Retail with purpose: The new digital economy demands an emotional bond with customers
What is the purpose of your business? If you are a retailer and your immediate answer is “to sell more products,” you may find times getting tougher in the months and years ahead.
To survive and prosper in the new digital economy, the leading retailers are thinking more profoundly. In practice, this means identifying their purpose – the role they play in the lives of customers, both practically and emotionally.
An existential threat
The danger of the new economy for traditional retailers is not simply slower sales or declining profitability. Instead, the threat is existential.
Online-only retailers saw their share of Christmas shoppers rise by almost 16% in 2016; department stores, meanwhile, lost more than 6% of sales. Bankruptcies and store closures are increasingly common, and even the biggest names are not immune.
If they have not already done so, retailers should take findings such as these as their cue to start thinking differently – and many are starting by focusing on what they stand for.
What do we mean by this? For some time, retailers have sought to manage their reputations, project a positive brand image and enthuse their employees. These days, however, such strategies may no longer be enough. Now, retailers need to consider their very right to exist: what is it that only your brand can give consumers? Answer this question, and the way forward becomes clearer.
Refocus on what makes your brand unique
So how can retailers differentiate themselves and stand out in today’s crowded marketplace? In our view, it requires a radical shift in approach. Consumers today do not want to merely buy from you, they want to buy into you. This means ensuring that the very essence of your brand is communicated to the consumer every time they experience you – from store employees to social media.
Consumers want to connect with your brand in their communities. Becoming relevant therefore means operating locally and ensuring that the brand promise is well known and understood by local consumers. Those with this kind of relationship with their customers will be able to adapt as consumers’ needs change. We call these brands “living brands” – they evolve according to the behaviours of stakeholders, staying true to their roots to retain authenticity but flexible enough to adapt.
Refocus human capital on what matters
This kind of radical change is likely to lead to a rethink in the way you work – including how your organization is structured and the use of technology. The leading retailers will rethink their use of human capital: roles that are standardized are likely to be automated by artificial intelligence, leaving to employees the strategic roles that matter most to consumers.
In addition, today’s enormity of data demands that retailers use analytics to aid the employee rather than leaving insights to chance. Modern tools and automated processes will not be enough to attract and maintain the right talent; to compete, retailers need to think about what draws employees to their brand. Like consumers, employees are increasingly interested in the purpose of organizations: they want to work for a business with integrity that knows what it is best at and what impact it is having on the lives of others.
Read between the lines of these capabilities, and it becomes clear that most retailers will no longer be able to do everything themselves. Instead, industry leaders are thinking about new partnerships – plugging into networks of digital partners big and small, and using data and analytics to maximize their own agility.
Rising to the challenges of the new economy will not be easy. But the data is showing us that the consequences of being a retail traditionalist could be dire: brands that do not evolve face more than decline; they face extinction.
It does not have to be this way. There is a huge prize for retailers that identify their purpose, organize around experiences, make use of advanced technology, focus on being local and personal, reconsider their structure and reimagine their processes. Get this right, and you can focus on what truly matters to the consumer and make them fall in love with you all over again.
To survive and prosper in the new digital economy, the leading retailers are thinking more profoundly. In practice, this means identifying their purpose – the role they play in the lives of customers, both practically and emotionally.
An existential threat
The danger of the new economy for traditional retailers is not simply slower sales or declining profitability. Instead, the threat is existential.
Online-only retailers saw their share of Christmas shoppers rise by almost 16% in 2016; department stores, meanwhile, lost more than 6% of sales. Bankruptcies and store closures are increasingly common, and even the biggest names are not immune.
If they have not already done so, retailers should take findings such as these as their cue to start thinking differently – and many are starting by focusing on what they stand for.
What do we mean by this? For some time, retailers have sought to manage their reputations, project a positive brand image and enthuse their employees. These days, however, such strategies may no longer be enough. Now, retailers need to consider their very right to exist: what is it that only your brand can give consumers? Answer this question, and the way forward becomes clearer.
Refocus on what makes your brand unique
So how can retailers differentiate themselves and stand out in today’s crowded marketplace? In our view, it requires a radical shift in approach. Consumers today do not want to merely buy from you, they want to buy into you. This means ensuring that the very essence of your brand is communicated to the consumer every time they experience you – from store employees to social media.
Consumers want to connect with your brand in their communities. Becoming relevant therefore means operating locally and ensuring that the brand promise is well known and understood by local consumers. Those with this kind of relationship with their customers will be able to adapt as consumers’ needs change. We call these brands “living brands” – they evolve according to the behaviours of stakeholders, staying true to their roots to retain authenticity but flexible enough to adapt.
Refocus human capital on what matters
This kind of radical change is likely to lead to a rethink in the way you work – including how your organization is structured and the use of technology. The leading retailers will rethink their use of human capital: roles that are standardized are likely to be automated by artificial intelligence, leaving to employees the strategic roles that matter most to consumers.
In addition, today’s enormity of data demands that retailers use analytics to aid the employee rather than leaving insights to chance. Modern tools and automated processes will not be enough to attract and maintain the right talent; to compete, retailers need to think about what draws employees to their brand. Like consumers, employees are increasingly interested in the purpose of organizations: they want to work for a business with integrity that knows what it is best at and what impact it is having on the lives of others.
Read between the lines of these capabilities, and it becomes clear that most retailers will no longer be able to do everything themselves. Instead, industry leaders are thinking about new partnerships – plugging into networks of digital partners big and small, and using data and analytics to maximize their own agility.
Rising to the challenges of the new economy will not be easy. But the data is showing us that the consequences of being a retail traditionalist could be dire: brands that do not evolve face more than decline; they face extinction.
It does not have to be this way. There is a huge prize for retailers that identify their purpose, organize around experiences, make use of advanced technology, focus on being local and personal, reconsider their structure and reimagine their processes. Get this right, and you can focus on what truly matters to the consumer and make them fall in love with you all over again.