Who are retail’s biggest disruptors?
The NRF Foundation has released a "List of People Shaping Retail’s Future" ahead of its inaugural gala this weekend in New York. The list of 25 individuals is broken out into five groups: disruptors, givers, influencers, dreamers and power players. Among the most interesting are the disruptors, described by the NRF Foundation as "people who make you rethink what you thought you knew about retail, opening you up to new possibilities for your customers, your business and your world."
Two of the people included on the list, Adam Brotman, chief digital officer at Starbucks, and Jeffrey Sears, co-founder and CEO of the home improvement retailer PIRCH, show that company size is not necessarily a predictor of an organization’s ability to innovate.
Mr. Brotman, according to the NRF Foundation, is changing how Starbucks’ customers interact with the company through the development and deployment of apps and other innovations. The report points to the Starbucks card, mobile payments, e-commerce and other advancements under Mr. Brotman that have established the coffee company "as a leader in the technology space."
Starbucks’ mobile payment app is often cited as a success under Mr. Brotman. Last year, about 15 percent of the chain’s total transactions were made by customers using the app, up from 10 percent in 2013. This year, the chain plans a nationwide rollout of its "Mobile Order and Pay" service.
While perhaps not as well known in retailing circles, the case for Mr. Sears as a disruptor can be easily made. According to NRF, shoppers visiting a PIRCH location "quickly realize that they are not in a typical home improvement store."
The San Diego-based luxury appliance retailer is known for creating showrooms where customers are encouraged to try out products before buying them. Today, PIRCH has seven stores with locations in Atlanta, Chicago, Dallas, San Diego and other towns in California. The company plans to open a new location in New Jersey this spring.
Discussion Questions
Who do you see as today’s most impressive retail disruptors? Is being a disruptor more or less important to achieving success in retailing today than in the past? What qualities make a person a retail disruptor?
There’s no inherent value in disruption for the sake of disruption. And innovation is not necessarily tied to disruption—you can innovate in an evolutionary manner as well as in a revolutionary manner. We also shouldn’t confuse disruption with differentiation. PIRCH is really different, but it is hardly disruptive.
I’m biased. I think what Greg Buzek is doing and trying to do in the area of giving is groundbreaking. Not only has he already raised a boatload of money for Honduras, Liberia and other places I can’t remember, but he’s got big plans going forward too. Until now, mostly it has been tech vendors supporting RetailROI. We’re really hoping to see retailers step up too.
I believe the arts committee is now working on a POS “giving” standard. That would be great.
And so, a brief commercial: If you’re going to the NRF big show and will be in NY, stop by RetailROI’s SuperSaturday event. It promises to be a barn burner.
The five most significant disruptive retail influences for fiscal year 2015 are and will remain:
That should just about cover it.
Sorry to go a bit off topic, but I was very happy to see that the NRF’s list has a category for givers and even more heartened by the fact they included my friend Greg Buzek, who co-founded the Retail Orphans Initiative with another buddy, Marc Millstein. These two have raised nearly $2 million to help provide support for foster care, orphanages and rescuing children from human trafficking.
Jeff Bezos and Jack Ma. Jeff was voted as the best performing CEO in the world by Harvard Business Review. Jack Ma has led the emergence of Alibaba which was the largest IPO ever, EVER, in 9/14.
With video becoming the predominant method of communication in virtually every aspect of our lives, I like to watch people who drive visual retail innovation. Most formats of physical stores appear very similar to the way they looked decades ago. I am looking for people who re-imagine the ways stores can look and feel, or looking at new visuals for online shopping experiences. These people have to be comfortable with starting from scratch and building a store environment that today’s shopper demands. If that disruptor can get the support of their retail organization to try these new ideas, then that retailer tends to get more attention in the marketplace.
According to the definition, “a disruptive (innovation) is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology.” An example would be Henry Ford. Before his production innovation, cars were available but affordable only by the very rich. With assembly line savings, he could make cars available to every working person. Is McCafe disruptive because it introduces coffee drinks to customers not already drinking coffee? Is Trader Joe’s disruptive because it is introducing shoppers to new foods and menus? Maybe.
Schultz would be my pick, he hired Brotman. Starbucks is one of the very few companies with scale that absolutely gets where the customer is going. Bonobos? Warby? A lot of people can be disruptive when you’re small, but to do things like the new “Roaster” stores, the “localized remodel” of over 17,000 units, home delivery and yeah, that fab app and still keep a very high brand perception rolling? That’s almost impossible to do. Kudos to them for staying on top, which to me, comes from the top.
Let’s look for a moment at what these retailers have done that we are calling disruptive. Both of these examples have made interaction with the product/service an integral part of the journey.
Another example of this is Hointers. You walk into a store and the product is what greets you. You get to experience it, touch it, inspect it, you are told about its features, then you use an app to place it in the dressing room.
As an advocate of experience and service design practices, this is where retailers need to be heading if they aren’t already. Pull out the old journey mapping tool kit and let’s modify it to place the product in every part of the journey. At every possible exit point or touch point along the path, ask the question, “What can the product/service do here to keep the customer moving to the desired end point?” and, Voila! Disruption!
