19 Apr Future Of Retail
Amidst current economic scenario being witnessed by most retailers in middle-east region, a question that comes to every retailer’s mind is “What does the future of retail holds for them?”
As you all know, Middle Eastern region is facing challenging times due to slow down in consumer’s spending power due to low oil prices & sustaining retail operations with high store rentals poses a big challenge to retailers, given the fact that most of the retail operators are franchisees or franchise operators of well-known international brands.
Story is slightly better for home grown brands due to their margin structure.
Well I would be sharing few insights or my personal opinions in forecasting future of retailing and the views herein are completely mine and may differ from retailers to retailers. Overall I hope my views may provide some guiding principles for the brands to gear up better for facing challenges.
- a)Re-invent or Perish:
Well, this sounds simple but is a tough business call when the size of business runs into hundreds of stores and has huge investments committed already.
I would like to explain the same with recent examples of industry players who have successfully adapted their business models to current economic challenges… One such brand is Nordstrom local who has reinvented themselves:
– From big box concept store to smaller formats in community centers.
– From product seller to experience provider– store now offers customized fashion advisors, on-spot tailoring needs, and Manicure and pedicure services while you enjoy your cold beer.
– Zero inventory store… however they provide style board (iPad to customers to check out new collections and order them in-store while taking advice from fashion advisor and the shipment gets delivered within 24 hours to stores wherein if the merchandise requires some alterations then in-store tailor does it as per customer’s requirement.
– Implementation of BOPUS i.e. Buy online and pick up from store mechanics.
- b)Keep a track on your consumer’s preferences & their habits:
Most of the brands take their consumers for granted especially in specialty brands like kids’ wears or toys. Avoid this trap.
– Monitor time spending habit of your consumers. You never know that your target audience might spend their time on technology products, throwing you out of the business completely.
– Example: Toys R Us has filed for bankruptcy protection which came as a shocking news to all of us, but if you evaluate and look at their financials, they are under lots of debt and interest cost is significant and has forced them to shut down or restructure their debts or re-look at business model. They made the error of not keeping a tab on their consumer’s time spending habits vs product usage habits.
- c)Invasion from ecommerce companies:
Many retailers have started feeling the heat of competition from their online rivals and are stating consumer’s preference of shopping online as one of the reason for their poor sales performance. I strongly believe if you cannot make difference to a situation then you start blaming environment for your poor performance.
I strongly believe that brick & mortar retailers can do better business than any of online retailers, they have strong real estate backing them up hence they can quickly adapt to Omni-channel rather than online commerce sites.
Biggest advantage for Brick & mortar retailers is that they meet & greet their customers on daily basis… (They know the pulse of the market), only thing lacking is to improve the channel of getting suggestions from shop floor team to strategy making board members.
- d)Using technology to your advantage :
We all have grown up or trained in AIDA model of communication (Awareness, Interest, Decision and Action) however now marketing to millennials have changed this model to something I call
I – Influencer
I – Interest
D – Decision
A – Action
P – Post purchase decision or service
W- Word of mouth / Brand custodians.
With technology like beacons becoming popular the future of retail becomes is more interesting and easy for retailer in terms understanding their customers.
Every task which can be automated would be automated in future retailing. Tasks which cannot be automated and would need manpower would thrive i.e. relationship building with customers, interpersonal selling, any task where human intervention is necessary would thrive.
Future retailers would master Lean management style for their retail operations. Here are few videos which would tell you about future of retailing.
Amazon’s GO store using AI Programming:
Virtual Fashion Stylist.
Jobs that won’t last in future.
Friends, these are my views and opinion and may differ from other professionals. My objective of having selected this topic is to caution traditional Brick & mortar retailers about danger coming towards them from digitization and it is high time that they need to re-invent.
Hope this topic helps my readers and fellow industry professionals.