Stop, and take a moment to think about what the retail market was like 10 years ago.
Who were the industry's biggest players?
What demographics had the most market influence?
How were consumers shopping?
What were your company's biggest challenges?
Did you even have a touch phone screen yet?
To say the retail environment has dramatically changed over a relatively brief period would be an understatement – yet it continues to evolve even faster.
The customer has literally changed, with Millennials and Gen Z taking over the throne as the largest consumer demographic age – replacing the long time baby boomers. Meanwhile, the immersion of e-commerce has changed the way ALL customers shop, creating a competitive landscape where many traditional retailers are struggling to keep up with the unparalleled growth of Amazon and e-tailers.
Struggling retailers share one thing in common – failure to evolve. Companies that resist change seem to be blinded by complacent myths of the past while naïvely hoping to “wait it out” - but that approach didn’t seem to work very well for Sports Authority, Toys R Us, Linens-N-Things, and The Bon-Ton.
This blog is meant to guide those who recognize the need to adapt, but are hesitant, simply because they are unsure and don’t know how – overwhelmed by putting together all of the rapidly changing pieces.
Nobody ever said change was easy, but the first thing you must do is actively work on changing your mindset. Start by reconciling the old complacent mindsets you have - the assumptions that you “always knew” and still grasp to.
This week’s Insights provides perspective on market and customer advancements, distinguishes between old complacent mindsets and modern mindsets, and can be used as a guide for the change in mindset required for you to stay relevant and get results.
1. The Customer Is Your Muse, Your Motivator, and Your (Only) Boss
Complacent Mindset: Management led decisions that are based on LY-itus, emotion (mainly fear), and personal opinions.
Modern Mindset: The customer is the ONLY entity that you should be focusing on. You need to give your customer a compelling reason to shop and if you aren’t providing it through an engaging experience, product, team, or merchandising strategy your customers will leave you. Hint: Shopping is supposed to be fun, are you contributing to creating a fun environment?
2. Value-Based Pricing
Complacent Mindset: Price driven and the cheapest wins. In the heyday of Walmart, and even at many traditional retailers today, “the cheaper the better” mindset rules.
Modern Mindset: Value driven – for today’s consumer, there is a direct proportion between value and price. That doesn’t mean that fantastic product has to be $$$$$. It means adding value. It could be an inexpensive product but it needs to have value that reconciles with what your customers don’t realize they need or want. Bottom line, if there is increased value, customers will pay more.
3. Compete with Yourself
Complacent Mindset: Obsessively stalk your competition to memorize the entire floor layout, product line, and pricing strategy.
Modern Mindset: Your brand is the only one that matters. Stop worrying about what everyone else is doing and start focusing on your brand and your customer. Competition has evolved and the only company and/or brand that you should be competing with is yourself.
4. Amazing Product = Amazing Sales
Complacent Mindset: More Sales!, Sales!!, Sales!!!… “Are we covering key items from last year?”, “Increase the sales on that style, we need to get to comp.”, “Add in 2 more styles, we need the volume.” These statements have been so commonplace that it seems we often forget whom we are buying for.
Modern Mindset: Yes, sales are important. Don’t get me wrong; we all want to make money. But product decisions shouldn’t be based solely on sales. Creativity, innovation, and good design are what is pushing the market forward and the customer has been noticing. If your focus is on delivering amazing product you will deliver amazing sales. If you build it (amazing product), they (customers) will come!
5. Wholesalers Need to Get Direct
Complacent Mindset: Sure we have a website, but we don’t sell on it. We are wholesalers and our retailer partners feature our product, so we don’t need to. Honestly we don’t even need a website, its just for awareness.
Modern Mindset: The internet isn’t going away, so if you’re not online you don’t exist – plan and simple. It is your best tool for maximizing the radius of your outreach. Why not embrace it by using it to go direct to consumer and adding a distribution channel that will expand your brands reach.
6. Choose Technology Investments Wisely
Complacent Mindset: “We need a fully maximized website, 8+ social media channels, chat bots, AI, and voice assistance capabilities……not sure why, or what for, but we need it!”
Modern Mindset: Technology is a resourceful tool, not a crutch that will solve all your problems. It should be regarded as an accessory that will heighten your customer’s experience. Choose wisely because if it isn’t value added to your customer, it’s a waste of dollars and time.
7. Don't Blame Amazon
Complacent Mindset: Amazon is taking over the entire retail world and stealing our sales. The customer wants convenience and they are giving it to them. We can’t compete with their prices, shipping, and customer service levels.
Modern Mindset: So I hate to break it to you but Amazon is an excuse. Yes they are a force to be reckoned with but they are not the only game in town that is winning. And duh, unless you are Walmart, you can’t compete with Amazon but that isn’t their fault, its yours for not putting better and stronger strategies in place that work for YOUR business. So quit whining and start doing something about it!
8. Value Your Vendor Partner (& Mean It)
Complacent Mindset: The vendors can remake it/do it/pay up. What’s the big deal? They can remake the samples (but we aren’t paying more), write up ecommerce info and selling reports (because we don’t have time to), and hand over markdown money because “their” goods didn’t sell (because they can take lower margins). We pay them, so let’s pile on everything that we can’t manage. They’ll have to figure it out.
Modern Mindset: Relationships matter more than ever in this social media & ecom driven retail world and are becoming a lost art. Commit to regular communication and start recognizing your vendors as the partners that they are. Build those relationships to foster idea sharing and give them a reason for mutual investment and you’ll see the profits come back twofold with your revived collaboration.
9. Millennials & Gen Z: A Case Study
Complacent Mindset: Why should we cater to Millennials and Gen Z?! They are finicky, always changing their minds, and I can’t keep up.
Modern Mindset: Millennials and Gen Z matter but, not for the reasons you think. You don’t HAVE to actively pursue them as your customer, and that is okay for your brand but you would be amiss if you don’t keep up with them. The generations today are very different in their brand expectations and shopping habits and if you don’t think that it matters, you are sorely wrong. These shifts are considerably different from generational changes in the past BECAUSE of technology. We are in a new frontier so you want to pay attention to them and at the very least, consider them a case study for customer evolution.
Clearly, business has changed over the past decade and continues to transform with an even quicker pace in more recent years. We are in a new age of retail and it is thrilling to be a part of. However if you want to remain relevant it’s critical you check in with your how you are approaching the industry, your business, and customer to ensure you are transforming with the marketplace.
If you want to hear more on how you can implement and grow in the retail climate today, contact Mod. Merchant.