BrainTrust Query: The Future of Retail – The Destination is You

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Oct 11, 2011
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Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Prophet Consulting blog.

Since the time of the Roman Empire, retail as a concept has been about destinations. Whether a small specialty shop, a department store or a website, retail has always meant going somewhere to get something.

This is about to radically change. Increasingly it will be the products that seek out consumers and, in the process, render consumers the destination.

As we move through our day, opportunities to make purchases will present themselves in a completely synchronous and contextual way. The “rules” about where we can find the things that we need will be challenged as “anything/anywhere” shopping becomes the expectation and, ultimately, the norm.

Here are four recent examples of how the death of the destination is playing out in retail right now.

Home Plus QR Code Shopping

Recently Tesco’s Korean grocery chain, Home Plus, installed innovative subway signage that allows busy commuters to order groceries while they wait for their train. Consumers simply scan the quick response (QR) codes of the items they want and pay for their order using their mobile device. The order is then shipped, at their convenience, to their home.

ShopBox

The 3rd Ward design incubator recently made news with its ShopBox installation in Brooklyn’s Dekalb market. The “store,” a recycled, retrofitted and completely unmanned steel shipping container, allows shoppers to browse products through storefront-like windows and then use an order-by-text system to complete a purchase. All items are then shipped directly to their home.

Facebook Timeline

Very soon you may be riding the bus to work when you get a mobile Facebook update from a friend that says they’ve just read a great book. Without giving it a great deal of thought, you click on the accompanying book title in their update and, within a few seconds, download a copy of the same book to your tablet and be well into chapter one by the time you arrive at work. Music, books and movies are the starting point, but other products and services can’t be far behind.

TV Adver-Buying

If you like the shoes that Tina Fey is wearing on 30 Rock, pause the show, select the shoes in the size you need and buy them by waving at your television. Then hit play to continue watching the show. While you’re at it, say goodbye to the 30-second (or even the 10-second) commercial. Internet TV will blur the lines between surfing and viewing and allow for contextual product placement within taped and even live programming.

What about destination retail?

To say that these and other technologies will eradicate the need for physical retail would be overly sensational and highly unlikely. It isn’t, however, an exaggeration to say that our expectations of physical stores will change dramatically. More and more we will expect these destinations to deliver unique and memorable experiences that we simply can’t anywhere else — digitally or otherwise.

The ultimatum that these technologies and concepts present, however, is that consumers will increasingly choose businesses that offer either anywhere convenience or only-here experiences. Everything in the middle may as well be invisible.

Discussion Questions: Do you agree that successful retail is becoming a matter of offering either “anywhere convenience” or “only-here” experiences? How may these technologies change consumer expectations around physical stores?

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27 Comments on "BrainTrust Query: The Future of Retail – The Destination is You"


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Gene Hoffman
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Gene Hoffman
9 years 7 months ago

There is a permanent force in charge and that force is change. As each change occurs, it is embraced largely by younger people who create the demand for the elements born within any change.

We shall witness a future era of retailing evolution and that era will also embrace many “only-here” situations. There will be room in the future for many retail experiences.

Paula Rosenblum
Guest
9 years 7 months ago

Nope, I don’t agree. I think success retail is becoming a matter of offering “anywhere convenience” AND “only-here” experiences.

Technology is the enabler, but people/employees are the differentiator. You can have an “only-here” online experience and an “only-here” commodity experience. The consumerization of IT and an overabundance of stores combine to drive the need for both.

Dick Seesel
Guest
9 years 7 months ago

I agree that “smart” mobile technology is changing the retail landscape, but I also agree with the conclusion that “physical retail” is here to stay. Yes, you can buy a book digitally while riding on the bus and start reading it on your mobile device…but there are still plenty of merchandise categories that demand physical interaction even if they are bought through e-channels. You can’t wear a sweater on your smartphone, nor can you use an iPad to toast a bagel…yet.

As long as consumers still want to “touch and feel” merchandise before they buy it, and as long as they enjoy the social interaction of shopping, there is still a big role for physical stores. And as long as customers clamor for value and convenience in some of their shopping trips, the importance of “unique and memorable experiences” may be overstated.

