenges, concerns and insights to ensure a vibrant NZ retail ecosystem. This means seeing them embrace diverse store formats, integrated campaigns, experimental marketing, tactical collaborations, social platforms, playful interactions, one to one relevant interactions, convenient services and innovative touchpoints.
A the recent ShopTalk18, retail behemoths such as Target, Walmart, Nordstrom and Macy's have experience tough times and have had to undertake significant company transformations to survive. The recognise that their size, history and heritage is not going to be enough to be a thriving brand of tomorrow. What I applaud is their openness in the retail fraternity to say they don't have all the answers, that they have had to change their approach and that they need to continue to constantly evolve.
Here are a few insights I gleaned from the big guys at ShopTalk18:
- The ways of the past will not win in the retail game of tomorrow.
- Agility and change will be constant - and we just have to be okay with that.
- Acquisitions and mergers may be the most appropriate way to acquire skills, capability and defensibility.
"The customer is the main character in our turnaround... She expects the human touch with the power of convenience and technology. We're not in the commodity business; we're in the experience business." - Jeff Gennette CEO and Chairman, Macy's.
Jeff Gennette recognised in his keynote presentation that despite Macy's significant heritage in the US and some impressive statistics, the business had to 'reboot' and 'significantly elevate the experience' and continues 'editing to reduce the sea of sameness' in the stores. While over half of all Americans shop at Macy's at least one time a year and 60% of the US population lives within 10 miles of a Macy's store, they could not rest on their laurels.
Gennette was quite open that the business undertook forensic mapping of the customer journey to uncover the pain pints and opportunities to integrate the digital with the physical to meet the needs of today's mobile-first shopper. This helped the business to create a North Star strategy to navigate the company back to growth shaped by four core tenant's shoppers are seeking: inspiration, fashion, value and great experiences.
Investment and innovation are key from digital initiatives, new apps, VR furniture trials and what it is calling its Growth 50th initiative, Macy's has targeted 50 stores across the country to receive additional budget for pilot technologies, new store fixtures and additional store talent. Those 50 stores will as the testing ground for future projects with what they learn from these stores will be rolled out in 2019.
"Our guests had decided for us - their expectations changed; technology was the accelerant." - Brian Cornell. CEO, Target.
Target is also investing and focused on making the 'Target run" easier than ever with bricks and mortar being key to the future. "We recognised that our guests love to shop at our stores... we also know they're looking for another choice," it is "completely done on our guests' terms." Target CEO Brian Cornell said.
Acquisitions and mergers are playing a key role for traditional retailers like Target. Cornell talked to the recent acquisition of Shipt, which offers same day grocery delivery service by their team of personal shoppers, which points to how the Target plans to make their physical locations more accessible to digital customers.
Walmart CEO Mark Lore and Andy Dunn, founder and CEO Bonobos, discussed dome of the reasoning behind Walmart's digital expansion and M&A approach. "Our M&A strategy has been to buy companies with great content, great relationships and innovation." From Bonobos, the men's fashion site; MooseJaw, an outdoor gear retail with ten stores; Shoebuy, online footwear site, Parcel, last-mile delivery startup to Allswell, an upscale mattress and bedding site created by Walmart there is a clear approach to acquiring talent which Walmart doesn't excel in and to bring in businesses with 'proprietary content... magical brands, with the ability to more people into our ecosystem.'
I think our traditional retailers need to adopt radical thinking. What was successful in the past is not going to be successful in the future. The business needs to be empowered to make change and make it fast and this will require permission by their boards and shareholders to try, fail fast, improve and move. Rather than the constant focus on year-on-year same store sales growth and the constant drive for short term returns retailers will require investment and the ability to be able to constantly change. This is our New Normal - a retail industry that embraces continuous, disruptive innovation to satisfy the changing customer expectations of the digital age.