“It’s the end of the world as we know it.” Well, at least for retailers. Today, they have to face their toughest challenge ever: Reinvent their identity, innovate their business and try to survive the Retail Apocalypse.
Easier said than done, at least judging from the rash of closings and business failures. Apparently, thousands of brick-and-mortars are shutting down, and foot traffic to retail stores is sagging. The only way to escape the fate is to tackle head on the underlying causes of the ‘Zombie Mall’ situation.
The term ‘Retail Apocalypse’ comes from the United Stated, where it began gaining widespread usage in 2016, following the closing of a vast number of American retail stores. Where are all these customers going?
“Overall, over 4,000 physical stores are affected as American consumers shift their purchasing habits due to various factors.” (Wikipedia) This shift has brought to multiple announcements of plans to either discontinue or significantly scale back a retail presence.
Of course, the seeds of what we are living today were planted many years ago. At the same time, some countries have more obvious symptoms (the US, for example, where stores per capita far outnumber that of any other country).
A quick look at this chart published on Business Insider makes the idea of what is going on in this beginning of 2017:
To tell the truth, not all analysts agree to believe this situation is so dramatic. In a recent article published by Forbes, the retail and tech analyst Paula Rosenblum states that there are at least five reasons why the ‘retail apocalypse’ is a click bait, a false scare story.
But is it? Honestly, there is one fact that none can deny (but many retailers still understate): the behaviors of customers have deeply changed in the last decade, and this evolution was driven by the technological innovation (mobile and connected devices, social networks, artificial intelligence).
With ‘behaviors’ we mean: How they search for information about services and products; how they connect with the physical and digital presence of a brand; how they compare the different solutions; how and where they finally purchase the product they have chosen.
Different behaviors demand different approaches. While the customers evolve, however, the retail brands often can not keep up with the change. To quote a post by Brian Solis, “The concept of future retail is constantly evolving. But what is not evolving as quickly is the understanding and widespread experimentation to bring the future to life today.”
The disruption of retail brings with it a critical corollary: What really matters is not what you do but how you do it. It is not the new fancy technology that you think can save your business with a snap, but how you implement that technology in the complex of activities that define your retail customer experience.
In the era of Digital Darwinism, when you stand in front of a new business challenge, you have three choices:
- Ignore the evolution and condemn yourself to the irrelevance (Business as usual).
- Wait to understand what others are doing and what are the real benefits (Business for the moment).
- Take advantage of the wave of disruption to face not only what is happening on the outside, but also what is not happening on the inside (Business for the future).
The majority of retail companies usually fall into the first two categories. They do not feel the urge to change a strategy that has so long proved effective; they are scared of the investments needed to move to the new approaches; they do not recognize an ROI hidden behind the digital transformation.
Unfortunately, the hard truth is that inaction always leads to irrelevance. For each brand that fails there is another brand that gets the spotlight. The competition is tougher than ever, and the race to success is mostly a competition for relevance.
Competing solely on products, price or features is not sufficient to gain a competitive edge. The new rules of engagement demand that you invest and work to reinvent your identity - starting from the physical store - and deliver a memorable and unique customer experience, online and offline.
How can you do it? Brian Solis (again) gave a significant speech a couple of months ago, talking about the ways for retailers to survive the apocalypse. The first step is to adopt a (new) human perspective and compete for customer experience, the main differentiator in the digital era.
We want to leave you with the video of that speech, not before pointing out the element that we consider the most critical: Invest in the trust economy, be transparent, and earn reciprocity through the facilitation of open engagement and commerce.
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