Whenever expert sources float out a major lemming-like prediction, there are three sequential reactions.
- The followers react in exaggerated ways, going to the extreme opposite
- Then they realize they over-reacted
- And finally, they learn that reality is somewhere in between the prediction and their exaggerated response
This accurately describes the retail industry\’s three-phased reaction to Amazon\’s mercurial rise and the onset of e-commerce, particularly on smartphones.
The first extreme response was shock and awe. Some industry leaders exaggerated the prediction that digital commerce would annihilate brick-and-mortar stores. As I\’ve said before, it\’s like the buggy-whip manufacturer at the turn of the last century watching the first Model T Ford roll off the assembly line and predicting the end of horse and buggy transportation.
The notion of an apocalypse for stores is still being bandied about by a few who still have not come to realize the new \”store\” reality as an opportunity. Most of the industry now understands that online retailing is just another distribution platform. In fact, those who really get it, not only embrace that fact as extremely positive, they are investing heavily in the integration of both online and in-store.
But here\’s the big \”aha!!\” The uber-smart retailers who understand the new reality between stores \”past\” and experiential and entertainment platforms \”future\” realize the surprising fact that the brick-and-mortar platform is the most important of the two. Physical retail is the real world, touchy-feely, tangible manifestation of the brand; its persona, its DNA, indeed its soul.
This can\’t happen online. Furthermore, the fusion of both sales platforms, BOPIS (buy online, pick up in-store), yields roughly an additional 30 percent impulse lift while the picker-uppers are in the store.
And if you don\’t take my word for the physical store being supreme, ask Target CEO, Brian Cornell who built his turnaround strategy on the store as the priority path to success. And it worked in spades. And then ask Jeff Bezos why he is organically and also by acquisition entered the physical world. I believe he will only accelerate his expansion. I even queried a potential Kohl\’s acquisition by Amazon a couple years ago.
And not just Amazon. A whole bunch of digital-native brands are opening physical shops: Warby Parker, Rent the Runway, RealReal; ThredUP, Casper, Everlane, UNTUCKit, Allbirds, Glossier, Suit Supply … plus more. Additionally, many of these and more are being acquired by, or sharing the platforms of major legacy retailers. Amazon has presence in Kohl\’s; Rent the Runway is housed in Nordstrom\’s; ThredUP is in Macy\’s; RealReal has a spot on Neiman Marcus\’ platform, to name a few. This will accelerate because the physical host and digital partner create a great synergy.
So, these digital natives not only realize their brands need to be rooted in the real world to engage and communicate with consumers on a human level, they also get multiple distribution platforms overnight without spending the capital and time required to build out their own. And we are just in the embryonic stage of this enormous concept of platform sharing.
Back to the Future
At the 2020 NRF Show, Ron Johnson, widely considered the visionary behind the Apple store and CEO of premier tech home-service company Enjoy told a keynote audience \”The best retailers have innovated so that the physical store has the upper hand again.\” It\’s important to note that he implies that only the physical retailers who are innovating will have the upper hand.
Other comments from speakers at the show noted that online customer acquisition is tough and very costly, resulting in losing or not making any money.
Consultant, Doug Stephens said, \”Stores are the new channel for retail. Stores are an incredibly powerful means of bringing people together. Stores are not about the distribution of products anymore, they\’re about the acquisition of customers.\”
My, my. Stores are back in vogue. Who would have thunk it? However, to reemphasize Johnson\’s point, and my own, the same old, same old stores of the past must transform to a new store of the future — one that provides experiences and entertainment that are compelling enough to drag consumers away from their online connections. So, the fourth phase, following the understanding of where success lies, is…well, proactively doing it!