The Retail (R)Evolution
About 15 years ago I met and became friends with a semi-well-known Academy Award nominated producer/director. When he first approached me, his opening line was that he wouldn’t put me in movies because I was “too funny looking”. It was a great opening line and – let’s face it – fair enough. I didn’t know who he was when he introduced himself – even though he co-produced one of my absolute favorite movies of all time. What I did know is that after grabbing a cup of tea with him, he was funny and he was indeed one of the most interesting people I’d ever have the pleasure of spending a significant time with. During the initial getting-to-know-you phase of our friendship, he was writing a screenplay – I don’t remember too much about it now but I remember he allowed me to read a bit of the draft as he was writing it. I do distinctly remember the content not being very compelling or relevant even though the screenplay was set in the current day – it reminded me of older movies that I’d seen in style and in character concept. My friend is approximately 35 years older than I am and it was, honestly, the first time I can recollect noticing the tremendous age gap. [I carefully crafted an honest answer I delivered when asked what I thought.]
Even though, when we would attend industry parties, people would immediately recognize him and were very warm towards him, it became evident that his time had come and gone and that now, he was now a great part of Hollywood history.
How Does That Relate To The Retail Evolution?
I can’t help but recollect the moment I’d noticed that my friend had become, for all intents and purposes, obsolete in his industry – with each and every story I read about retailers we have all known closing for business, I can’t help but be reminded of the moment I realized that the need for my friend’s point of view and perspective was rendered irrelevant. Of course, in retail we have a lot of options available to us to assign blame to…the customer, the shopping centers that aren’t generating foot traffic, Amazon – I could go on and on. The objective reality is that companies that are unable to, or choose not to, evolve and stay relevant will find themselves extinct. Not for any other reason than they have placed themselves in this position by not adjusting their business and using the many resources available today to effectively communicate business strategy and manage the customer journey.
Currently, as I type this article, there are two retailers in the news that have escalated their circumstances from “distressed” to “dire” with one of those retailers announcing they will be ceasing operations and have begun the liquidation process. The other – recently – declared bankruptcy. The challenges they faced came directly from the executive and most senior level leadership of the organizations existing inside their own bubble of ego and retail history. Recently having experienced both retailers, I found my in-store experiences to be bland, at best. Both delivered shopping experiences that were a little bit gross and dirty, disorganized, and profoundly lacked in even the most basic level of service and employee interaction of any positively memorable kind. Usually, I saw sour or zero-charisma employees going through the motions of ringing up transactions and who seemingly – for the most part – performed only the most basic tasks assigned to their job description.
These issues are symptomatic of ineffective leadership. Ineffective leadership from the executive team [having placed the stores in this dire position] and from a field and store leadership perspective where excuses around Amazon and the customer selecting a different way to shop were taken at face value and an environment where few people fought to make a difference and challenge that theory. Having worked for companies that were in distress, I know it is absolutely possible to deliver exceptional experience, positive comps, and a positively memorable aesthetic shopping journey through the very final day of business – if you possess the drive, competence, and determination to do it.
“Old-School” Organization Caution
An obstacle that comes with this type of environment/employee and primarily sourcing/recruiting and inviting these people into a new organization [“to get them hired”] is that these potential candidates – especially those who have held long(er)-term roles – have not been required to adapt to change [except in the final weeks of the business] in their previous culture. There have not been exposed to innovation, nor elevation of customer experience [or even a required focus on it], oftentimes the retailers that are declaring bankruptcy and dissolving are very behind in all things development in their people, their product, and their presentation. They often and profoundly lack a sense of anything other than working within the dreaded status quo. Many candidates who have existed in these roles can erode and damage forward-momentum and forward-thinking in new organizations.
Unfortunately, there frequently exists is an “old-school” mentality, in these types of retail organizations…as a matter of fact – one of them just introduced [in July 2017] the 1989 leadership theory: “7 Habits of Highly Effective People”. An outdated leadership concept from 30 years ago that now is used, primarily, in elementary school environments. These people will take substantial time, budget, and energy to bring up to current market relevance and I don’t know many retailers that can afford, in time or cost, to reeducate leaders grounded in antiquated business concepts and moldy operational models. There is so much amazing talent in the marketplace, just because people are currently working doesn’t make them the best candidate for every role. This is when critical success factors and signature relationship practices should guide the dialog.
