Ok, so people aren’t going to stop shopping in stores tomorrow, however, they’re going to do it a lot less than they do today. Grocery trips per week are at a 10 year low and falling. The fundamental problem facing retailers today is a business model and deployed infrastructure that is simply not aligned with changing consumer behavior. No amount of marketing, sales, coupons, spam email, retargeting or begging is going to change this. For a large part, shopping sucks. It’s a chore, the experience is lacking and with each passing day, new alternatives that are easier and less time consuming are gaining traction. Throughout my career, I’ve seen marketers fight changing behavior vs. adapt their product or service to behavior always with the same result. Remember the music industry suing its customers for not buying albums any longer, or taxi companies seeking to politically constrain Über? Retail will adapt of course and cull the laggards.
Almost on cue, retailers have responded with increased sales and deals in a margin destroying race to the bottom. At some point, there is a diminishing return, especially if consumers are required to do the work to save move via apps or coupons etc. In a transparent pricing world, price is not a competitive advantage but rather table stakes. Someone will ALWAYS have a lower price and increasingly consumers are seeking a “low enough” price that factors in the effort they have to put into transacting. Jet.com has garnered lots of press for having lower basket prices than Amazon, a company that hasn’t profitably sold items in its entire history but has built profit centers from ancillary services like cloud hosting and its Prime membership. Can Jet.com overcome a huge infrastructure investment lead prior to running out of cash? Doubtful. And once again, a reliance of the gamification (so much so that shoppers can’t figure out how much they are paying) of shopping seems to be a business model. Ask Groupon how that is working out. The reality is this, there will always be consumers who will ‘work’ for deals, discounts and savings but likely efficiency and simplicity will win out for the majority of consumers.
The real future problem for retailers will be the real expectations of omnichannel beyond the buzzword darling that it is currently. Consider this example from Business Insider’s Haley Peterson trying to buy a Fitbit from Walmart.com and pick it up in store. This scenario should be the key for how Walmart can compete against Amazon by leveraging its physical retail but as Ms. Petersen points out, it’s a terrible user experience. Due to the fact that walmart.com and Walmart have different pricing (and inventory), the shopper is unable to take advantage of the combination of store and ecommerce offerings as a single entity, they may as well be separate retailers. Retailers: Consumers do not care about your back end problems, they expect to have a single brand experience no matter where they engage. Media and shopping are fusing in some very unexpected ways. Google, Facebook, Instagram and Pinterest are all retailers in the sense that they are helping consumers to edit product selections and facilitate transactions.
The Endless Digital Shelf
Note the multi-retailer options including the manufacturer derived from a simple Google search of Nike Air Huarache shoes that creates shopping interface for comparing and buying various models. Product discovery is also enhanced by adding in simple product selection tools so that I could easily narrow my selection no matter my purchase hierarchy including geography. I was also able to create a shortlist of products I was considering which can be collaborative with other users. Essentially, Google has created an endless shopping shelf comprised of most of the currently available options.
I believe the biggest change will come from shopping automation. Already many retailers and brands are developing auto-replenishment programs. I have put my razorblades on replenishment from walgreens.com and will likely take time to put all regular consumables my family uses on replenishment as well. I predict that as consumers really give consideration to how much time and energy go into buying mundane purchases like cat litter (and the process becomes more seamless), more and more products will just show up at consumer’s homes when needed.
Retail stores definitely have a place in consumer’s lives although the shift from the center of shopping focus to a discovery and support role is occurring faster than many expect.