First, The Bad News. Then 2019: Tough, Tougher or Toughest

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The state of our economy is currently a paradox of \”good\” and \”iffy\” as we enter 2019. Low unemployment and slightly rising wages do not seem to have the strength to offset threatening headwinds powered by potential trade war price hikes (and ensuing global mayhem), slowing global growth, a tanking stock market and economists\’ ominous projections that we are past due for another recession (using an inverted yield curve as potential confirmation). And while these dynamics are scary enough to ponder in the normal cyclical cadence of the economy, the dark reality TV show, produced, directed and starring our current president, is not confined to the U.S. and could conceivably be the catalyst to trigger a deep global recession and potential citizen unrest worldwide.

Oh, and by the way, Happy Holidays!!

I really did try to start this with a voice of optimism, citing most experts\’ projections of hunky-dory holiday retail sales. NRF predicts a close to five percent increase over last year. However, after I tapped in my opening line, \”The state of our economy,\” my keyboard seemed to take over like an anti-Robin to present a different reality leading to the rest of the unhappy opening paragraph.

The problem with Trump as producer, director and star of his global show is that he expects all of the other actors to adhere to his script and act according to their roles as directed by him. Sadly, in the real world, it\’s not happening. Let\’s get real: the global and domestic cast were not selected by him and have no incentive to be directed by him. In fact, his name for the show, Make America Great Again, has morphed into Make America First Again in the eyes of most of the global cast. How these actors will play out the narrative being pushed on them by Trump is scarily unknown.

Perhaps we\’ll have an intermission through the Holidays to imbibe in some \”bubbly\” to toast a great retail season. I hope so.

Sticking with the reality show metaphor, will the audience leave the show at intermission, thus shutting it down, or will it return to the show in January, hoping for a happy ending?

Act III: 2019

Barring a global or domestic recession and increasing violence around the world, industry sectors will continue to be overly competitive and growth challenged. Most economists believe that the much- applauded tax cuts were a one-off and our economy will continue on its slow growth trajectory with at best, 2-2.5 percent GDP growth. On top of this minimal economic growth, all consumer-facing businesses are still saddled with the complexity and eye-popping investments they must make to transform their digital and physical business models to serve the elevated expectations of an all-powerful, young technology-armed consumer culture. And if this isn\’t enough, the large, publicly-owned legacy brands and retailers do not get a pass on unprofitable growth. So, as you plan your strategies heading into 2019, assess your tactics in one of three buckets, tough, tougher, and toughest.

On that happy note, you might as well start thinking and acting out of your own \”box\” right now and never stop. If you don\’t, you will still be in that box when they lower it into its final resting place.

Identify the radical thinkers and doers in your organization (as we hail them in our Robin Report Radicals Awards program) and let them loose to support the following initiatives.

The 2019 Big Five

1. Personalization

Some may say that the terms \”personalization\” and \”AI\” are overused. Well forget it. I will never stop pounding their importance into the heads of every C-level executive in the industry — until they have understood and embraced the strategy of identifying and profiling every single one of their consumers. And even more important, these executives must implement and deliver personalized products and services – each customer\’s individual dream.

Big data and predictive analytics must be every retailer\’s and brand\’s strategic priority to drive customer personalization. As I\’ve said before, Amazon is leading the way, ranking on top of the one-to-ten personalization scale, while the industry at large ranks at about two. So, step on the gas in 2019 and keep the pedal down, because ultimately the ability (or not) to respond to and deliver personal dreams will determine the future winners and losers.

Amazon\’s analytics are on steroids: The company knows when you will run out of toothpaste and will have a replenishment package on your porch before you know you even need it. On another level, the predictive analytics of subscription model Birchbox, Stitch Fix and now many others, deliver a personally curated, regularly scheduled delivery of items the recipient will love. Smaller mom-and-pop neighborhood retailers have forever personalized their offerings because of their intimate knowledge of every one of their customers. Retailers need to deliver that knowledge at scale.