Fabien Tiburce
Guest
Fabien Tiburce
9 years 7 months ago

Historically speaking, traveling caravans, delivering goods right to your medieval door step, are nothing new (and did not eliminate outdoor markets nor artisans) — neither will digital marketplaces. First because some goods and services cannot be delivered digitally (digital latte?). Second because customers are increasingly interested in real time. If you live in an urban center, ordering something online often takes longer than getting it in person. Third because in-store experiences can (and often are) fun. We are human beings and hard-wired for human contact; people will continue seeking meaningful interactions whenever the cost of doing so is nominal. I think the big opportunity for retailers is to blend their digital marketplace with the stores giving customers options on a case-by-case basis.

Dr. Stephen Needel
Guest
9 years 7 months ago

If you’re a media retailer, you have to at least have one or the other. Fashion may well be the same. In grocery, not so much of either. Grocery shopping is pretty unlikely to have “unique and memorable experiences” — it’s grocery shopping.

Adrian Weidmann
Guest
9 years 7 months ago

Aside from the ‘need to have’ products and services (e.g. milk, eggs, furnace air filters, diapers), shoppers want to be surprised and delighted. Technology will indeed squeeze out the middle — whether for retailers or brands. The proper holistic integration of various technologies and their associated workflows will provide brands and retailers the opportunity to establish ‘customer-for-life’ strategies measured by ‘share-of-wallet’ rather than promoting discounts to sell more for less today. Brands will increasingly develop these capabilities in order to communicate directly with their customers and sell their products and services directly, bypassing traditional distribution channels that are becoming marginalized and eventually unnecessary by digitally empowered consumers. Retailers need to embrace this reality and design ‘only-here’ experiences augmented by anywhere convenience. Anything else will render them invisible to the shopper.

Max Goldberg
Guest
9 years 7 months ago

Retail is still about destinations. There now are many more paths to get there. There are more consumer choices, but the basics of winning their business have not changed.

Retailers still must build a brand and offer a trusted experience to win customers. Trust is built through positive experiences and meeting expectations.

Though the avenues to reach a retailer may have changed, the basic deliverables have not.

Phil Rubin
Guest
9 years 7 months ago

The Future of Retail is very much about “anywhere convenience”, as Doug aptly suggests. As smartphones and other mobile devices become more useful — even if not necessarily “smart” — the opportunity and mandate for merchants to be everywhere grows.

The issue of “only-here” is one we would challenge, as we don’t see mobile retail as a sole channel but one that is additive to existing channels, including actual brick-and-mortar stores. While it all depends on the category, the most powerful channel for commerce is the omni-channel!

Yet another reason why, as we continue to maintain, Amazon is the one to be most reckoned with, particularly for those in broader or even narrow “mass” merchant businesses.

Ian Percy
Guest
9 years 7 months ago

I’m kinda with Paula and the others who think the decline of ‘destination retailing’ is premature. Here’s why: If you’re talking about “things”, then where you can get them fast and cheap wins. If you’re talking about an experience, engagement, excitement or event where you ‘want’ to spend physical time, then the true ‘destination’ wins. The problem is most retailers haven’t a clue how to be a destination.

Marge Laney
Guest
9 years 7 months ago

If you’re selling a commodity product you better be “anywhere convenient” and price competitive. But if you’ve got something unique, you have the opportunity to create “anywhere convenience” and an “only-here” experience. Nordstrom has nailed both.

The trouble comes when brands that have an “only-here” opportunity fail to create the experience. The result is that they become lost in the “anywhere convenient” offerings and become just a high priced competitor.

Lisa Bradner
Guest
Lisa Bradner
9 years 7 months ago
Interesting stream of conversation around this. I would ask people how many of us 15 years ago would have said, “No way will consumers buy music online — they want to hold the disk and physical form in their hand (or would have said that about the demise of vinyl before that). Stores, human interaction, touching and feeling before buying will always have their place, but traditional retailers are losing their middleman power. We will see certain goods and services (shoes, jewelry, kids clothes) migrate faster than others, but it’s definitely going to shift power back to strong brands. I for one started buying designer stuff online where I could experiment without being condescended to by a sales associated BEFORE I started walking into bricks and mortar to do the same transactions. My insecurity? Probably, but I’m not sure I’m unique. The biggest issue I think retailers face is that their physical footprint is too large for tomorrow’s retail. Sears is already looking to lease out space within the stores. Best Buy has lost its… Read more »
David Biernbaum
Guest
9 years 7 months ago

Anyone who ignores modern technology, changes, and evolution will simply be left behind in Jurassic Park with the cash register and the typewriter. However, in-store shopping is still a pretty darn convenient way to look, touch, feel and buy multiple products — all at once. Retailers need to keep up with technology in every possible way while also working even harder to create “destination” in the aisles. Traditional SKU rationalization might not the the answer for every store. It’s not the right mouse trap. Give that some thought.

