When I talk to people who serve retailers, after a few minutes of explaining the nuances of running retail chains, I often get comments like this: I will never say retailing is easy again.
Retailing has never been easy; I've often viewed it as art in creating a masterpiece theatrical event and science, almost like launching the first ion rockets to Mars, therefore one continuous experiment in creating aspirational experiences.
I have to point out I am not a futurist, nor someone who paints dystopian pictures of retailing or one where humanity will be subservient to machines. I leave that to others. What I do is look for opportunities, not someone else's. I look for those opportunities that will impact an industry or consumers. Usually, they are 3-5 years away and have all the chemistry to surface in some capacity.
I will also tell you that consumers will shop in person for hundreds of years to come, regardless of how these shopping venues evolve, how industries deploy technology or how consumers adopt it. We as humans have been this way since we became aware of our sentient place in this world. We learned to create things, trade and sell. We adapted to early style open bazaars in ancient times, and we had outposts, all of which led to shops, downtowns, department stores, malls and e-commerce, now even direct to consumers. So, the future has been unfolding, sometimes gently and other times abruptly.
Often, people want to know the future. I believe that Peter Drucker, the father of Management, said it best "If you want to predict the future, create it." And that is what the future is really about. It is not about how others use technology or design stores or customer experiences. Because chasing the frenzy of others' ideas seldom ends well. Instead, it is about vision and inspiration, with a blend of art and science that sets the human mind afire aspirationally to pursue their personal vision. It sounds lofty and perhaps even romantic in some settings, but that is what retailing is about.
When I think about the history of retailing, especially one hundred years ago when so much relied on people engaging and serving people, it worked because it was a personal one-on-one experience. Pictures of staff carrying out packages for customers walking out of department stores are behind us. After years of driving out costs, retailers became vulnerable to disruptive innovation. Why? Because the service early e-commerce delivered was no different than physical operators who could no longer afford the staffing, so it was an open door for change. E-commerce operators delivered to your home; physical retailers couldn't or wouldn't. A reporter once called and asked me what I thought of "showrooming." I said it comes as no surprise. Why? Because consumers were starving to free up their personal time. Households couldn't survive without two incomes. As a result, we have a culture where household couples or singles are time-stressed; they hold down two jobs and carry debt; some have kids in need of daycare, school clothing and supplies; the kids also attend after-school activities and dentist appointments. The cost and time to operate a household remains overwhelming. Physical retailers didn't get that message early on: they had to hit the digital wall first, and many still do.
After years of cutting staff, shopping took longer, and the whole aspirational aspects of retailing degraded to dull. In fact, the reality even today, one person is running a store and expected to deliver a great customer experience to more than two customers is a stretch. When 2007 came along, with the birth of smartphones, this single device decoupled consumers from their homes and desktops at work. They were free to roam, compare and shop. So, no 'showrooming' was no surprise. And nor should anything currently being developed be a surprise either. I am referencing to AI. We remain in a culture where convenience is in demand; the risk is that many retailers will make the same fundamental mistake as they did with e-commerce, developing digital platforms, connecting with mobile devices and building strong performing omni channels.
All retailers would love to rekindle the past; however, financially, it is impossible. Service and products will always cost more in any environment with a great deal of human contact. Therefore, you either embrace technology or get run over by change.
So here we are in the present. I find that many retailers looking for brand resilience need to address their ability to compete in what I call a hyper-competitive market. One would hope that they have achieved some level of digital mastery in addition to the quality of data that is being collected and have defined their AI capabilities to be truly competitive.
There is no denying that AI will change this human-driven world. Human resistance is driven by fear agendas to protect silos. Corporate resistance is quickly met by disruptive innovation. The heads of companies make the mistake of sitting on their hands and closing their eyes to the future. That’s how it begins. Ultimately, this mutual resistance hastens the company's demise, and everyone walks looking for jobs. History doesn’t just repeat itself. It is a stark reminder that you either lead or fail.
Having studied businesses that have lasted hundreds of years, they had to learn to adapt and recreate themselves repeatedly by adopting new processes, products, services, and technology. Sometimes, as a result of unprecendent events. Their business cultures were resilient because these were families that passed down their learnings. Few corporations have the ability to do that today; however, those who have identified their vision and created the right culture are in a better place. Organizations need this level of maturity to deal with the present and future.
So, here are ten areas that I believe will change retailing faster because of Data and AI; it's not to say that this is the complete list by no means. In reality, the list will only get bigger, and retailers should expect significant changes to the digital and omni landscape they thrive on. Of course, how well an organization does will depend a lot on its willingness to lead and create change versus chasing it.
Knowledge will be a multiplying factor that comes from data and AI, which will drive decision-making more dynamically and unexpectedly for many retailers that leverage it. However, knowledge will also lead to leadership in product design, development, supply chains, sustainability, pricing power and market share.
How retailers develop and design their customer capabilities will also separate winners from losers - those with a deeper understanding of their customer preferences, habits, and pain points and willing to invest in (key point) in changing or improving them will also have advantages.
Identify, develop and deliver next-generation strategies through the power of Human and AI intelligence working together. I can't emphasize enough to highlight this point. Ai is coming of age, and it is clear why so many fear it. It's not that it will take over the world. It is because it will challenge human thinking without evidence.
Resilience in a hyper-competitive market and the nature of competition will change. Invest in talent that is bought into embracing change.
Rethink the current organization. I believe the structure needs to be inverted breakdown silos fixed on turf protection. Silos kill cultures, and you will find more silos inside of the ones that are obvious.
Customer engagement and timing - chatbots & predictive analytics...optimize customer engagement. Companies that are not making heavy investments will struggle to break through as AI personal assistants grow. There will be more AI-to-AI communication, and you don't want to be caught on the outside of this.
Omni channel effectiveness -optimize the customer journey across various channels. However, AI will punish brands that are not intelligent enough to communicate with their customers.
Optimized store layouts - rethinking the in-store experience once more. The time has come to go beyond paper displays. Interactive and visual must deliver the message.
Staff recruitment, selection and development- hiring for the brand story. As I said earlier, retailing is both Art and Science (technology); however, to deliver a brand story, you need to create the environment with the right people who choreograph the experience, like actors in a play. Rehearse, rehearse, rehearse.
Expect the equities markets to add another component in valuing companies and their performance. That will be their data privacy quality coupled with their AI capabilities. Any brand without it will be considered to be falling behind.
No retailing is not easy. It is about art and science to create inspirational experiences. Data and AI contribute to that experience regardless of the channel it comes from.
I bring real-world experience to the discussion on resiliency and the competitive capabilities needed to remain relevant now and in the future.
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