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In the early 16th century, Nicolaus Copernicus proposed a model of a Sun-centered universe that upended the prevailing geocentric world view.  One could not be reconciled with the other. This shift in direction completely upset the accepted status quo and our understanding of planetary movements.  The Earth went from being at the center of the universe to just another planet orbiting the Sun. What was once certain and familiar went out the window.  The common sense and long held belief of the time was stood on its head.   Might today’s digital frontier offer a similar situation in retail and consumer-facing industries?  Is this a Copernican moment or is it a passing fad?

For some the digital frontier is a disruptive opportunity of the retail status quo – an Internet-powered Copernican moment. To others it’s a blip on the radar to be ignored since the nature of retail has not fundamentally changed: charge a fair price for what customers need while keeping costs down.   And there’s little argument in that online retail sales have captured the lion share of growth in the retail industry these past years. Yet, with retail volume from traditional brick and mortar stores constituting the overwhelming majority of retail sales, some question the long-term significance of this digital shift.  Sure, we talk of e-commerce, m-commerce, multichannel, omnichannel, and crosschannel – and it gets confusing as these are ideas and concepts based on a retailer’s or consumer product company’s view of the world and not necessarily the perspective of the consumer.  Consumers’ do desire to have it all, at any time and any place, now, and on their own terms. No one really knows exactly how the future will unfold, but it’s certain to surprise.

A fundamental shift to the business model is taking place.  Power has accrued to the consumer.  This power is founded on advances in consumer-facing technologies (including digitization):  the taken-for-granted of a ubiquitous Internet, powerful search engines, mobile maps and apps, rise of social networks, smart phones and tablets, and mobile broadband and Wi-Fi networks.  As these have built on each other and have come together to deliver speed, convenience, and always-on availability to the individual, we’re now seeing a need for a model that better reflects this new reality. 

As I’ve suggested in a previous blog, the future holds a hybrid retail model with physical stores and digital presence.  It’s about turning the store into a brand hub designed with the shopper in mind – to anticipate and delight.  It combines store associates and digital assistants, it’s not about the tyranny of “either/or” but the power of “and.”  So, in reality our Copernican moment is far less about our ability to digitize everything and more about the centrality of the consumer in what we do.   What is truly revolutionary is the realization that the center of the retail universe has shifted from brands and banners to the consumer. The consumer has always been at the center, but previous business models did not recognize or simply had ignored this reality, today there’s no escaping it.

A wonderful and recent example of the possibilities ahead is the My Runway Mobile App.  That’s how Millennial generational shift, design, digitization, and the speed of SAP HANA come together to deliver business and consumer innovation to emerging consumer needs while presenting retailers with novel growth trajectories. 

There are many challenges and opportunities ahead in retail, and these can be best understood and harnessed when we innovate with the consumer at the center of the universe.

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13 Comments

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  1. Paula Rosenblum

    Mohammed, I agree with you completely.  In truth, if you ask any retailer if he / she is customer-centric, the answer will be “of course” but the devil’s in the details.  What retailers have generally been is sales-centric.  Now that seems like an “of course” statement, but the difference is fundamental.

    We started our company (RSR) with the notion that “Retail is no longer about what you want to sell, it’s about what consumers want to buy.” and that notion has only gained power and been demonstrated empirically over the past 6 years.  Consumers remain time-starved and their attention span is getting shorter.  That means assortments have to be tightly curated in stores, while Amazon continues to be the 21st Century Sears Catalog.  There’s a place for each.

    That’s why the very core questions of the day are “How much do you know about your customer?  Do you have a clear vision of what your brand stands for?  And do you keep your brand promise across every single customer touch point?  Or do you break that promise?”

    This is not easy.  It’s HARD.  It affects everything we do in the stores from the people we hire, the salaries we might have to pay them, and certainly the technologies we deploy. I don’t know where it’s ultimately going to fall out – but I suspect retail stores are going to look different in 2020 than they do today.

    Nice job!

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    1. Mohamed Amer Post author

      Paula, thanks for the affirmation!  I like the way you captured the essence and difference between “sales-centric” and “customer-centric” – and that this extends to the entire retail ecosystem.  Very challenging when you have  to change organizational direction (not just a tweak here or there).  It requires both strong (and visionary) leadership as well as a nimble organization.

      Mohamed. 

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      1. Paula Rosenblum

        Let’s give Mr. Redd his props.  He’s the one who started saying consumers don’t think about channels.  I had a lot of arguments, but – whoops – he was right!

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    2. Warren Nash

      Does the retailer understand the customer – NO.  Just a simple thing, when I walk into a shop I hate it when someone straight away says to me “can i help you”, give me some time to breathe please.

      Retailers and the fashion industry have always tried to tell us what to wear and how to wear it.  What I have said in previous SCN blogs is that I feel the future is MTO and the Chinese do this so much better than any westerner I have met.  In one hour I get fitted for something that “I” want.  Each big shopping centre has a special mending department and allows also for “personalisation” of the product.