Herb Sorensen
Guest
9 years 7 months ago

All four “shopping alternatives” discussed here have some significant POTENTIAL. However, the bricks store has a lot more potential that will NOT be unlocked as long as retailers are happy to have their suppliers pay them to provide what is really a mini-warehouse, seeking rent — not getting their revenue from shopper profits but from their commercial partners.

As a senior executive at one of the world’s top 3 retailers asked after I presented the potential for double digit sales increases from a focus on just what the shopper wants to buy, “Why would we promote these items if no one is paying us to?” Meditate on that question to realize that the potential for bricks retailing largely lies between the retailer’s ears. And it will likely take at least a generation to replace the anti-shopper mentality embedded there.

The idea that whizzy technology will convert retailers from merchant warehousemen to actual salesmen is mostly DOA, as brilliant tech teams scratch their heads about what isn’t going like it should.

Ben Ball
Guest
9 years 7 months ago

I love this definition of the future dichotomy of retailing. “Anything/anywhere” (perhaps “anytime” is implied?) versus “only get it here” experiences is a compelling characterization of where we are headed.

But as I read through the other posts, I started to see how we are going to succeed in muddying such a simple concept. First we will want to define categories by whether they are “A/A” or “OGIH” (think “high touch/low touch”).

Then we will get into defining shopper types by how they prefer to buy. “Can we gain an edge by knowing whether a $100K+ household is more likely to want an OGIT experience when buying avocados?”

When the simple truth is, and always has been, that each purchase occasion can take on a completely different character for a given consumer and category in different situations.

Retailers who simply “get” Doug’s simple dichotomy and then concentrate on doing one or the other well will succeed.

Paul R. Schottmiller
Guest
Paul R. Schottmiller
9 years 7 months ago

Great piece Doug. No doubt that the physical store will continue to morph as virtual and physical retailing “mashup.”

As successful innovation trials move to scale, they will also force major changes to core retail functions. Merchandising, marketing, logistics, inventory management, customer service, and supply chain will need overhauls to deliver tomorrow’s “anywhere convenience” and “only-here” experiences. Beyond the cool new technologies, how fast retailers can drive organizational change will matter more than ever going forward.

Al McClain
Guest
Al McClain
9 years 7 months ago

I think it is the commodity-oriented retailer and retailers who offer a “commodity experience” that have the most to worry about. Retailers who offer an interesting experience have little to fear from technology. Is anyone worried about the lack of experience at IKEA, Whole Foods, Starbucks, Publix, Nordstrom, Bloomingdale’s, Costco, Urban Outfitters, Saks, Wegmans, HEB, Neiman Marcus or Stew Leonard’s? Provide an interesting shopping experience and a tailored assortment, plus good customer service, and they will (still) come.

Verlin Youd
Guest
9 years 7 months ago

Customer experience demands and expectations will continue to change and those changes will differ by retail segment, location, and buyer. I agree with Paula; there will be a broad spectrum from “only-here” on one end and “anywhere” on the other with countless combinations of the two in between.

The ability to deliver value “anywhere” vs “only-here” is also dependent on a retailer’s supply chain, e-commerce, and in-store execution capability. Some of these are more challenging, particularly in developing markets, markets that are becoming increasingly important.

Finally, if retailers hope to lead and succeed in the future, they not only have to have a compelling value proposition, they will need to ensure delivery of that proposition, whether it be “anywhere”, “only-here” or one of the many variations of the two.

Bob Phibbs
Guest
9 years 7 months ago

Doug continues to hammer that retail is losing the middle where so many have been successful before. And I think we can see that is coming to pass as zombie retailers don’t realize they are dead. But just because I “can” buy anything at any moment from anywhere doesn’t mean that IT is a slam dunk to making an engaging shopper experience.

People deliver, not apps or QR codes.

Camille P. Schuster, PhD.
Guest
9 years 7 months ago

Consumers no longer have to go to a retailer to purchase items now. With the increased use of mobile devices, consumers can be reached anytime in any location. However, the question is not which shopping experience consumers will use. The question is, which consumers will use which shopping venues when and for what reasons?

