My introductory commentary to John’s (@Katadhin) post below… 
Always insightful posts via the guy I look to for the future of retail insight, thanks John Andrews. Will big, retail location stores become a thing of the past? Will our way of life change dramatically?
 
Well, maybe not tomorrow, but big changes are most definitely coming. Amazon’s drones might not be ready to deliver yet, but distribution systems are already in place—ready and waiting for the next evolution.
 
Uber is gearing up to be the last mile as well, and will Amazon acquire Lyft, or the USPS to do the same, or build their own. It will be interesting to see how it all shakes out, won’t it?
 
Great point John about fighting change instead of adapting… or innovating. Most wait until it is way too late.
 
“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.” ~Dan Millman
Future of Retail.Katadhin 11.15.15
 
Physical Retailing Is Over (as we know it) by John Andrews, @Katadhin

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.

Comments below from original post on LinkedIn

  • Ted Rubin

    Ted Rubin YOU

    Social Marketing Strategist, Keynote Speaker, Brand Evangelist and Acting CMO Brand Innovators

    Great point John about fighting change instead of adapting or innovating. “The secret of change is to focus all of your energy, not on fighting the old, but on building the new.” ~Dan Millman

  • John Paul Thompson

    John Paul Thompson 2nd

    Sr. Solutions Architect at Wal-Mart Stores, Inc.

    What do you think about the deeper integration between social and retail (like Facebook’s in-app retail tests: https://www.wired.com/2015/10/facebook-testing-shopping-section-app/)? Obviously the back-end issues still apply, and it does expand the front-end. Does it help serendipitous shopping when basics are delivered automatically?

    • John Andrews

      John Andrews AUTHOR 1st

      Marketer, Entrepreneur, Intrapreneur

      I believe that shopping ins’t something that happens in a singular place or time but over time and involves many subtle influences. With all digital channels, simplicity is the key. I’ve personally increased my spontaneous shopping via social channels, primarily on mobile devices but typically, its been for products that I’ve already been considering.

     

  • Steven Lipton

    Steven Lipton 2nd

    Creating cool stuff and training for iOS, Raspberry Pi, and medical diagnostics.

    @Eric Cohen My thoughts are Mom and Pop stores have a better chance of surviving what big won’t under two conditions: 1) They give a in-store experience that is remarkabe and impossible online or in the big box. 2) They have an on-line presence which includes content marketing and a sales platform that reflect that in-store experience. Amazon is already helping this model with used books stores (often special interest) being merchants on their sites. Instead of holding used books in inventory, Amazon acts as a broker and gets a cut. Of course Amazon expanded that to the full marketplace system they have now. Other solutions aimed directly at small business like Etsy are growing, and the player I’ve been using and find very interesting is Square. Not just competing with bank for credit card processing, you can get an incredibly inexpensive on-line store. With one user, it comes out to the cost of the credit card processing. More users cost more money. We’ve used both Amazon and Square for on-line sales, and finding it a very interesting model. Sadly our on-line marketing efforts are spotty, which is the part that I think most business large and small will trip over.

  • Allison Reece

    Allison Reece 1st

    Marketing Assistant at Pisgah Valley Retirement Community

    Totally agree.

  • Eric Cohen

    Eric Cohen 1st

    Exec. Editor/CMO at Macaroni Kid

    Great post. How about for the mom and pop? Doomed?

  •  

    • John Andrews

      John Andrews AUTHOR 1st

      Marketer, Entrepreneur, Intrapreneur

      I think anyone large or small that provides and experience wins. Still a need for even the smallest players to adapt technology to enhance that though.

     

    • Jennifer Silverberg

      Jennifer Silverberg 1st

      Consultant, Speaker, Change Agent, Board Member, CMO, Consumer Behavior Voyeur

      Eric, I don’t think so … at least not for the ones that deliver an experience that is hard to replicate/beat online. It’s the nameless, faceless megaretailers that will die, IMHO. Interested in John‘s thoughts …

     

  • Ted Rubin

    Ted Rubin YOU

    Social Marketing Strategist, Keynote Speaker, Brand Evangelist and Acting CMO Brand Innovators

    Always insightful posts via the guy I look to for the future of retail insight, thanks John. Will big, retail location stores become a thing of the past? Will our way of life change dramatically? Well, maybe not tomorrow, but I think it’s coming. Amazon’s drones might not be ready to deliver yet, but the distribution system is already in place—ready and waiting for the next evolution. Uber is gearing up to be the last mile as well, and will Amazon acquire Lyft to do the same or build their own. It will be interesting to see how it all shakes out, won’t it? #NoLetUp!

  • Dean Thomas

    Dean Thomas 2nd

    Co Founder & CMO at Gnack

    #AmazonNow

  • John Stringer

    John Stringer 2nd

    Artist at John Stringer (Singer/Songwriter) | Owner PolyPlat Records | Speaker at BandingPeopleTogether.com

    Spot on. I’d echo that convenience is why I enjoy online more. I can check out products/reviews, select and order all in the time it would take to get in my car and drive to a retailer!

    • John Andrews

      John Andrews AUTHOR 1st

      Marketer, Entrepreneur, Intrapreneur

      I think Amazon is moving to the point where I can just think about a product and order it. Not to far away with Echo.

  • Jennifer Silverberg

    Jennifer Silverberg 1st

    Consultant, Speaker, Change Agent, Board Member, CMO, Consumer Behavior Voyeur

    To me, the biggest difference is that shopping online delivers WAY more fun! Retailers like Amazon have built great “discovery” engines for new products. I get to enjoy the buying rush once at time of purchase, and then look forward to the excitement of coming home to find the package at my door. And then I get to open it (which by now feels like a gift). Conversely, traditional retailers are trying to spend less and less on the in-store experience, to the point where finding a manned register can be difficult, never mind finding help in a store. Tiny aisles, out-of-stock items, dirty bathrooms, and difficult parking add to the annoyances. Give me Zappos, Amazon, or Whole-Foods-via-Instacart any day over their offline equivalents!

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