      I guess you can look at it like “bread”, I can go to a department store and buy the brand based white loaf or I can go to a bread shop and buy a “variety” of breads that maybe I have never tasted before.

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      1. Paula Rosenblum

        Where do you live and how do you find those extra-helpful sales associates Warren?  🙂

        In fact, you’ve hit on yet another retailer dilemma.  I think Best Buy did a survey a few years ago:  33% of customers wanted to be nursed and helped all along their path to purchase in the store, 33% wanted assistance when they were ready to ask for it, and the rest wanted to do everything themselves. These numbers are not exact…but my memory says they are pretty close to what BB reported.  So what’s a retailer to do?  Especially when the sales people are on commission.  Their “Can I help you?” is basically an act of territory marking.

        Conceptually MTO sounds logical, but there are gazillion reasons why it’s not going to happen in a mass market.And it would not eliminate the problem you described, even in apparel (and certainly not with bread).

        Levi-Strauss tried MTO some years ago, and it failed for some of the gazillion reasons – the primary being..”What do I do with returns?”

        Anyway, it’s just my opinion.  The next generation is about delivering what each customer wants, and recognizing that this will be different from customer to customer. 

        Actually…along those lines, here’s a question.  If you could notify the store in advance that you were coming and request “No help please” and then identify yourself at the front door of the store, would you do it?

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        1. Warren Nash

          1. I think the “new” generation just do not expect any service these days, so they do their research before they buy and therefore the salesperson in the shop is generally a “nuisance” for them.  My wife is very much this kind of person and will be almost abusive if the salesperson says “this will look nice on you too or what about a blouse with those jeans”.

          2. Simple – lean & mean!!  Look at Zara as an example, what is it “every six weeks there is a new line of clothes”, they have totally destroyed Esprit’s market share.

          3. They are not offering “help”, because the more modern customer basically already knows what they want.  The older generation would need to ask questions and seek advice in the retail store.

          Regards

          Waza

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  2. David Trites

    Great article, Mohamed. I look forward to the day when retailers fully make the transition – hopefully I won’t be too old to enjoy it! 🙂 I also agree with your hybrid model prediction. Especially for areas like grocery. A grocery store that could have my prepackaged/boxed goods ready for check-out or delivery when I go into the store to pick out my fruits, vegetables, meats (things I won’t buy online or have delivered), will win my business. Why do I need to walk around a huge grocery store to find the same box of Cheerios and pack of paper towels everytime I’m there? I’d rather open an app on my phone, select those items from my grocery list and tell the store I’m coming in a few hours to complete the rest of my shopping so they can pack up those items for me.

    David

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    1. Mohamed Amer Post author

      Thanks David, I’ll be right there with you using that app!

      Yes, transitions are hard but I think here we’re really talking about a complete change of mindset – that means changing directions which is extremely difficult to accom;plish for any large and established organization (but I have hope).

      Respect my time, be convenient, make my life easier and I will give you my business.  That’s a winning combination for both consumers and retailers.

      Mohamed.

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  3. Denise Missonak

    Mohamed,

    Great “thought provoking” insight that I agree with. What I especially like is your undeniable declaration of the customer being the core and the driving force behind everything retailers do, regardless of the vehicle they use to reach them. I ditto your thoughts that balance is of utmost importance for retailers and believe that brick and mortar stores, internet e-commerce, catalog sales, mobile device commerce and who knows what else will pop-up can and will coexist with each other, in varying levels, all serving a specific need of the customer. There’s that word again, customer!  Figuring out the right balance and the best operating model to achieve that balance is where I believe retailers will and should focus their efforts in the foreseeable future.

    Denise

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    1. Mohamed Amer Post author

      Denise,

      Thanks for your comment.  Part of the challenge ahead is finding that balance you describe. Key is having deep understanding of your retail customer; without that you can’t begin to build or project your brand in a relevant and effective way to consumers.  Retail formats and models will evolve to deliver, effectively and efficiently, on what customers are demanding and expecting in a retail experience.

      Mohamed

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  4. Warren Nash

    I look to MTO based retail taking over where the consumer can choose colours, size and characteristics and 1 week later can pick up the item.  Though I live in China and they can make a man’s suit in 2 hours.

    From an on-line angle RayBan has some software that allows you to wear their sunglasses in the virtual world.

    Regards

    Waza

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    1. Mohamed Amer Post author

      Hello Waza,

      Thanks for sharing.  The more retailers consider how they can meet the needs of the consumer along time and convenience, they will be better positioned to differentiate their offering (products and services) and build repeat business — Price is NOT the main lever to increase sales.  Who wouldn’t want to have a custom made suit in 2 hours!!!!

      Regards,

      Mohamed.

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