Muddy Reports On The State Of Retail And The Value Of Innovation
Opinions on the state of the retail industry vary as much as the kinds of hamburgers you can order at the “have it your way” Burger King.
I actually saw the “A” word (apocalypse), which I thought was finally consigned to the dustbin of history dragged out in one recent media piece. After the best holiday season in six years, I find myself reading that the layoff of seasonal workers is going to be “Yuge.” Occupancy is up, but mall vacancies are up as well. The US is a market maker, but China is about to overtake the US as the largest retail market in the world.
Further, despite the fact that US retailers did enjoy their best holiday season in six years the media is full of doom and gloom. The stock market was not amused, and retail stocks were pummeled. In fact, if you read this piece by the Associated Press, you’d think the world was ending. I mean, the bloody title was “Off The Charts: Holiday Heartbreak For Retailers.” Seriously?
This begs the question, if you’re a retail executive, what the heck are you supposed to do? Crawl into your shell and die? Close stores immediately? Expand into the Chinese market? There are plenty of reports indicating that the Chinese retail market is in a slump as well, so maybe that’s not such a good idea. Who is right and who is wrong? And again, as retailers what the heck are you supposed to do?
Well, for starters, you definitely have to mind your knitting. Using technology to create innovative customer and employee experiences is a good plan. Being laser focused on customer satisfaction never goes out of style. I don’t think we’re going to see eCommerce become 35% of retail sales in the US as they are in China. Consumers in the US and Europe both seem more interested in “having it their way” and the path to purchase still ends up in a store most of the time.
Brian and I co-authored a study late last year, 2018 Ramping Up Retail Innovation. We wanted to understand how retailers are, in fact responding to constant change in the marketplace, and constant improvements in technology. We found that, at least in the US, Amazon is a big driver of change for all retailers, most especially Retail Winners. And we found that the response to that challenge, again, especially among Retail Winners, was two-fold: provide customer-facing innovations (93%) and creating process automation of operational processes.
To me, this is the exact right approach. Work to keep the top line coming, and make sure you optimize expenses to insure a healthy bottom line as well.
Perhaps the most interesting finding in that report was that Retail Winners are most likely to find customers are the most frequent sources of new ideas, followed closely by internal constituents. Maybe we don’t need expensive consultants to tell us what those who care about us already know? And who would tell us for free.
I know it is easy for me to say the following as I stand on the sidelines, but sometimes you really do have to ignore the Street and wait for it to catch up with YOU. At the end of the day, if you deliver value, stock market analysts will come around. It takes intestinal fortitude, like that of Costco. But it can be done.
I also think it’d be a good idea to ignore clickbait. Too many retailers were paralyzed by the “Retail Apocalypse” fantasy. And seem to be breathing a sigh of relief as the media has finally come round to what knowledgeable retail watchers were saying all along – this was a false flag. The nature of the 24/7 media is a universe of clickbait and false flags. Stick to your knitting. Satisfy your customers. Sell products people actually want to buy at a fair price. Do your homework on real innovations you can use. Lean on your vendors for advice and counsel. And…truth be told, you can also ask us at RSR. We have been around this industry a really long time. And we can spot a false flag from a mile away. Let us be your curator.
And finally, innovate. The pace of change is only rising. This is not the time to stop.