It’s time to bring your A-game
Earlier this month, some of the leading retail leaders from around the globe gathered for the World Retail Congress in Dubai, where they discussed issues such as the future of retail, battling Amazon and the rise of millennials. Here are the highlights.
In the opening keynote at the World Retail Congress, Macy’s chairman, Terry Lundgren summed up the state of retail as the equivalent of having our backs against the wall.
US-led political uncertainty, shifting customer expectations, store closures and the rise of Amazon have many uncertain about what the future of retail holds. According to Lundgren though, this as a good thing: “When our backs are against the wall, that’s when our industry responds.”
In such a fast-changing landscape, he urged retailers to be relentlessly progressive to remain relevant. This means understanding the shift in consumer expectations, then exceeding those expectations tenfold when it comes to customer experience.
The time has come for retailers to bring their A-game.
A shift in customer expectations
“Don’t blink. The customer is changing fast,” Lundgren warned. For the first time, baby boomers have been trumped as the largest generation in the US. The reign of the millennial is upon us and with that comes the biggest shift in consumer expectations in history.
According to research by Eventbrite, 78 per cent of millennials prefer to spend on experiences over things. Driven by social sharing and the FOMO (otherwise known as ‘fear of missing out’) epidemic, the customer of the future is looking for brands that deliver rich, shareable and personalised experiences. The role that stores will play in this experience economy is changing, and changing fast.
The rise of retail experience
“Sometimes people want to shop. And sometimes people want to go shopping,” explained Apple store designer Tim Kobe during his presentation. The more we see the rise of cheap and highly efficient online retailers, the more we will see the rise of highly experiential retailers on the other, he pointed out.
When it comes to both price and efficiency, all eyes at the WRC were on Amazon. You only need to look at the series of futuristic patents lodged by Amazon over the last five years to conclude that they will be a force to be reckoned with in terms of frictionless online retail transactions, from selfie checkouts through to drone delivery.
The in-store experience of the future was a key topic at the WRC, in particular the shift away from traditional stores (originally named because they stored products until customers came to buy them) to inspiring hybrid spaces where customers can interact with brands in a meaningful way.
Rapha co-founder and CEO, Simon Mottram sees himself as being “in the business of creating great moments”. The cult cycling brand sees average dwell times of 33 minutes in their “Club Houses”, which are as much coffee shops, snack stops and bustling meeting places for lovers of lycra as they are retail stores.
Retailers like fragrance veteran Jo Malone are championing the return of creativity in retail. Jo Loves is Malone’s latest retail concept that offers customers “tapas for the nose”. Customers are taken on a four-course journey where shower gels are prepared in cocktail shakers, bath cologne is warmed in tagines before being released via a cloud of scented steam, and body lotion is whipped into a foam and then brushed onto your skin. Creativity can be hard to quantify, but with conversion rates in-store sitting at 94 per cent, Jo Loves is a shining example of the value in delivering rich and unexpected in-store experiences.
Another brand that has recognised the value in the in-store experience is Lululemon. CEO and VP of Global Brand Programs, Eric Petersen, explained how Lululemon’s strategy of putting its entire marketing budget into staff and stores (which double as free community yoga spaces) has helped build a loyal customer base one community at a time.
However, according to Lundgren, retailers have fallen short in delivering on exciting stores to date: “We’ve tweaked, we’ve changed, but what have we done that is significantly different in the last five years?”
Lundgren believes that bricks-and-mortar retail can compete against online players like Amazon.
“Make your store the advantage,” he urged.
There is no doubt that the future of retail holds its challenges, but with those challenges come great opportunity. There will be a handful of retailers that take on Amazon at the efficiency end of the spectrum. But for everyone else, that opportunity lies in experience.
Matt Newell covered the World Retail Congress exclusively for Inside Retail. He is the founder and executive strategy director of The General Store, which specialises in retail strategy and innovation. Email: firstname.lastname@example.org Tel: +61 403 821 025.