The wave of retail closings in 2017 shows no sign of abating. And now, with the shock waves of Amazon’s announcement still reverberating in the market, we should ask: what can retailers do to compete?
As John Hagel has pointed out here previously, we must rethink retail:
What about re-thinking the physical retail store experience? Today, the focus of more and more stores is on transactions – maximizing selection to increase the likelihood of a purchase. Salespeople have been steadily reduced as shelf space has been steadily expanded. As I’ve written in a major research report on the future of retailing, this is likely to be a losing proposition relative to the infinite shelf space that is available from online retailers. I would suggest that, increasingly, the future of physical retailing lies in creating rich “experience bazaars” that help to amplify return on attention for the consumer.
What do I mean? What about focusing precious retail space on creating a broad range of experiences that are not just enjoyable but that help the consumer to learn faster about choices pre-purchase and about the most effective usage of the product post-purchase? In the future, some retailers may maintain a product focus to their store – for example, consumer electronics – but many retailers may end up adopting a customer segment focus like people who are about to have their first child or people who are about to retire. If the focus is on accelerating learning, having a clear understanding of customer context becomes much more central to designing the right learning experiences. In more and more cases, the business model for physical “retailers” may shift from making a margin on the product sale (since, more often than not, the actual purchase may be executed online) to actually charging for the value of the learning experience itself. The “showroom effect” dreaded today by most physical retailers may in fact define a very rewarding future – if they evolve their business model accordingly.
Bring the Human Back to Marketing
I would like to imagine a new retail landscape, where retailers bring the human back to marketing. Every interaction an individual has with a brand must deliver value.
There are a minimum of three levels at which this can play out:
- Micro-moments and the Buyer’s Journey
- The In-Store Experience: Retail as Lifestyle
- The Mega-Experience: Retail as a Destination
At the core, marketers must use a Jobs-to-be Done approach across these three levels. Let’s explore how.
Micro-Moments and the Buyer’s Journey
How do you as a marketer integrate the wisdom of the micro-moment into the discipline of mapping the buyer’s journey?
The result is a blueprint for becoming more competitive in a mobile-driven, omni-channel world:
The buyer’s experience throughout their journey is critical to every company’s future. Marketing must take a leading role in driving quality and profitability throughout the buyer’s journey. To do this, marketers must grasp, in exhaustive detail, exactly what buyers want to accomplish during their journeys. At Harte Hanks, we’ve collaborated with Strategyn to adapt the Jobs-to-be-Done (JTBD) concept to meet this challenge and give specificity to buyer’s journey maps. This is a highly reliable way to describe exactly what buyers want to accomplish during their journeys. It also helps us define what a company must do to meet buyer needs at each stage of the journey. See: Did Micro-Moments Ruin My Buyer’s Journey Maps?
The In-Store Experience: Retail as Lifestyle
Harte Hanks CEO Karen Puckett writes about experience centers as a possible answer.
An experience center is a physical location that bridges the gap between ecommerce and traditional retail. It allows the consumer to research and shop in a variety of channels while adding additional value over an online-only transaction. The brands that do this most successfully create in-store experiences that are complementary to and integrate with their digital presence.
While ecommerce is an attractive and growing channel for consumer purchases, physical store locations have unique advantages over online retailers at specific spots in the buyer’s journey. These include three specific customer jobs-to-be-done:
1. Identifying which products they may want to purchase
At this point, the consumer is determining which product(s) to consider to solve for her particular need. Brick and mortar stores have the advantage here because they are able to provide problem-solving experts.
2. Choosing which product to buy
For some products, it’s important for consumers to be able to check them out—to experience them—before deciding what to purchase.
Customers are more likely to buy an item when the prospect of returning it seems easy and convenient. Repackaging and mailing an item back seems cumbersome, which is why retailers with a physical location have an advantage at this step in the journey.
Watch as Samsung’s Gabriel Mas explains Samsung’s rationale behind the Samsung Experience Center:
For me, this offers a chance for the customer to experience how a product adds to their lifestyle. The retailers job is to satisfy the customer’s curiosity in a way that online cannot – does this product make my life better? It can also be a social experience, where the customer tries out a product with their family and friends.
Are their examples of other retailers that have created an experience that enable a lifestyle? Here are three examples of iconic brands that do so:
- With offers like puppy training classes, grooming and boarding services, PetSmart has always offered more than great products. PetSmart has built a pet-centric culture that incorporates pet-data and customer-data with in-store and online behavior. The result? It was voted #1 in customer experience (tied with Amazon).
- Starbucks created the coffee-culture lifestyle in the US (and now around the world) where none existed previously. In 2010 Howard Schultz famously declared that Starbucks had “cracked the code” on customer experience.
- REI is the nation’s largest consumer cooperative, and its policy of treating employees generously has created a visible passion for outdoor adventure. See this customer blog post as proof. And if that isn’t enough, REI was ranked #1 for Companies that Customers Feel Most Respected By.
In each of these examples, the experience goes far beyond the transaction to interaction – learning, advice, and genuine caring for customers.
The Mega-Experience: Retail as a Destination
Can the retail experience become a part of a larger experience? One that makes retail a destination? While many malls are closing around the country, new, integrated experiential retail destinations are growing. Lowes Foods, for example, a food retailer in the Carolinas and Virginia states, redefined its customer engagement strategy by “Disneyfying” its retail experience.
What makes a great destination?
There are a number of critical ingredients that provide the recipe for destination branding. UK-based Sean Young, Managing Director of a destination branding agency, offers the following:
Create awareness of the destination and attract market interest. They include iconic buildings, natural features, retail, leisure and cultural facilities, and events. Attractors tend to deliver the ‘highs’ of the visitor experience.
Helps create a sense of place and supports the smooth operation of the destination. It includes transport, parking, signage, public spaces and so on.
Cater to visitors’ and residents’ needs, help create activity and, ultimately, increase spending. They include hotels, cafés, bars, shops, event programs, and services such as cleaning, security and customer care.
The destination’s BRAND captures all these elements of the destination experience and presents it to its markets. A successful destination brand articulates ambition, raises expectations, makes a promise of quality – and keeps it.
Integrated MANAGEMENT of the destination is important to long term success. Planning, development, operations, branding and marketing must be managed for the destination as well as for the individual attractors, services and infrastructure elements.
My example of what is possible in terms of creating a mega-experience is Singapore’s Changi Airport. Watch what the authorities have done to make one of the worst customer experiences (airport travel) into one of the best experiences in the world.
People visit the airport even when they are not traveling!
So where does a retailer start?
We have some ideas on how to bring the human back to marketing. We hope you find them useful.
Frank Grillo is the CMO of Harte Hanks. He is a passionate advocate for bringing the human back into marketing by better understanding and facilitating customer journeys.