As consumers, many of us have access to smartphones, giving us the ability to tap our way to the best price or offer anytime, anywhere. We can ask Alexa for the weather conditions and Siri to help us navigate the fastest route home. Instant gratification is the name of the game, and we expect our counterparts, consumer brands, to exist on the same playing field. Consumer technologies have elevated our expectations of brands – we are in the Age of the Shopper.
I had the opportunity to sit with Retail Systems Research Managing Partner and Industry Analyst Nikki Baird and chat about the future of retail, more specifically, the evolution of the customer experience. A recognized expert in trends impacting brand-to-consumer relationships, Baird’s research and thought leadership frequently covers some of the most pressing issues facing retailers today, like omni-channel strategies, the relevance of the brick-and-mortar store, and personalization. And while she believes “this is an existential moment for retail” during our discussion Baird created a roadmap for every type of retailer to move away from the dated strategy of competing on price to competing on customer experience. Here are a few highlights from our conversation:
Joanna Beerman: Nikki, thanks for taking the time to “talk shop” with Salesforce. While many industries are experiencing massive transformation, you believe the retail industry is at or nearing a point of existential crisis. Why?
Nikki Baird: Retail’s not immune to the forces of digital transformation, but it is an industry that is uniquely unprepared for that transformation. Consumers have fundamentally changed the way they shop – the store may still be the hub of the transaction, but it is no longer the hub of the customer journey. Digital now owns so many pieces of that journey, like exploring product categories or selecting specific products.
But while digital can give retailers so much information about shoppers, it also gives consumers so much more power over how they conduct their shopper journey – which makes it really challenging for retailers to differentiate. When consumers chart their own shopper journeys, retailers often get reduced to a competition on price, availability, and speed of shipping. But in that fight, two clear leaders have emerged: Walmart and Amazon. Anyone trying to compete on that game field is doomed to be trampled.
Here’s the scary part: for all that retailers have embraced online shopping, they have not truly embraced digital transformation. That’s why we’re approaching something of an existential moment for retail. Retail as an industry is built on the idea that there is differentiation to be had in the process they use to sell consumers “stuff” – and part of the reason why they hold that belief is because they define their market in terms of selling stuff, buying low and selling high.
The problem is, digital has taken all of the differentiation out of that process. Consumers control their journeys, and with price and inventory transparency, retailers can no longer differentiate on things like “I have the lowest prices” or “I have the broadest assortment”. Google has the broadest assortment, because it can find you any product anywhere. Google has the lowest prices, because competitors’ prices are just a browser tab away.
Retailers can no longer define their market in terms of selling stuff. And where technology has long been an expense to be controlled, it is now the source of competitive differentiation at the heart of digital transformation. If retail can’t move past those two mentalities, then all those naysayers crying “retail apocalypse” may actually be right.
JB: But there’s hope right? Or should we expect more of the same? Like daily reports of store shutterings and bankruptcy filings?
NB: There is absolutely hope. The answer is simple, but executing it is not easy: retailers have to redefine their market. It’s not about selling stuff, it’s about solving consumers’ problems. If retailers can become an essential part of consumers’ lives, then there is no competition on price. If you can solve my problem, price becomes the least of the matter in a lot of cases.
That’s easy to say! Solving problems is a lot harder than selling stuff. But that’s where digital opens opportunities that store-only retailers would not have access to – digital is where retailers can really get a sense for the problems that consumers are trying to solve, or the lifestyle needs they’re trying to fulfill. Social communities are exactly the places where consumers share those problems, giving retailers unprecedented access to the way consumers think and how they go about assembling their customer journey.
The most important part of this change is for retailers to give up on the idea that they own the customer journey. I hear too many retailers talk about “designing” the customer journey, like they are building a road, with guardrails, that they expect consumers to follow. That is not customer-centric thinking. That is still thinking in a way that forces consumers to follow the retailer’s process. Instead, retailers need to be building capabilities to enable customer journeys, and to influence them – that’s where personalization and flexible technology architectures become critical.
JB: Glad to hear there’s hope for B2C brands out there. Solving customer problems doesn’t feel like a typical “cash and carry” retail operation. Can you elaborate?
NB: Absolutely! In a recent webinar, I talk about a business idea – I thought of it first! – involving cupcakes. You’ll have to listen in to get all the details. But here’s what it boils down to: retailers talk about shopper journeys all the time. But that is a journey around acquiring stuff. That’s old world thinking. There’s another journey that’s even more important, and that’s the problem-solving journey – the why behind the buy, if you will. What problem are consumers trying to solve, and what journey do they take to solve them?
I characterize that journey as the “owner” journey, to distinguish it from the buyer journey. You have to have a problem where you decide to solve it with a product before you can shift to a buyer journey. Retailers spend a lot of time and money trying to own the shopper journey. But if they can figure out how to own the owner journey – how to be the go-to place to solve the problem, instead of one stop on a frustrating journey across multiple touch points, then there is no competition. There is no price comparison. There is only loyalty because you’re making their lives easier.
It’s funny, because stores actually tend to “get” this concept easier than digital. Apple is the original “owner vs. buyer” concept – when they first launched stores, the idea was to have 50% of store space dedicated to buyer, and 50% dedicated to owners – that’s where the Genius Bar concept came from. And if you look at their latest iteration of the Apple store, it’s even more skewed towards owner – I would guess 25-30% buyer and 70-75% owner. They’re not the only one. Petsmart, Lululemon, and REI are all retailers who have dedicated store space to owner experiences.
JB: In many cases, the consumer’s path-to-purchase begins well before they ever step foot in a store. Oftentimes, this consumer crosses multiple channels leading up to — and following the point of sale. How can retailers effectively enable and influence the journey along the way?
NB: Frameworks help a lot. At RSR, we use what we call “The 5C’s of Brand in the Digital Age”. Whatever shopper journey you use – and I recommend that you be able to break that down into no more than 5-7 steps – we lay the 5C’s across that shopper journey. The 5C’s are: Content, Community, Commerce, Context, and Customer Insights. Content is all the information that a shopper consumes along their journey. Community is all the people a shopper engages with to help them along their journey. Commerce is about enabling the buy button – in most cases, it’s about reducing the friction that exists as shoppers move along their journey toward a purchase. Context is where the shopper is – in their journey, physically, and I think it’s worth even looking at the context of buyer vs. owner. And the Customer Insights are the things you learn along the way to help you make sure you’re applying all those other C’s in the most effective way possible.
If you have those 5C’s in play, it becomes painfully obvious where you’re hitting and where you’re missing in helping consumers. For example, let’s say a consumer is interested in learning to paddleboard. They’re on your site reading blogs and looking at different kinds of paddleboard. A lot of retailers, at that point, will start spamming consumers with offers – 25% off this brand of paddleboard! Or whatever the offer is. But the consumer is not in a context where that level of commerce is valuable to them. They don’t even know how to paddleboard! Why would your first real commerce interaction with them be “Buy this paddleboard now!”?
But when you take that step back, you can start to line up your best assets to help move consumers through their journey. In the paddleboard example, instead of trying to sell them paddleboards, the real solution is, “Learn how to paddleboard! Here are classes near you.” For consumers who take you up on that, the end of that journey is, “Try different paddleboards and see which one is best for you.” And then – after you’ve solved their problem – you become their trusted partner. And selling the “stuff” that goes with solving problems becomes a natural outcome.
This article first appeared on the Salesforce blog.