Hey retailers, it’s time to get imaginative
“I’m not going to talk to you about a retail apocalypse, because that’s not how I see it,” Steve Laughlin, IBM’s vice president and general manager of global consumer industry, told an audience at NRF 2018: Retail’s Big Show on Monday.
Retail, Laughlin said, is undoubtedly in the midst of a great period of disruption, driven by shifts in demographics, changes in customer behavior and increases in competition. Markets in North America and Europe are shrinking. Customers are valuing experiences over brands. The barriers to entry are breaking down online.
But while the retail landscape has changed dramatically, he said, stores themselves have changed relatively little, even as the percentage of sales that happen in-store remains high.
“We spend a lot of time worrying about online but we haven’t spent very much time worrying about stores. Stores matter but we as an industry have to make them matter,” he said.
Rethinking stores, Laughlin said, means putting a premium on imagination.
Disruptive retailers like Amazon, Laughlin said, value experimentation—and failure—inherently. But those characteristics haven’t been true of traditional retailers. If they’re going to succeed, he said, they must be willing to invest in tests of new, groundbreaking ideas.
“This mentality of failing fast but being willing to reinvest and learn across the enterprise is something we don’t have sufficiently. It’s something we’ve got to put in place,” he said.
So in what ways should retailers look to innovate?
To start, Laughlin said, they need to rethink who their customers are and how they serve them. They need to stop averaging their customers and start treating them as individuals.
“Today, we have more data than most industries to start to really know who our customers are by name and to start to understand the journeys they engage with us on,” he said.
Further, Laughlin said, retailers need to focus on differentiated offerings that can set them apart from the competition. The Cat & Jack clothing line is only available at Target. Simple Truth products are only available at Kroeger’s. Other retailers, he said, should follow suit with unique product lines that can’t be found anywhere else.
Finally, Laughlin said, retailers need to use structured and unstructured data—including weather, social media and event data—to make each store’s assortment tailor-made for its location in real-time.
How exactly should they do it? There’s no one-size-fits-all approach, Laughlin said. But through experimentation—and bold imagination—retailers can determine a solution that fits their business.
“We need to quit using online competition as our excuse. We need to use the advantage we have as incumbents and the physical asset of a store to call customers in,” he said.