There you have my 2 cents!
Disruption is not needed to achieve retail success, but rather differentiation. Disruption comes about through innovation and someone changing the model in a way that’s never been done. If I was going to look at some retail disruptors, I think Dollar Shave Club and Birchbox fit in that category.
Maytag had some dedicated stores, at least for awhile. I wrote about it in 2005.
Some of the old line appliance and mattress stores in semi rural areas (they grew out of hardware stores I think) have done this. E.g., when I did a commercial district revitalization study in Brunswick GA in 2007, H&H Lifestyle store did this, and I was really struck by its novelty.
That being said, given the cost of some of these appliances, or the difficulty in figuring out how to use them (e.g., I’d happily take a class on how to better use my Kitchen Aid artisan mixer), the PIRCH concept is a good one, and from the “experience economy” standpoint, it’s a winner.
Amazon Dash is disruption vs. evolutionary described here—but to be fair, it’s much harder to disrupt in the physical world, and the NRF does have a show that caters to virtual retailers.
The qualities that make a person a retail disruptor is to not think in terms of channel but in terms of the customer and beyond thinking to develop new DNA to learn, prototype and adjust.
As an industry we’ve been called a fast follower industry, but culture/DNA is evolutionary, takes time, and is the ticking time bomb. It might be 1913 for the merchant prince and the princess.
Congratulations Greg and Mark!
One hates to start the year off with a gripe, but…What exactly is “disruptive” about Starbucks’ mobile pay system? Starbucks’ business model is to sell high priced coffee on (seemingly) three of every four street corners in America, and whether people pay with their phones, their credit cards or loose coins they found on the way to the store, I don’t see how that model is being changed. Now if they want to license the payment system to others, then fine, they’ve become a bank (or at least a banking processor)…but minor—to me at least—changes in method-of-payment barely move the excitement meter.
Indeed (as his griping continues) while I think it’s swell to applaud people who innovate, labeling it “disruptive” reinforces the false notion that retail has been some stable, unmoving world…hardly the case.
Rant over: A happy 2015 to everyone!
What I’m seeing is specific categories being disrupted, one by one. Warby Parker is doing it with glasses and Harry’s and Dollar Shave Club with shaving. This kind of disruption affects both the packaged good company (e.g. Gillette) and the retailer.
One individual that I would call out is Jane Park at Julep. She is doing at least 3 things that are remarkable: 1. Building a packaged good subscription business that works. 2. Turning her customer base into a true fan base. 3. Involving the fan base in product design (what B-school academics refer to as “co-creation”).
I have a hard time seeing that Starbucks is disruptive with their app. 15% of purchases were made through it? Nice. But did that increase business? Lower cost? Increase ticket size? Those are the things that matter.
Otherwise (and my guess) all it means is there’s a new approach to payment and Starbucks is using it.
My own prejudice in this? I have paid with mobile at Starbucks for years. And that’s all it is for me—a payment method. None of the wu-wu brand engagement stuff that gets claimed for their app has any meaning for me.
Am I alone? No. Am I reflective of a majority? Possibly. Are there some people who get intensively engaged through the app/mobile payment? Yes. But based on other experience, that’s a very narrow enthusiast base.
Well, the thing with Dollar Shave Club and Starbucks mobile wallet is that younger segments of the market seem to want to consume and buy products differently from what we might call legacy customer segments.
Me, I can use a Gillette shaving cartridge for 6 weeks to 2 months so to me the Dollar Shave Club thing is all hype and a waste of time. Gillette cartridges aren’t expensive if you only need a few/year.
So DSC to me is a solution that doesn’t have a problem to solve. But for younger people who seem to think maybe that using Gillette shavers is somehow hard, DSC is a great idea.
Similarly, I think about Rapp and Collins’ “Maximarketing” from the mid-1980s, which discusses very well the point that “it” is all about channels, and maximizing your reach into every channel there is.
A lot of the Internet stuff is hype (and valuations). It’s just a different channel and delivery system. but not necessarily particularly unique. E.g., how is Living Social or Groupon any different, really, from Entertainment Passbook? And most online commerce is like a direct mail catalog (although with reviews, wishlists, and mobile apps, it becomes different from printed catalogs, more interactive definitely).
But at the most basic level, the web is a way to reach people more quickly, in a different manner, than a coupon book that you have to buy at a store.
Is the difference so significant (cf. _Maximarketing_) that it’s worth billions of dollars? Probably not. At least with Living Social or Groupon.
But anyway, with the Starbucks payment method, for people who want to do as much as possible of their life via their phones, it’s a big deal and helps to make Starbucks the #1 top of mind retailer in that category for that segment.
Disruption-innovation, tomatoe, tamahtoe, both need to be watched, and we need to remember that one segment’s disruption is another’s innovation.
Mobile payment being considered as “disruptor” in 2015 is interesting. I would have thought this would be a necessary evolution.
I would really love to see these innovative retailers tackle back-end issues with disconnected databases and supply-chain visibility and address many others issues that have been holding retail back for decades.