HARRY WAS RIGHT ALL ALONG
PART ONE: GREAT EXPECTATIONS
People often ask; what is the biggest disruptor in retail? But this, of course, is the wrong question because what they should be asking is not what but who is the biggest disruptor in retail? And the answer to that question is you, me – all of us. Because as consumers, our expectations are growing exponentially at a rate which is far outstripping retailers’ ability to keep pace.
Our demands and expectations are almost out of control, the last great experience simply raising the bar ever higher and this is driving a tsunami of change throughout retail which shows no sign of abating. The implications for every retail business are profound and must be faced up to in order to survive. At the time of writing, many retail businesses are under severe pressure to survive, Debenhams is the latest to agree a company voluntary agreement (CVA) in order to close stores and reduce the rent burden on the remainder. This is now practically becoming accepted practice and nothing out of the ordinary. The same appears to be true of Arcadia whose flagship Topshop brand has been struggling to keep the rest of the ship afloat for some time now.
And why mention these two especially when there are many others which could have been included? Because they both have two things in common: they are both suffering from a lack of investment in eCommerce years ago and, partly as a consequence, both have lost their relevance. And it is relevance that trumps discounting every time. We have been educated to expect certain characteristics when shopping online. Amazons one-click online experience being a case in point. That has set the bar for ease and convenience of the online experience and so, quite justifiably, we expect the same from any of our online shopping experiences. The same goes for delivery which is rapidly moving towards same day being the norm. And this is perhaps the new battleground for retailers. I predict that final mile delivery capabilities will come to define a retail brand. In this era of great expectations, we will soon be expecting anytime, anywhere delivery not just same day but within the hour in many cases.
Matchesfashion.com are a case in point. If you live in central London and order online, they proudly boast that you will be wearing the garment within ninety minutes. How long before that becomes ‘within the hour’? Where does it all end? Artificial Intelligence (AI) is learning all the time and therefore learning all the time about us, our habits, our preferences. Scary, intrusive – maybe, but ultimately this will drive an era of hyper-personalisation where retailers and brands will be able to predict what we want or need before we even realise it ourselves. Ironically, the only barrier to this will be the same disruptor which is driving it: us. GDPR has shone a spotlight on personal data and the need to keep private what needs to be kept private. It will be fascinating to watch over the coming years how this develops as our initial fears of being ‘slaves to the algorithm’ dissipate in the face of ever more convenience.
Frictionless and seamless are terms both used (too often in my opinion) to describe the ideal shopping experience. And, of course for commodity items both would apply if they are interpreted to mean ease, speed and convenience. This goes for both the online and the physical shopping journeys. And in the case of the latter, I don’t subscribe to the notion that self-service checkouts in supermarkets improve customer experience. For those of a certain age (such as myself) I can still remember my very first job as a petrol pump forecourt attendant. Yes, my job was to fill customers cars with fuel. They would have recoiled in horror if I’d said, ‘nah mate, fill it up yourself’! But the oil companies gradually educated us to expect to have to get out of our cars often in the freezing cold, get our hands on a grubby fuel hose and then have to queue behind people seemingly doing their weekly shop. Shell brought back attended service at their stations at certain times and I was struck by my reaction when a Shell forecourt attendant approached me recently offering to fill the car up for me. I was quite taken aback and eyed him with suspicion. No, I’ll do it myself thank you very much. Oh, how times change!
Soon we won’t see any attended checkouts in supermarkets, and there are those who believe that the Amazon Go model will become the norm for all supermarkets. Walk in, fill our basket and walk out. And it is to stores that we turn to explore perhaps the one area where our expectations are driving seismic changes. Harry was indeed right when he said “excite the mind and the hand will reach for the pocket”. Stores, more than ever, need to inspire, excite and intrigue us, with a new surprise around every corner. Selfridges on Oxford Street is the epitome of this but others are also realising that whilst in the future there may be less, stores, the ones which remain must be magical places to spend time. The new Primark in Birmingham, which at the time of writing is their largest in the world, is a case in point. Stretching the boundaries of the brand in ways least expected such as a barber’s, a beauty salon and restaurants. Whilst online continues to grow (some experts putting it as consuming anything up to 35% of all our spend before plateauing out) it is to the physical stores we turn to for that exciting, inspiring experience. After all, as boss of Boxpark, Roger Wade once put it; “online is like watching fireworks on TV”.
The store is dead, long live the store
Never has the High Street been more competitive, never has it been so dynamic and demanding and most importantly, never have we as consumers been more demanding of retailers. Can retailers afford to continue to innovate, deliver great
product and at rock bottom prices whilst at the same time deliver a truly memorable customer experience? And if the last is true, what one ingredient will facilitate this?
Austerity has had many varying impacts on both the economy and our spending habits, none more so than on the High Street where it has changed behaviour for good. Loyalty, if it ever existed, certainly doesn’t today – except at point of purchase - and so as we become ever more promiscuous in our shopping behaviour so too must retailers strive ever increasingly to convince us to part with our hard-earned cash. It is this mixture of intense competitiveness, highly dynamic and ever-changing landscape combined with not only a lack of any loyalty but acute consumer expectation which is creating a maelstrom for retailers, the like of which has never been witnessed before. So how can a retailer hope to differentiate themselves and create a compelling offer for the consumer?