Tony Orlando
Guest
9 years 7 months ago

Both brick and mortar plus the new high tech shopping have a place in the future. I agree that a destination store better be on their toes in order to grow their business. You can’t run any business without embracing some of the latest technology coming out. The tools today actually can make your storefront work smarter and keep the folks coming back, through e-mail, internet, Twitter, and a modern, friendly checkout experience. Once inside your store, the shopping experience must improve dramatically in service and quality for future survival. Only the well run stores will be around in the future, as the internet will continue to take away more sales every year.

Gordon Arnold
Guest
9 years 7 months ago

I suspect that retail stores will see expanded distribution/delivery services and fewer visits by the customer. The virtual retail store, mall, and or town is still taking shape, with much to learn and do. A trained eye watching the expanding capabilities of Verizon FIOS, Direct TV, Dish TV and the others will see the shaping of how most retail purchases will soon be done. The cost of fuel and the time it takes to visit two or more locations make the virtual store most attractive, especially with local delivery included in the price. As for TV commercials, they will not go away. They will instead become interactive, with the ability to order and/or get related information.

Ralph Jacobson
Guest
9 years 7 months ago

Sometimes, you just need it NOW — and a quick trip down the street to the store allows you to have it instantly. Although retail space vacancies continue to climb, I believe there will always be a need for the physical store. Not only for differentiating retailers, but also for convenience retailers of all product categories. If your kid needs a new pair of running shoes for school tomorrow (if they even give you THAT much notice, LOL), it’s easy to go to the specialty store and get a pair in 30 minutes flat. Delivery/shipping obstacles will not eradicate that convenience anytime soon.

Roger Saunders
Guest
9 years 7 months ago

The consumer is smart enough to figure out how to navigate the marketplace. They are going to travel through some disruption, choosing between the destination points that Stephen points out.

The consumer is going to expect that the technologies work hand-in-hand with what can be offered at physical stores — either in actual experience or in service to take them to the products they need and expect.

Mark Price
Guest
Mark Price
9 years 7 months ago
Successful retail always involves understanding that there are different segments of customers, all with different needs. Many customers prefer to “touch” or inspect merchandise prior to purchasing. Others are adverse to paying higher prices to offset shipping charges, or have a strong desire to have their purchase in their hands immediately. Really, what we are talking about is “immersive retailing” where customers have a wide variety of options of where to order, what to order, where to have the product delivered and, in digital terms, where to consume the product. Those choices will further segment customers based on their needs, more than on the capabilities of the different channels for communications and “pickup.” Physical stores will always have their place but need to play multiple roles, from showcase to delivery depot to full-service retail locations. The revenue model will need to be multi-channel to fully account for all the revenue related to stores, web sites, mobile devices, etc. It will be exciting to see how the behavior segments play out, and how that impacts store… Read more »
Harris Loeser
Guest
Harris Loeser
9 years 7 months ago

Retailers who do not embrace their advantages over Online risk their retail lives. I consider the unalterable advantages of physical retail to be:
1. instant gratification
2. physicality
3. shopping pleasure

Look at the Apple Stores to see all three done really well. HSN and Amazon do not have these.

Take advantage of the three to introduce your retail concept to your customers online and through their handheld devices.

Dave Wendland
Guest
9 years 7 months ago

Interesting dialogue (not the first and definitely not the last on the topic). The day has arrived where the clickety-clack of shopping cart wheels is being augmented by the clickety-clack of keyboards. But I believe there is a need, place and destination for integration, not separation.

Chris Partlow
Guest
Chris Partlow
9 years 7 months ago
When discussing this issue, I like to talk about the textbook industry. With online services like the Amazon Marketplace and Chegg, college bookstores are suffering, as students can get textbooks much cheaper and easier there than they can at their campus store. But what these online stores can not offer is the knowledge/expertise of the stores. The staff, for the most part, knows the books/courses better than these online services do. And the books in the store are requested specifically by the professor, so students know they are getting the right books. The stores may still be suffering but they have an advantage online services don’t possess, it’s just a matter of effectively utilizing that advantage. Granted, one day, this could all change. We only dreamed of this type of technology 10 years ago so who knows where it’ll be 10 years from now. But, for right now, this is the biggest advantage brick and mortar stores have. The option to talk with someone who understands the product better than they do. Or, as Mr.… Read more »
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