On retailers borrowing someone else's strategy.
Originally published in two parts in February 2019. Combined here, with the original examples.
Do you ever get mistaken for somebody who is not you? It used to happen to me a lot. One day, when I was much younger, I was at Leeds railway station in England waiting for a connection. A very attractive Spanish lady kept looking at me. Normally I would have been flattered, but these looks were not endearing. If looks could kill, I would not be writing this now. After a while she came up and gave me what they call in the north-east of England a "gobful". I understand only a few words of Spanish, but I got the drift, and the drift was how dare I not speak to her after all we had been through together. I replied, in English, that I was sorry but could not speak her language. Her face went from red and fiery to white and deathly. She had clearly mistaken me for somebody she knew well. She apologised and went back to her place on the platform, occasionally giving me a double take as if she still could not believe it.
Retail innovation often gets mistaken for things it is not. It is not new technology, new store design or cost cutting, unless it follows the golden rule: it solves a customer problem, does something positive for the business, and aligns with your purpose. The shock of recognition when a retailer realises that what they thought was innovation was only something that looked like it is just as bad for them as it was for that lady on the platform. Why are there so many cases of mistaken identity, and how can we guard against them?
The NRF Big Show is a wonderful place to see the best retail technology in the world, and it is impressive. Imagine you have just come back having seen some digital technology that is going to transform how you communicate with customers in store while gathering data that will help you serve them better in every channel. You run a trial. The technology works beautifully, customers react well, and it aligns with your purpose of blending physical and digital. You think you have found innovation, and then you find it was mistaken identity. The trial fails, because the resources needed to keep developing content, analysing results and running new campaigns after the trial are not available internally and cost prohibitive externally. This should have been known before the trial started, but too much time was spent on the amazing technology and not enough on what outcomes it could deliver for the business.
Trials that work technically but never roll out plague our industry. I know of one company in Australia that deployed more than fifty trials of a very impressive technology without a single full-chain rollout. That is a tremendous waste of resource and opportunity for the technology company and the retailer alike. The most common cause is that trials are sold on the features of the technology rather than the benefits to the business. When business issues arise mid-trial, it looks like bad management not to have considered them earlier, and unsuccessful trials become too embarrassing to revisit.
Technology can be a marvellous facilitator of innovation. At Walmart, RFID delivered better in-stock for customers and lower inventory cost for the business, which in turn supported a purpose of low prices. At McDonald's, free Wi-Fi gave customers an extra reason to visit, increased dwell time, opened a new communication channel, and fitted a purpose of being the customer's favourite place to eat and drink. The internet itself may be the greatest change retail has ever seen. With smartphones, IoT, AI and far better ways to manage data, we may be living in the most exciting era ever for retail technology. But technology is still just a facilitator. It is not innovation in itself. Apply the golden rule up front, does it solve a customer problem, do something for the business, and align with purpose, and many more trials will succeed.
Being involved in the design of a new store is one of the most exciting things you can do as a retailer. Usually the design agency presents a view of macro trends, how they affect consumer behaviour, and how they relate to your brand personality and customer journey. Eventually a design is presented that looks so good (they never look bad) that it could easily be mistaken for innovation. It ticks every box from the research. It has greenery, because your customers are environmentally conscious and feel more comfortable among plants. It has places to sit, so customers happily spend more time. It has screens, kiosks and perhaps Wi-Fi, because contemporary customers value blending physical and digital.
You roll out the first stores and they look great. Unfortunately the impact on sales is not what you expected, and when you walk the shopping centre you see a lot of other new stores that look very much like yours. The design did not work because too much time went into making the store look good and not enough into solving the core customer problems: long waits, complicated payment, poor omnichannel integration. The store looks so good that the fact it is still hard to do business with you irritates customers more than before.
When a design follows the golden rule, it does not need to change much from year to year. Apple is the obvious example. I have pictures of my first visit to an Apple store from more than a decade ago, and while some things have changed, the look and feel is still recognisable. The design has survived because it facilitates ongoing innovation: a better environment than other stores, a more effective way to convey Apple's propositions, and a continuing fulfilment of the original purpose for building its own retail channel, which was to educate and serve.
Cost cutting is also portrayed as innovation, but this impersonator is easier to pick. Its disguise consists of a joke-shop moustache, glasses and a funny accent. You would have to be fairly naive to mistake it for the real thing. Management know this, and tend to dress cost programs in futuristic names or a date about five years away. When cynicism sets in, they are relaunched with another name or another date. Cost cutting is good and sometimes necessary, but it should not be confused with innovation.
With a trained eye it is not hard. Real retail innovation follows the golden rule, and when it is real you can see the results in the customer count and in the till. When it is not, you make excuses: we are in the wrong part of the centre, everybody is down, the government is killing our business. Technology, design and cost cutting can all facilitate innovation. Unless they follow the golden rule, they are not the real thing.
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