We now take cheap, inexpensive grocery, electrical and fashion items for granted. We expect that they will be available when and where we want them; delivered to our place of choice without trouble or fuss. In short, we expect ease and convenience – much of which is of course online and many column inches are devoted to online, omni-channel, multi-channel – call it what you will. However, the fascination now is not online but the role which the bricks and mortar store estate plays in all of this. How a retailer differentiates through their physical presence will in the next few years, come to define the success of their online offering.
Imagine a world which was 100% online? No shops except for showrooms in which to view the product before buying. It simply couldn’t exist; shopping is intrinsically a social and experiential activity and this will never change. In addition, it is sensory and retailers know this – especially fashion retailers where, if you’ve ever noticed, all our senses are engaged in the buying process. But all this is to ignore the one key factor which will redefine the retail industry in the coming years – its staff.
Traditionally, retail has not been viewed as a great career option in the same way as, for instance, banking once was. With the perfect storm of fierce competition, the need for great in-store customer experience, together with the necessity to drive for better efficiency and productivity, no longer will store staff be seen as a necessary cost. They will become the front line leading the brand, able to create a memorable and great experience unlike no other. Retail will undergo a major transformation in the way that it promotes itself to young people, offering career paths like never before, showing that whether it be in retail operations, supply chain, buying, merchandising, there awaits a great career path in retail far beyond the popular zero hours filler jobs whilst waiting for something better to come along. For all those having received their A level results and considering their University options, retail should be high on the list.
Why brand loyalty is a myth
Consumer expectations take many forms. We’ve looked at online, stores and delivery but what of loyalty? Think of your shopping habits compared with 10 years ago. Are they any different today? Chances are they are. And in what way? The most striking difference will most likely be in your loyalty (or otherwise) to particular retailers or brands. Because back then, the global financial crisis was just about to hit us and smartphones were in their infancy. What we didn't realise is that these two things would revolutionise not just our shopping behaviour but our attitude to brands. Whereas before we would behave in a manner more reflecting our parents - those born in the baby boomer years (and before) - who gathered 'stuff' in a manner which bemuses current day millennials.
That global financial crisis not only dented our already fragile confidence in bankers, it fundamentally shifted our belief systems. No more were we slaves to whatever was pushed in our direction. And then the consumer finally came of age - and with that smartphone in our pockets, we had the means by which to exercise our new found consumer confidence. We flexed our muscles and exerted our influence on retail brands; long since bloated on the idea that they could simply stack their shelves and we would come calling. The financial crisis gave us the incentive, that smartphone in our pockets provided us with the tool and social media the platform by which we could finally exert pressure on retailers.
I often look at my own personal shopping behaviour to inform me and whilst I naturally see the world through my own lens (we all see the world from our own perspective) after years of observing, with quiet admiration, I recently made my first purchase from a certain fashion retailer who would like us to believe that it has a Japanese heritage. I was in need of a new winter jacket and was very satisfied to find the one I wanted. But after only two weeks of use, the zip completely gave out. £85 worth of jacket pretty much binned. Both emotionally and psychologically I was ready to commit my (albeit limited) loyalty to this brand. And yet now I feel let down, almost betrayed that this commitment has in some way been for nothing.
This is likely to be my last experience with this particular brand; the unwritten consumer - retailer trust agreement has been broken. Tolerance and patience are virtues not commonly associated with consumers these days. Our expectations demand that our relationships with brands has fundamentally shifted. Rationally, I can understand that these things happen. But emotionally, it is a different story. The relationship between consumer and retailer today is more tenuous and fragile than ever. Loyalty is a thing of the past. Today we are far less tolerant, less forgiving and certainly less patient with retailers and brands than ever before. And one thing is clear; give customers a reason to follow your brand and they'll do so willingly. Give them a reason to dislike it and they'll drop you like a ton of bricks.
Why you need a happy workforce
But our expectations aren’t just limited to price, product, online, delivery capability or the appearance of the store. There is one ingredient which we haven’t touched on yet but is one that can make or break a brand: people. Or to be more precise, a retailer’s store staff. As stores move into a new era of being, as Howard Saunders the Retail Futurist, aptly describes, becoming ‘playgrounds’, the days of simply stocking and selling ‘stuff’ are well and truly over. One thing's for sure, if your business involves human interaction, you need your greatest asset - your workforce - to be as happy as they possibly can be. Here's why. But first a tale familiar to many of us.
I approached the checkout with a degree of trepidation. OK so the self-service checkout was available but today the prospect of yet another battle of wills with a soulless automated machine was not one I relished. That could wait for another time.
For a change, what I sought on this occasion was some human interaction - a smiling face, a cheery hello - a smooth and pleasant transition from store navigation to satisfied customer. The experience was anything but.
My greeting was met with an eye contactless grunt. Request for payment was something indecipherable. A relatively enjoyable shopping experience had quickly been undermined at the last but crucial stage. This left me wondering; is this person that unhappy to be at work? I can't think of another industry which thrives on as much human contact as retail and hospitality.
