By Brian Kilcourse, Managing Partner
January 19, 2010
Remember the mood ring? Along with the Pet Rock, it was one of the biggest fads of the ’70’s. Maybe it’s time for a comeback. After all, it’s hard to tell from any of the rational evidence what a “better” 2010 will look like for retailers. For example, the NRF announced on 1/14: “After a year that saw holiday sales decrease by 3.4 percent, retailers bounced back in 2009… retail industry sales (which exclude automobiles, gas stations, and restaurants) for December rose 2.3 percent unadjusted year-over-year…. As a result, preliminary 2009 holiday sales… rose 1.1 percent to $446.8 billion….” On the other hand, on the very same day the Wall Street Journal reported: “U.S. consumers defaulted on store-branded credit cards at near-record levels during the holiday season, and the trend is likely to continue this year, according to Fitch Ratings. During the November collection period, about $1 of every $8 of receivables was written off as uncollectible….”
What’s a fella to believe?
If the organizers of this year’s NRF Big Show conference and expo in New York City had passed out complimentary mood rings to attendees, we would have seen a lot of yellow (Cautious, Disquieted, Unsettled, Wary, Strained) tending towards green (Hopeful, Expectant, Excitable, Restless). Or, if acronyms are your thing, the mood was definitely VUCA (“volatile, uncertain, chaotic, ambiguous” - apparently, this acronym originates from Procter & Gamble).
Certainly, no one that Team RSR spoke to during the four day event was naive enough to assume a return to pre-recession “normalcy”. What we did hear, and pretty consistently, is that it’s high time for retailers to do what must be done to keep pace with customer expectations. As one solutions company executive told us, “There’s a palpable sense that foundational change needs to occur”.
Post ‘Customer-Centric’?
RSR has been preaching the gospel of “customer-centric” retailing since its founding in 2007. One tech provider at NRF 2010 put it perfectly: “It’s the notion of managing from the customer in, not from the supply chain in.” What’s fundamental to this positioning is that retailers have a single view of inventory, a single view of the customer, a single view of order management, and a single view of demand.
It was clear on the NRF expo floor that many exhibitors assume that as a baseline understanding. What many booths demonstrated was either the latest in consumer empowerment (most prominently mobile enabled shopping capabilities), or employee empowerment technologies intended to help store associates keep up with what consumers carry in their hands. That last point is important. If retailers are to make the store as interesting to consumers as the rest of the cross-channel shopping experience, then store employees need to be empowered with the same information that consumers have in their hands.
But in RSR’s June 2009 benchmark study Walking the Razor’s Edge: Managing the Store Experience in an Economic Singularity, we said:
“Even retail neophytes understand the importance of the store manager to brick and mortar retailing success. Yet survey after survey indicates the tools given to these managers are primitive, or worse, tether them to desks where they are unable to actually manage activities on the selling floor. This year’s study… asked retailers how long they they’ve provided technology-enabled touch points in the body of the store for store managers, customers and employees. For store managers, we qualified the question to include MOBILE touch points only. The results are somewhat shocking….”
Specifically, 40% of survey respondents claimed that they had “no plans” to provide enabling technologies to store managers.
To illustrate how big a gap that is from the consumer’s reality, here’s a comparative data point: according the results of a global study of 32,000 consumers conducted by IBM (results released at the NRF event), 80% of consumers use some type of technology to shop, and 30% use two or more. And, in emerging markets, that behavior is 2X more prevalent than in established (US, EU) markets. What this means is that although the majority of shops may be completed in the store, the process starts outside of the store – with technology – for an ever increasing number of consumers.
On the NRF expo floor there was plenty of evidence that technology solutions companies have created the platforms that will enable consumers and employees with access to a wealth of actionable information via mobile technologies.
The Year of Transparent Retailing
RSR’s Nikki Baird framed the challenge and opportunity for retailers in 2010 perfectly - 2010 will be the year of transparent retailing:
“…retailers will have to provide consumers with more access, at a more granular level, to more information about their operations and how consumers fit into those operations. It might be as simple as providing consumers with searchable, analyzable purchase history online, or as complex as providing the carbon footprint of products or processes. It might come from the mobile channel, through price or availability comparisons, or from the online channel around product reviews or ratings.” (2010: The Year of Transparent Retailing, 1/5/2010).
For retailers’ mood rings to transition from yellow to green (maybe even blue?), many must realize that their fate is in their own hands. They can choose to follow the lead provided by consumers, or they can continue to languish. Consumers see no difference in “the channels” – it’s all just “the shopping experience.” When retailers start thinking like consumers, then they increase their chances of winning.
As Rollin Ford of Wal-Mart said to RSR at the conference, “Look at how our customers and members are using technology around the world. They are online, twitting, blogging, and interfacing with technology. People are connected today. If technology is not part of your business plan or process, I think by definition, you’re behind. In the past, as long as you had good intentions, you could remain current with things, but, in our present world, technology is required to keep up with the mom of today around the world; the rate of change is too fast without it.”
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