2. Fluidly Ubiquitous, Laser-Like Distribution

The commonly used term \”omnichannel\” is too often mistaken to mean the integration of digital and physical distribution platforms. A fluidly ubiquitous, yet laser-like distribution strategy is more accurate in defining the winning model for this century. While laser-like ubiquity could be considered an oxymoron, in this context it means that every brand, retailer or service must be operating on, or distributed through every relevant digital and physical distribution platform possible (even if it is with a collaborative competitor such as Amazon), to provide quicker and easier access to all current and targeted consumers, and quicker and easier access for those consumers.

Consumers are not only a moving target and the new POS, (wherever they are, whenever and how often), each is also an individual. Therefore, every supply chain must be liquid, capable of flowing anything and everything quickly and efficiently to each and every one of those fragmented, personal points of sale. This will force organizations to de-silo, de-layer, flatten and seamlessly integrate functions, allowing faster and more fluid decision-making. These liquid supply chains must be demand-driven (pull), vs. the old forecasting models (push).

So, let\’s talk about the word \”platform.\” This should replace the word \”store,\” which immediately brings to mind a traditional department store, and now, the store and its website. By replacing store with platform, and understanding liquidity and fluidity as described above, we can unlock our minds from being trapped inside a physical space or on a website, both of which \”store\” stuff. Amazon is a nation-state-sized platform, upon which anything and everything in the world can operate, flow through or flow from – including competitors. Platforms can also provide great personalized experiences. Integrated digital and physical platforms provide synergies. Research has found that consumers who have several platforms to choose from spend three to four times more than when they only have one. Also, consumers who buy online and pick-up-on-platform (BOPOP) purchase additional impulse items when they\’re on the platform for pick-up. These synergies, in addition to consumers demanding ubiquitous, immediate and experiential distribution, is driving pure e-commerce players to launch physical platforms and vice versa. The poster child examples: Walmart acquiring its way into digital and Amazon acquiring its way into physical.

Again, in the physical world, the need to follow consumers (the new POS) wherever they may be requires all kinds of flexible, agile and even temporary distribution platforms: think small neighborhood platforms; kiosks; pop-ups; airports; mobile vans — and just use your imagination for many more.
Finally, competitive or compatible platforming provides a huge synergy and will continue to accelerate. Amazon has a lot of competitors operating on its platform. Nordstrom has Brooks Brothers, Topshop and J.Crew. Macy\’s has Apple among others. And there are many other examples. Here\’s how it works: Synergy results when a loyal Apple customer goes to Macy\’s Herald Square because it is closer to where they live, rather than the store they usually go to across town. This results in new traffic for Macy\’s, which may also result in additional purchases while in store. Likewise, Apple gains a Macy\’s customer with a new sale. So, think about the new traffic Kohl\’s will gain from Amazon\’s small shops on its platform, which will be used for pick-up and return of goods. You get the synergy idea.

And the \”last mile\” wars will continue for the fastest, cheapest, on-time delivery process to wherever and whenever the consumer demands receipt. Where will the capital investment in these processes end when delivery is within an hour by drone, a driverless vehicle or from a skydiver?

Mark my words, this is the distribution century: preemptive, precise and perpetual distribution!

3. Co-Created Experiences

The word \”experience\” is overused and in danger of an eyes-glazing-over syndrome, which results in executives ignoring it or placing it somewhere further down on their to-do lists. It may be overused, but it is the key ingredient for personalization. It must be on the top of all consumer-facing businesses priority lists. Every step in the consumer\’s digital or physical journey, from search to discovery to purchase, must be embedded with experiences. Even the bare-bones experience of the convenience, speed and value provided when ordering a commodity item from Amazon satisfies expectations. And the Amazon experience is only heightened when placing the order through Alexa.

Subscription models like Birchbox, Stitch Fix and others offer a personally curated experience. And let\’s not forget the \”treasure hunt\” experiences at TJ Maxx and Costco in the physical world.