Think of your last stay in a hotel. What defined the experience? The surroundings? The room? The food? I'm sure all of the above contributed however I would argue that one aspect in particular can make a good hotel great and a great hotel average: the staff. I've been fortunate to stay at some wonderful hotels; one in particular however - the Chewton Glen in the New Forest - stands out.
Consistently ranked as one of the top hotels in the world, it may not be the most expensive, but it is most certainly, for me at least, one of, if not the best. Why? Put simply - it is 100% down to the staff. They absolutely and completely define the hotel. From the Manager to the Chambermaid it is easy, relaxed, pleasant, friendly - polished. It is the stuff of dreams, as if the very fabric of the hotel has been sprinkled with fairy dust and in doing so a wonderful, magical experience is created for their guests. So, if people can make or break your brand, isn't it something worth paying a little attention to? We’ll revisit the wonderful Chewton Glen in part four.
Customers come second
"Staff first, customers second and shareholders third. In this order, everyone is kept happy. It’s our people who drive our success, so we strive to maintain a healthy and happy culture”
Sir Richard Branson
This might sound a little counter intuitive however it's the way that Virgin, under Richard Branson, treats its customers. But who would argue with the logic? If there is a direct link between employee happiness and business success wouldn't it be great if there was a way to easily and quickly, not only measure but improve employee happiness? Engaging Works, the brainchild of former Waitrose MD Lord (Mark) Price, does just this.
Working on the principle that happier employees are more engaged employees hence are more productive, provide better customer experience and in so doing become more fulfilled people both at work and at home. "All the research shows that the companies with more engaged workforces are more profitable, more productive, and more successful” states Lord (Mark) Price. I predict that employee happiness will feature ever more strongly on the radars of retailers eager to retain and grow their customer base as they realise that their people are their most valuable asset. As consumer expectations and demands continue to increase, it’s the human touch which will differentiate the great brands from the merely good.
Stores no longer simply sell stuff
I referred to Howard Saunders earlier when he talked about stores becoming ‘playgrounds’ and not simply selling ‘stuff. It’s worth exploring this a little further because it has significant implications for all physical retailers (which of course is the vast majority). Because if you think your stores are there to just sell stuff; stop reading now. If, on the other hand, you view your stores as being a little more than just a glorified warehouse, let me explain.
Because in an era when our expectations are like a freight train in danger of running out of control, ever more imaginative ways to present the store are needed. And perhaps the newest trend in retail is....not to sell anything. Well, directly that is; for it seems that in the rapid evolution of stores the idea now goes far beyond stock churn and ringing tills. Because in today's retail, the smart money eschews the idea of shifting any product up front.
For some time now, upmarket cycling brand, Rapha, have referred to their stores as 'clubhouses', places where the sweaty, lycra-clad faithful can commune and share stories with other, well, sweaty, lycra-clad enthusiasts. A place not to come and buy but to discuss the relative merits of Shimano versus Campagnolo over an espresso or two. Personally, the thought of middle-aged men squeezing their ever-burgeoning waistlines into an outfit more suited to a gymnast fills me with horror. But Rapha has tapped into this middle-aged market and rather than simply selling cycling gear, they offer their 'clubhouses' as places where fellow enthusiasts can gather together. And frankly, they do it really rather well. You see, Harry was right all along.
Just hanging out
Alternative in-store experiences are nothing new of course, it’s just that they’re getting better. Eight years ago, in their flagship Currys stores, Dixons were showing off their kitchen equipment by having trained chefs cooking up something delicious.
This is a very exciting time to be a consumer because the entire concept of the role of the store has been taken to a different level. Lululemon began yoga classes in its stores a number of years ago and this now extends to their 'Sweat with Us' events. Forget the website, forget the store even, because there's a whole brand world out there just waiting to be explored. Opened in early 2019, at the Nike ‘House of Innovation’ store on 5th Avenue in New York, they are able to produce a completely customised pair of trainers for you within the hour.
This development of the brand experience hasn't escaped the luxury end of the market either. Why? Because, according to Fashionista, the hot new trend in luxury fashion is not selling anything. From Hermes to Dolce and Gabbana, brands are creating both permanent and pop-up spaces just for us to go and hang out. Hermès, one of the most exclusive and luxurious brands, opened "Carré Club" (carré meaning "scarf") pop-ups in New York, Toronto, Singapore, Los Angeles and Milan. With free public admission, guests could get photos taken, sing karaoke (sorry, Carré-Ok), enjoy complimentary refreshments from a café and watch artists and designers at work. In London, the aforementioned Matchesfashion.com opened 5 Carlos Place, a Mayfair townhouse with a retail component that serves as a community space where all sorts of event programming takes place, as well as live streaming and podcasts for those who can't visit it in person.
Click bait's the new name in town for 2019; making your stores 'Instagram ready' is vital if you want your brand to stand out because this is where your influencers expect to come and just hang with your brand because, dude, well, just because. But it's when they start snapping and sharing, you just know what all their followers are going to do; that, my friend, is when you sell. Stores must be so much more than, well, just stores these days; as consumers we expect it.