Death of a Salesman is a play written by American playwright Arthur Miller in 1949. It addresses the loss of identity and the inability of a man to accept change; the changes around him and the changes within him. It is widely considered one of the greatest plays of the 20th century.
Playing out before our eyes in today’s world is the death of brick-and-mortar retail as the industry steadily loses ground to online shopping. As the world moves towards the data age, are traditional retailers failing to adapt?
A famous quote from marketing and advertising guru Alberto Brea sums up the situation nicely and has become an enduring call to arms for members of the retail industry that hope to survive the digital age:
“Amazon didn’t kill the retail industry. They did it to themselves with bad customer service. Netflix did not kill Blockbuster. They did it to themselves with ridiculous late fees. Uber did not kill the taxi business. They did it to themselves by limiting the number of taxis and with fare controls. Apple did not kill the music industry. They did it to themselves by forcing people to buy full-length albums. AirBnB did not kill the hotel industry. They did it to themselves by limited availability and pricing options. Technology by itself is not the real disrupter. Being non-customer-centric is the biggest threat to any business.”
Insensitivity to customer needs and a failure to adapt to changing times and technologies is what is destroying traditional retail, not Amazon. The message being sent here is there isn’t any tariff, duty, taxation or other protectionist measure that can shield retailers from the inevitable tsunami that is online shopping. The only lasting option is for brick-and-mortar retailers to become more sensitive to their customers needs and to adapt to the changing business climate.
Many online retailers have been enticing customers with deals because the costs of running a physical establishment are considerably greater than for an online store. This remains the biggest challenge to physical retailers: cost structure.
Online selling is just cheaper and can offer a far wider selection. Online shopping has proven to be less costly, less labour intensive, and jobs tend to be centred in large metro areas unlike the reality of many traditional retailers. The effect of online shopping on the traditional market place has been affectionately called the Amazon effect.
Lin Grosman of Forbes Magazine states, “the Amazon effect has introduced consumers to an almost completely frictionless shopping process with near-immediate results (more and more, this refers to delivery, too). However, the Amazon effect has also spilled over into more traditional spaces. Customers now want the same experience, whether they’re in front of their computers or inside a shopping mall.”
Protectionist measures will only serve to delay the inevitable demise of non-adaptive businesses because such measures do not address the essential, core problem—your customers are happier elsewhere.
How can physical retailers hope to compete?
Lin Grosman goes on to say that agile traditional retailers have been offering customers a technology-driven experience in an attempt to meet their lofty standards. Three ways traditional retailers have been countering the Amazon effect are:
1. Use brick-and-mortar to support online stores
2. Track customer behaviour in store, and
3. Leverage mobile technology in store.
Grosman continues, “While physical spaces still serve a purpose, many companies are rethinking what that purpose is. One result has been new-age retail stores like Nordstrom Local, a clothing store with no dedicated inventory.
Customers can pick up their online orders and make returns. Beer, wine, cold-pressed juices and espresso are available, too. There are onsite tailors. Nordstrom local and stores like it are designed to serve the online experience, not compete with it.”
When it comes to tracking customer behaviour; “everyone knows that you can use analytics to improve your website, but these digital tools are now increasingly effective in offline stores, too. E-commerce websites were the influence behind candy retailer Lolli and Pops literally tracking the paths customers take once they enter its stores. The insights have already paid off. For example, the company found that one of its locations wasn’t seeing the same revenue coming from its high-sales sweets section.
After checking in-store analytics, they found that there was a table in the way that deterred customers from exploring the area in which these items were located. These analytics also help them better train their staff to engage with customers, including offering them free samples.
Using this type of technology has allowed Lolli and Pops to almost completely forego a marketing budget, relying almost solely on their customer service instead.”
When it comes to leveraging mobile technology in store, a recent study done by SOTI (a proven leader at creating innovative solutions that reduce the cost and complexity of business-critical mobility and the Internet of Things) discovered that:
• 92 per cent of shoppers prefer stores that offer mobile experiences.
• 73 per cent want mPos (mobile point of sale) for quicker checkout times.
• 65 per cent want location-aware coupons.
• 61 per cent would choose using a kiosk over speaking with a sales associate.
• 47 per cent expect personalised service.
In this way, mobile and offline stores can work together to accommodate shoppers who are becoming more independent. They already know what they want when they enter a store. The retailer’s opportunity is in providing a mobile experience that will make it as easy as possible for them to acquire it as quickly as possible.
According to a Forrester Report, $1.26 trillion worth of offline retail sales were influenced by digital media in some way. The same report estimates that number would be $1.4 trillion in three more years. (https://www.forbes.com/sites/forbescommunicationscouncil/2018/02/22/what-the-amazon-effect-means-for-retailers/#3910e0982ded)
Is this the death of retail? Only the death of retail as we have known it. Online shopping is here to stay because it is simply better, cheaper, faster, and more responsive to customer need than traditional brick-and-mortar stores. Many countries have tried to use protectionist measures to protect their business classes from inevitable progress but all such policies have come with severe consequences.
In the immortal words of Danny Devito’s character (Lawrence Garfield) in the 1991 business movie classic Other People’s Money:
“This company is dead. I didn’t kill it. Don’t blame me. It was dead when I got here. It’s too late for prayers. For even if the prayers were answered, and a miracle occurred, and the yen did this, and the dollar did that, and the infrastructure did the other thing, we would still be dead. You know why? Fiber optics. New technologies. Obsolescence. We’re dead alright. We’re just not broke. And you know the surest way to go broke?
“Keep getting an increasing share of a shrinking market. Down the tubes. Slow but sure. You know, at one time there must’ve been dozens of companies making buggy whips. And I’ll bet the last company around was the one that made the best goddamn buggy whip you ever saw. Now how would you have liked to have been a stockholder in that company?
You invested in a business and this business is dead. Let’s have the intelligence, let’s have the decency to sign the death certificate, collect the insurance, and invest in something with a future.”
In the face of progress resistance is futile. Adapt or die.