Co-created experiences take the concept to a higher level. Apple, Lululemon and Starbuck\’s provide experiences that the consumer co-creates with the brand. Consumers proactively co-create Lululemon\’s yoga classes. Apple customers proactively co-create a meaningful educational experience with Apple\’s geniuses. And Starbuck\’s is not just a coffee shop, it\’s a co-created community for coffee lovers to hang out in.

Co-created experiences can be addictive. Each time the consumer proactively engages in creating the brand experience, he or she is indelibly shaping that experience to their mood of the moment. Because each moment is new and unique, consumers are compelled to keep coming back, and metaphorically they become addicted. Obviously, this increases the value of the platform and everything on it. Then think about pricing power, which as we know, is an oxymoron today. Furthermore, these addicts will travel miles to get their fix (at full price or higher) when there may be a generic competitor just across the street.

What is there not to understand about the power of co-created experiences? Consider the message this sends to all consumer-facing businesses. If I were a big box or old-world department store retailer (platformer), I would be inviting brands with co-created experiences to operate on my platform. It\’s a no-brainer.

They would be adding these valuable experiences to the streets of interesting shops that these large platforms must create to deliver a more personalized, intimate community. In addition to these shops there will be restaurants, bars, food courts, salons, fashion shows, product demonstrations and other engaging experiences that will replace the old-world stores simply piled high with stuff.

4. RetailTech

RetailTech is another imperative strategy for the future of retail. In addition to all the code required for e-commerce, inventory optimization, supply chain management, analytics and databases, augmented reality is an engaging strategy that creates frictionless, co-created entertaining shopping experiences. New AR innovations enhance the shopping journey with interactive touchscreen kiosks or windows, virtual fashion mirrors, interactive dressing rooms, games and bar code scanners that open storytelling videos of a product\’s inspiration, creation and production.

Beacon technologies further facilitate personalized experiences, interacting with the customer by sending coupons, upselling, cross-selling, etc. Associates equipped with iPads or tablets containing personal information can engage more intimately with the customer and is an imperative strategy for winning. These devices also provide the sales staff with inventory transparency for immediate access wherever the product may be in the supply chain.

Automatic checkout through mobile digital pay systems personalize and provide a frictionless experience. The New Gen expects no less.

5. Sales Associates

And finally, an essential imperative for both physical and digital platforms will be the elevation of the most important link in the value chain – the human link — that interacts with the consumer at the nanosecond of search, discovery and purchase. This human being, currently called an associate should be educated to earn a master\’s degree in customer engagement or in brand ambassadorship, i.e., an MCE or MBA, if you will. Plus, they should be compensated accordingly, near the level of the Masters in Business Administration. While this may be a stretch, the principle is spot-on. With the cold, non-human advancement in technologies across the consumer\’s shopping, discovery and purchasing path, the most important asset in danger of being lost is the human social experience. Consumers cherish the proactive intimate engagement with a personally knowledgeable and human partner who has great empathy. Businesses who want to win big will provide this level of service.

The Ball Is About to Drop

The clock is ticking reminding all old-world consumer-facing businesses that time is not on their side. There are hundreds of entrepreneurial upstarts that are leapfrogging over all old-world strategies and structures, embedding all of the five principles into their models from the get-go. I\’ve called them little speedboats circling around the old-world slow-moving battleships. Nine out of 10 won\’t make it. And the one out of 10 is not an imminent threat. However, the one out of hundreds of \”10s\” in the aggregate adds up to a real existential threat.

In closing, on the happiest note I can conjure up, regardless of the uncertain economy and our presidential reality show\’s potential to tip it into disaster, the new year will arrive. Keep your head down. Stay on course, whether it\’s tough, tougher or toughest, accelerate your implementation of the five imperatives to prevent getting sidelined, or even worse, obliterated.

And to do so, find and celebrate your radical innovators and movers link who are playing a major role in taking your business successfully into the future, and please forward their names and emails to The Robin Report so we can assist in their application to our Robin Report Radicals Awards program. We are depending on you to be the solution, not perpetuate the problem.



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