Seven disruptive trends that will kill the 'dinosaurs of retail'
Sept. 25, 2014 | by Chris Petersen
Retail has been described as the world's "second oldest profession." But that doesn't mean that it is not changing. In fact, some of the most well-known retailers in their categories have suddenly gone extinct. The forces that caused these retailers to vanish are yet again evolving at an even faster pace. Darwin's law of survival is even more relevant for today's "retail dinosaurs" on the verge of extinction. For those unwilling or unable to adapt, there are at least 7 major disruptive trends which will cause the next wave of retailer casualties.
25 retail dinosaurs vanished in the last 25 years
Dinosaurs are the perfect analogy for some of the major retailers who have vanished in recent years. Many of these extinct retailers were giants that literally dominated their category or channel. Others were retail innovators in their own right, until they were outgunned by new disrupters. Longevity, size or specialization have NOT guaranteed retail survival.
Normally, I do not think of Entrepreneur as a primary retail source, but they recently had a great piece on "The Retail Giants That Disappeared." Starting with Circuit City, the article runs down the list of 25 retailers that have disappeared in the last 25 years and what led to their demise, iconic institutions such as Comp USA, Blockbuster, Borders, and Tower Records.
In reviewing the list of dead retail dinosaurs, Darwin's law of survival would seem to apply to retailers as well as natural species:
It's not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.
Seven major disruptive retail trends
There has never been a time of more disruptive change in retail. As we have said previously, retail has changed more in the last three years than the previous 30. There are at least seven major disruptive trends that are forcing retailers to adapt, and adapt quickly, in order to survive.
1. Omnichannel is the new normal
The major force of change in retail is the consumer, who now shops anytime and everywhere. While stores remain a destination for experience, the consumer journey starts online. The successful retailer of the future needs to not only master online and offline, but how to connect with the consumer across many touch points, especially social media.
2. BOPIS required, not optional
BOPIS is an acronym that describes both consumer expectations and behavior. BOPIS = Buy Online, Pickup In-Store. Actually, consumer expectations now exceed BOPIS: More than 50 percent expect to shop online and see if stock is available in store. This not only requires new integrated technology, but re-engineering of processes and staffing to be able to both execute, and capitalize on the omnichannel shopper who is now in charge of both where they make a purchase, and where they take delivery.
3. Virtual aisle = endless shelf
The reverse of BOPIS is just as important. Omnichannel consumers now fully realize that stores can't begin to stock every model, style and color. While consumers can see hundreds if not thousands of products in store, they know that there are millions online. Even Walmart is now realizing that stores are becoming distribution points for online. They have joined the big rush to build smaller stores, much smaller and less costly to operate. But, for small to be successful, they also need to be able to offer the consumer an "endless aisle" through a virtual shelf. The very best disrupters are literally creating a seamless experience between online, store and mobile apps so the consumer can "have it their way" anywhere, anytime.
4. Consumer experience rules
E-commerce giants like Amazon helped to kill off the previous retail dinosaurs based on price and selection. But, Amazon also created a new trend and high standard for consumer-centric experience and service. When consumers can shop anywhere for the lowest price, products become commodities. The biggest challenge for retail dinosaurs is a product-centric heritage of building big-box stores for displays. The number one reason consumers today say that they shop stores is for the experience and interaction with staff.
5. Connecting with the "WE"
Consumers have gone social, worldwide. While the major platforms may vary by country, omnichannel consumers are heavily invested in the "WE" of social networks. Social has become a primary source of research and validation on what to buy. Today's consumers are 14 times more likely to believe the advice of a friend than an ad. Today's major brands are spending more dollars on social media than traditional media. It is not about point of purchase for today's sale – it is all about creating and sustaining relationships. It is also not just about Facebook. Disrupters like Pinterest are being use to forecast consumer purchase trends and actually sell stuff.
6. Personalizing for "ME"
By being able to access retail worldwide, consumers today realize that choices are almost unlimited. Innovative pioneers like Nike have shown that consumers value and will pay for building their own customized shoes. New disrupters are emerging with "mass personalization" opportunities to custom tailor your clothes, or curate your personal wardrobe assortment and send it to you. One of the fastest growing online retailers is Etsy. They enable artisans to sell very personalized goods, even made-to-order styles, to millions of consumers worldwide. Why buy "stock" off the shelf when you can have something unique and personally tailored for you?
7. Mobile majority
The latest stats show that there are now more cell phones in use than people on this planet. Smartphones now exceed 4.5 billion. Mobile is the majority, and will be the preferred screen for shopping. How many retail dinosaurs have optimized online for mobile search and purchase? The retail disrupters are not only optimizing for mobile engagement, they are broadcasting offers and connecting with consumers where ever they are. The store of the future will not only have beacons to connect, but to track traffic via mobile as well.
Saying you're omnichannel is one thing, executing is quite another
The one major disruptive trend that is changing the face of retail is consumers and their behavior across many channels. To us as consumers, it is not just mobile, social or any one thing. It is all about a personal, seamless experience across our journey to explore, evaluate and purchase, with services beyond that. The retail dinosaurs must be able to adapt quickly. And, the answer is not a choice of picking one of the 7 above … the answer for survival lies in executing some form of ALL of the above.
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