May 18, 2016

Traditional Retail vs. Modern Retail

Here's what happened during the ill-fated Omnichannel Era of 2010 - 2016.

  1. Traditional Retail tried to make the same item available in all channels, assuming that the issue was that it was hard to seamlessly shop a business across channels.
  2. Modern Retail assumed that merchandise (i.e. something cute) and experience and price were the issue ... and then went after folks age 18-39 with cute / new stuff at great prices.
  3. Traditional Retail spent five years building the infrastructure to make shopping seamless across channels.
  4. Modern Retail spent five years figuring out how to get inventory turns up to 25x - 100x per year.
  5. Traditional Retail assumed that existing customers wanted a seamless shopping experience, and by default, did not focus on what prospects wanted.
  6. Modern Retail assumed that prospects wanted a great experience and cute merchandise and new merchandise at great prices - and consequently put a moat around the 18-39 year old customer.
  7. Traditional Retail assumed that 40% off is thrilling to a customer.
  8. Modern Retail assumed that merchandise scarcity is thrilling to a customer.
  9. Traditional Retail assumed that "digital" is about getting an existing customer to shop online.
  10. Modern Retail assumed that "digital" is about creating awareness that supports sales in a store with customers and prospects.
  11. Traditional Retail tried to compete with Amazon.
  12. Modern Retail tried to avoid Amazon.
  13. Traditional Retail asked customers to stay at home.
  14. Modern Retail created an in-store frenzy that required customers to go to a store.
  15. Traditional Retail thought it was cheaper to serve existing customers, and consequently, began running out of new customers in the past two years.
  16. Modern Retail decided to find new customers who would eventually become existing customers, and was successful in this endeavor.
  17. Traditional Retail decided to integrate everything, creating a slow organization.
  18. Modern Retail did not integrate everything, creating a more nimble organization.
  19. Traditional Retail loses energy when it is unable to hire the best 18-39 year olds.
  20. Modern Retail gains energy by being able to give significant responsibility to 18-39 year olds.
  21. Traditional Retail tries to avoid hard change by reconfiguring presentation style / visual / creative (think JCP), then tries to sell via reconfigured presentation style.
  22. Modern Retail uses merchandise scarcity to fuel buzz via presentation style (think Instagram / Zara).
  23. Traditional Retail spent five years prioritizing digital and largely ignoring stores.
  24. Modern Retail spent five years using digital to create buzz for stores.
Solution?

Read (2) (4) (6) (8) (10) (12) (14) (16) (18) (20) (22) (24) ... and develop a strategy that aligns with the even numbers. This strategy will take a few years to bring to fruition, and the industry will lose ground in the process.