Retail Tech Decade In Review: 2019


Aside from the fact that I still haven’t accepted that 2019 is already over and 2020 is well on its way, it’s kind of amazing to look back at the things that have come and gone in the last year, and the things that have staying power.

Lego’s AR-only store made its debut at London Fashion Week, and much was made over the Target-Disney partnership – hey whatever happened to that? For all the words spilled over the relationship, it didn’t seem to make much more than a blip over the holidays.

Food halls, long lurking in Millennial uptown locations, hit mainstream awareness (read: the suburbs) while malls continued to struggle to find relevancy in North America. My favorite quote from 2019 that doesn’t really have staying power, but is a good snapshot of last year: Food halls are one big party all day long, while malls are vast echoing tile deserts that are more interested in kicking out “the teens” than in doing anything that might capture their interest.

As for the things with staying power? AI, new media brand upstarts that made a killing selling via social media (even though no one else has seemed able to crack the code), more frustration with the slow pace of change and the epic struggle to embrace digital transformation inside large retail enterprises, and disillusionment with “the customer journey”. It was also the last year that any retailer could truly expect to get away with not taking a stand on issues important to its brand promise – and by extension, customer expectations. In chronological order as I wrote them:

1.    

What it takes for a consumer to trust a brand is shifting. We’ve seen all the elements of it – a demand from consumers for greater corporate responsibility, whatever that means, alongside the rise of Instagram brands and online-only brands that thrive on levels of personality that give cold sweats to chief brand officers and public relations executives at very large brands. But in 2019, retailers will begin to win or lose on consumer trust at a much more noticeable rate, and specifically on their ability to win consumer trust in digital channels. The big inflection point here: before this shift, retailers used discounts to entice consumers to do business with them, in the hope of providing a good enough customer experience to earn their trust. Now, retailers must earn consumers’ trust, if they ever hope to gain their business.

Without discounts as a way to drive traffic, many retailers have been lost – and floundering. In 2019, Philip Krim, the CEO of Caspar, was quoted in the Wall Street Journal – a quote I use regularly to this day. Roughly, he said the first wave of retail disruption took out the financially weak, but the next wave will take out the experientially weak. Already in 2020 we have Pier 1 filing for bankruptcy and L Brands selling off the former darling, Victoria’s Secret. What happened? Neither brand had consumer trust – Pier 1 because they didn’t understand how to attract Millennials in digital spaces, and Victoria’s Secret because too many things around the company didn’t square up with the message they were selling. Pier 1 never had customer trust. Victoria’s Secret had it but then squandered it.

2.    

While social channels play an increasingly important role for retailers in winning the hearts and minds of consumers, social commerce has not. 2018 was not the year social commerce approached anything near the growth rates that mobile has achieved, and 2019 probably won’t either. The role that social channels plays in retail is becoming clearer – but it’s not about commerce. Social channels are for being social, not relentlessly promoting products and discounts.

You may be tempted to point out Glossier as a counter example. But I will contend that Glossier has, only in the last two years, reaped the benefits of its investments in social as a communication and trust-building channel. They didn’t wake up Day 1 and decide to sell 10,000 units of lip gloss on Instagram. They got there through incremental and passionate investment in communicating with customers – a communication that led to the kind of trust that results in 10,000 units sold on a single post.

3.    

Corporate giving is often bland, and by its nature designed not to offend anyone. A lot of times it involves supporting inoffensive national charities like the Red Cross or the United Way, or simply instituting some kind of corporate match, to enable employees to direct where they want giving to go. This lacks passion, a key ingredient to taking a stand. It also lacks alignment with whatever lifestyle or brand promises the company is making. If you’re in the outdoor business, it’s increasingly difficult to get away with not taking a stand on climate change. If you’re in the jewelry business, it’s pretty disingenuous to not have anything definitive to say about conflict diamonds, or the exploitation and environment degradation of precious metals mining.

4.    

Of the many things that have changed in retail, technology’s role in the business is one that has changed the most. It has gone from cost to be controlled to a primary enabler of a retailer’s ability to sell. Which increasingly puts technology at the heart of the customer experience. eCommerce, mobile apps, personalization – all of these are technologies that, in their absence, retailers increasingly wouldn’t be able to do business at all.

This is me trying to help define what digital transformation really means for retail, when it can often be confused with trying to put eCommerce more centrally into the customer experience. That’s not the same thing as digital transformation at all.

5.    

Digital-native brands have taken a completely different path to growth. These brands are using digital connections to tap into a tribe of people who share a common passion, and then building the global connections to reach those people wherever they are in the world. They source globally out of the gate, because technology has made it easier than ever to connect suppliers with buyers no matter where they are in the world, and supply chains and logistics are sophisticated enough to figure out how to get those goods where they need to go without being prohibitively expensive. An entrepreneur with an idea and an internet connection can design, source, and manufacture without any of the assets those activities used to require.

We’ll see how well this plays out in now that COVID-19 has exposed the downside to all of this interconnectedness.

6.    

The one place where AI is the weakest today, is in teaching people the why behind what an AI recommends. Black box AI should not be trusted – we don’t have enough controls in place today to make sure that it doesn’t go off the rails in what it learns. But worse, when it doesn’t educate the people using it on what it learns, it keeps a critical benefit off the table – one that would help overcome the barrier of user adoption.

2019 was the year I began my newest hobby in earnest: collecting stories of AI gone wrong. They are simultaneously hilarious (AI’s apparently are big proponents of cannibalism, by the way), disturbing, and powerfully insightful into the shortcomings that exist in both the tools we use to create and manage AI, and the thought processes that go into creating AI use-cases. It is far too easy to pretend these challenges don’t exist in the early days of AI-driven results, especially in something with relatively low stakes, like retail (vs., say, healthcare). But the challenges, gaps, and complete lack of understanding are still there, regardless.

7.    

Customer journeys have become far too channel-focused. I’ve heard “one basket/one swipe” as the greatest ambition for retailers’ customer journeys. I have also heard customer journeys that start with “She walks into a store…” or “she opens an email”. If you are waiting until a customer walks into a store or, even worse, is ready to pay, before you start thinking about the customer journey, you are going to completely miss the boat when it comes to customer journeys.

The customer journey should begin with a problem or challenge or a change in her life that results in a new unmet need. And it certainly should not end with a transaction.

8.    

Understanding shopper objective is at least as important on deciding the brand value proposition of the products you sell. How those two things play off of each other drives the underlying capabilities that a retailer needs to be good at. And far too often retailers approach this completely the other way around: they define the products, they develop their competencies, and then they try to force customers into the journeys they need customers to take. And that is not customer centric at all.

9.    

Experiential retail will become even more focused on experience – to the point where the product almost becomes secondary or an afterthought to the experience itself. And convenience retailing will become so focused on convenience that you might not even realize you need the product until it shows up at your doorstep (as Amazon tried to patent).

This is the opening salvo of a powerful emerging trend in customer behavior around sustainability. Not only will consumers be more focused on experiences over things, they are increasingly going to want things that have staying power and meaning. In the battle of Konmari vs. Forever 21, it is Konmari that has won – and this means a new world for retail in the next retail tech decade.

10. 

Amazon may have blazed the trail in two-day and now next-day or same-day shipping, but it may well be that consumer concerns for the green impact of speedy shipping turns it into something wasteful, rather than convenient.

Another retailer that is exquisitely vulnerable to the sustainability trend: Amazon.



READ SOURCE

READ  Bringing Santa Claus to pediatric patients

LEAVE A REPLY

Please enter your comment!
Please enter your name here