Traditional Retailers, It’s 15 Minutes to midnight. How to Strike Back at Your Online Competitors.

Customer Obsession does not equal Customer Centric.

I am not one to use such CW Superhero rhetoric in a title, but we are at a significant inflection point in traditional retail. Many traditional retailers have Investment Firms or Venture Capitalists hovering over their business models and or owning the retail outlet directly. These venture capitalists are demanding that retailers launch and execute on not only a digital transformation but also a Customer-Centric Transformation. With this said, here is a list of opportunities, we see in our practice to help Traditional Retailers strike back at their once only online competitors. There are many significant opportunities and it’s not too late, but action is required.

From Merchandising to Customer Centricity.

  • Stop thinking of your business as primarily a merchandise operation. That is a very dated paradigm in which the customer experience is not fully accounted for. Instead of jamming in tech and analytics functions such as broader business analytics under merchandising, take a step back to make sure the customer journey you want to drive is what the customer wants in the context of the retail experience respecting all of the traditional pillars of stable retail yes. What this means is consider revamping your org structure with new C level roles in Data Analytics and Digital rather than just planning, allocation, and merchandise. You need an Integrated data-driven experience strategy as you will need to compete on analytics to drive the experience.
  • Create an integrated, connected data infrastructure by having a coherent data strategy. Without a CDO and clear customer enabling data strategy, it is not clear if traditional BI data modeling in today’s retail environments can get you there alone. You need to deal with the digital exhaust data coming off of mobile devices and social media platforms that need to connect both offline and online marketing. You need to resolve your customer’s identities across channels such as social, and you will be driving prospects and customers across your paid, owned and earned media. This is a very complicated endeavor, but one if mastered can create the competitive advantage you seek over your online competitors. You need to connect the dots in a vastly more complex digital and retail ecosystem.
  • Start viewing your CMO as more critical than your Head of Merchandising and Allocation. The fact that you see marketing and analytics as support areas will be your demise. Yes, it’s time to turn up the strength of the language if you want to win. Related to this theme you need to view merchandise and promotion spend on an ROI basis with other forms of marketing spend. Come up with a framework on what to invest in based on the customer journey you want to co-create with your customers.
  • Continue testing big data and business analytics to help optimize the merchandising mix but think of these AI and data capabilities as the brain behind your merchandising planning and not some adjunct to the buying process. For example, create an Omni-channel segmentation using customer behavior to understand buying trends and combine this with good social and customer VOC to ensure you know both the “what people want” and how they buy. A right blend of quant and qual is needed more than ever before. The Analytics function including digital and social intelligence needs to inform enterprise-wide strategy and not just one aspect such as mobile geofencing or beacons for example. There needs to be a Strategic Intelligence Strategy to drive your customer experience strategy.
  • Many large retail stores are very disorganized and give the impression of being a mess which hurts the brand image and makes the consumer want to buy online and stay home. This works against your omnichannel efforts. Walk into some stores where clothes are pilled up and or thrown all over the stores.
  • Restructure your marketing channels under the CMO. The direct mail team and the digital team should not be in separate verticals doing their own thing. This creates customer collisions which should not be happening in the age of the customer where customer-centric technology is available to solve this. If there is inertia to do this consider replacing leaders as needed as you can’t afford this type of rivalry in your company.
  • Use analytics to help you optimize your merchandise mix between national brands and private label. This is not apparent from the customer experience that we are seeing. Broader use of Business Analytics and Optimization can help with these business problems but think about optimization across the enterprise.
  • For your digital transformation consider bringing in executives from other related fields such as retail banking, online advertising, and other consumer-facing businesses. To break the mold, you need additional points of view. You already have enough institutional knowledge of your business, but that doesn’t appear to be fending off competition.
  • Broader use of AI to bring a cost leadership position. For example, according to porters classic strategic choices of Cost leadership, differentiation and focus. Choose one strategy to reap the benefits of AI. For instance, can customer service be handled on social media and what role can chatbots and virtual assistants play? In Porter’s strategic choices this would help with cost leadership. What part do smartphones play in the omnichannel and in-store experience and more?
  • Ensure you are using recruiters who can find transformation executives and who know the disciplines you are recruiting for.
  • Some of the early work in digital analytics has been great but how does digital intelligence help the entire enterprise across all channels to better enable customer engagement. Tag Management and other identity resolutions systems are not always in place to measure the interaction between social media and other marketing efforts.
  • Continue to leverage your in-store advantage but use data and analytics to further target and segment to provide customers with an indeed customer-centric experience, not just a customer-obsessed experience. Customer Obsession without customer-centric data and knowledge does not drive step change and double-digit growth.
  • Consider Revamping your own compensation models to attract top talent. If your online competitors are paying mostly in-stock consider paying a bit more in cash to attract top talent and learn the various models of your competitors and use that knowledge to your advantage.

These are some of the issues we see in our practice to help take traditional retailing to the next level. We hope this article provides several provocative ideas for you to take your retail customer experience to the next level.