Companies that don’t innovate or even adapt to the times are quickly finding themselves industry dinosaurs. Companies that don’t re-imagine and reinvent themselves to the customer, marketplace expectations, and the engaging digital age are going away. Retailers today are confronted by a more robust, vivid, and complex business environment. With highly valuable and significant information at the hands of every customer, new ways they engage with products and brands and a more dynamic and diverse competitive landscape, traditional retail is going through a period that is decidedly more of a revolution than an evolution.
Retail organizations and leaders that capture and effectively utilize customer data real-time, that have real and actionable engagement and experience strategies in place, and are working to develop and build sustainable customer loyalty are the ones who are working to drive their brand proposition, growth, and sustainability in today’s retail landscape.
Examples Of Retailers Embracing the (R)Evolution
Every day, for each retail obituary that we read in bold headlines – there is usually a fun [but smaller] comeback story of a retailer that is fighting mightily to regain relevance and recapture some market share. One of the more recent stories I read about is about one of my favorite retailers, on March 13th, ChainStoreAge.com reported that nearly a year after it closed down its retail operation and shuttered its stores, bebe has re-emerged with a new “lifestyle” concept store in NYC. This exciting brand re-positioning concept includes:
- A beauty bar (in partnership with on-demand beauty service beGlammed) where shoppers can have their hair and make-up done in-store;
- A lounge where bebe will host interactive discussions and engaging educational events with top influencers and fashion industry insiders;
- In-store iPads for ordering from bebe’s online catalogue/website.
“We are excited about the grand opening of the bebe store and introducing consumers to a new lifestyle concept,” stated Ralph Gindi, COO of Bluestar Alliance. “bebe is about leading trends in the industry and we have incorporated this concept into the new store by offering the latest fashions, in-store embroidering and beauty services where consumers can leave the store looking fabulous. It’s a fresh perspective to engage our loyal and new consumers of the brand.”
Obviously, we will have to wait and see how this new lifestyle branding works out for this organization but – I applaud the retailers like bebe – that are innovating the concept of how their stores will meet shoppers’ needs today and into the future: this probably means fewer stores, but stores that will cater to how consumers shop today and the future digital age. Clearly focusing on of the themes of convenience, collection and destination, I believe many retailers will be able to successfully reposition themselves for the future.
Coach [part of the Tapestry Fashion Group] is another exciting re-emerging leader in the new retail environment – in my opinion. Since taking Coach’s reins in 2014, CEO Victor Luis has done what a very few retail CEOs have been able to accomplish, he has tapped into his company’s successful past to help it compete in a more challenging and fluid present [with exciting collaborations and partnerships]. Taking the brand image from “our founding, romantic days” and using the brand nostalgia to re-introduce it in today’s evolving and digital consumer market. Three years ago, Coach was hemorrhaging market share, suffering the effects of being a retailer that positioned themselves as a discount, mass-appeal retailer – that position tarnished its brand and repelled its core deep-resource and affluent customer. Mr. Luis, brilliantly, shrank the business [from 300+ locations to just over 200 locations in 2017] and re-positioned Coach as a smaller, exclusive, and healthier retailer, prioritizing quality and customer experience over mass-market acceptance.
One of my other favorite and on-going transformations is that of Abercrombie & Fitch who, in the late 90’s and throughout the aughts and early teens positioned themselves as exclusionary, brash, conformist, but also cool, young, athletic, and hyper-attractive. The brand absolutely alienated certain consumer segments, such as the awkward and non-confirmist teens and an older consumer segment, to attract its core consumer [that could tolerate their overwhelming scent marketing and irresponsibly loud music]. Their early brand image invited litigation and brand-tarnishing losses. Their customer was changing in the early teens and were finding value and excitement around inclusiveness and diversity and found that their brand did not follow suit. The end result being that Abercrombie & Fitch’s “cool and exclusive” factors were interpreted as discriminatory, offensive, and controversial and was counter to where their customer’s moral center accepted. Sales dropped and their base deserted the stores.
Since 2016 Abercrombie & Fitch has been diligently working on re-branding to position itself as inclusive, accessible, candid, confident, quality, and comfortably stylish. This is a clear break from its previous elitist promise. They are still working through some of their challenges as they market the brand to position it as inclusive, diverse and accessible. But this is in direct contradiction with its relatively recent brand perceptions which makes it difficult to capture new customers but, as a customer since early 2017, I love the brand and the quality of the apparel today. It will take time for Abercrombie & Fitch to be actually associated with values such as inclusiveness and openness. I hope they continue to engineer this image shift and find marketplace success to a larger audience.