TECTONIC SHIFTS in demographics, economics, technology, and media seem to be
conspiring against traditional retail business
models. But they also present an opportunity
to reimagine, reinvent, and reinvigorate retail.
Here are inherent opportunities in five imminent crises:
Crisis: You will replace staff with technology—Retail salespersons have an estimated
92% likelihood of being automated through
combinations of machine learning systems and
robotics within 20 years, according to a recent
report. Your company likely will substantially
reduce the number of humans you employ.
Opportunity: Rethink your customer experience—Re-evaluate the strategic role of human
staff to elevate the brand experience. Online
clothing retailer Zappos, while only transacting
about 25% of its sales via phone order, invests disproportionately
in hiring, training, rewarding, and retaining talented, culturally
attuned staff for these positions. If routine tasks are better performed by technology, where can outstanding people add a new
level of rapport, empathy, humanity, and delight to the customer’s
Crisis: Ecommerce growth will force store closures—Although
ecommerce is a relatively small percentage of the total retail market, its global pace of annual growth is close to 20%. If this continues unabated, by 2025, upwards of 30% of retail purchases could be
made online. This will inevitably result in massive store closures.
Opportunity: Reimagine stores’ strategic value—Physical stores
remain the best place shoppers can have powerful physical and sensorial experiences with your brand. Right-size your customer experience. Imagine stores as live-action pieces of media that speak to
the brand’s unique and remarkable attributes, fostering a lasting,
kinetic, emotional connection with shoppers. Design and articulate
the complete customer experience in-store. Stop measuring store
productivity solely on the basis of sales and profit; leverage offline
analytic tools to quantify the experiential value of your stores.
Physical stores also provide a network of shipping and pickup
points. Burberry has experienced stronger sales growth online
than in-store, but invests heavily in its in-store experience and
its “click and collect” service.
Crisis: People will 3D print what you make—Depending on what
you sell, your customers may soon be able to download and print
it in their homes. The cost of a good, consumer-grade 3D printer
has scaled to under $2,000 and is simple to use. This new consumer
capability represents a Category 5 hurricane for retailers of all kinds.
Opportunity: Reinvent your business model —While 3D print-
ing may threaten a percentage of your sales, it may also represent an
opportunity to innovate a new business model for
the products you sell. Toy manufacturer Hasbro
has a joint project with 3D printing company
Shapeways. Select artists will create unique ver-
sions of Hasbro designs, which fans can order and
Shapeways will print. It’s a new take on toy manu-
facturing and a new business model for Hasbro.
Crisis: People will share what you sell—The
sharing phenomenon is spreading across just
about every category of goods and services. In
2013, revenues within the sharing economy
were estimated to be $3.5 billion and growing
at 25% each year. You will face a choice as the
level of collaborative consumption increases:
accept a loss of sales, fight your customer’s right
to share, or find a way to benefit.
Opportunity: Facilitate sharing what you
sell—Patagonia encourages consumers to
reuse, repair, and resell their existing Patagonia
clothing. The company even created an online
marketplace to facilitate the sale of used clothing between custom-
ers. Following this campaign, sales of new Patagonia merchandise
increased by 16%. Customers rewarded the brand for its willing-
ness to do the right thing.
Crisis: You will be forced to tell the truth—When a food blogger
suggested that some chemicals in beer are, let’s just say, less than
appetizing, Anheuser-Busch and Miller-Coors posted the ingredients in some popular products. Instances like this are becoming
the norm and call for a new level of openness. What you make,
how you make it, who you hire, how you treat employees, and
even your company’s political leanings are becoming readily avail-able. There are no secrets anymore, and if there are, they’re liabilities in waiting.
Opportunity: Turn honesty into a competitive advantage—
Explore the aspects of your brand that have been obfuscated or
held from public view and the risks associated with those things
being thrust into the spotlight. Consider the potential upside
in being proactively transparent. While many food companies
defend, deny, or hide their use of genetically modified organisms
(GMOs), Chipotle began listing GMO ingredients in its menu to
build trust with customers—which it appears to have done.
While the onslaught of change provides plenty to be concerned
about, it also brings enormous opportunity for retailers with
the courage to challenge industry, category, and corporate
beliefs. Survival is not linked to size or strength, but to adaptability
and the inherent willingness to change quickly.
Doug Stephens, www.retailprophet.com, is a retail industry futurist and founder of Retail Prophet. He is author of The Retail Revival:
Re-Imagining Business for the New Age of Consumerism.
5 Coming Crises in Retail
retail industry futurist
and founder of