Retailers in both mature and emerging markets are experiencing an unprecedented rate of change, as traditional department stores permanently shut their doors and sales increasingly shift to online platforms.
Remaining relevant and embracing change should be at the centre of everything retailers do today, senior retail executive Andrew Jennings told a Gordon Institute of Business Science (GIBS) Forum. “You can’t be half-hearted about retail – the retail graveyard is full of brands who lost focus and didn’t stay relevant.”
Jennings, who has more than 45 years of experience at some of the world's most respected high-end, specialty and department stores including Harrods, House of Fraser, Saks 5th Ave and Woolworths South Africa, explained that traditional bricks and mortar retailers are under huge pressure. In the United States and Europe more shoppers prefer to purchase online and customers are becoming increasingly sophisticated.
Due to retail innovations such as multichannel environments, disruptive retail models and empowered consumers “the whole environment has been turned on its head in only a few years.”
The all-empowered customer, or what Jennings termed the “super being” has everything at their fingertips: “They demand transparency, value for money and service every step of the way, whether it is online or in traditional bricks and mortar retail.”
Access to online price comparison and product reviews mean customers have extensive product knowledge that can surpass that of sales staff. “You can’t move slowly or you lose the customer forever,” he said. “The customer makes the decision whether we as retailers will be successful or not – nobody else decides that. They have all the information at the touch of the button.”
Constant innovation by online retailers such as Amazon, who now offer a ‘try before you buy’ service through their Prime programme meant customers making the journey to a physical store want excitement, or “stores of discovery.”
“You have to make sure there is a reason for the customer to visit your store,” Jennings said.
While only a small percentage of South African retail sales are online compared to 15,5% in Europe and 17% in the US, Jennings told the gathering to “watch this space. It is going to go off like a rocket and you have to be set up for it.” He predicted that Amazon would follow its South African call centres with retail operations within the next three to five years.
Jennings mentioned the Mr. Price and Foschini Groups as examples of excellent local retailers who had delivered consistently and kept employees, customers and shareholders happy.
He offered four points to retailers who wish to stay relevant in today’s rapidly changing environment, as detailed in his recently released book Almost is Not Good Enough – How to Win or Lose in Retail.
Know your customer
Retail basics such as understanding your customers’ emerging wants, needs and desires still apply today. Jennings said consumers are all the same in that they need to be served, but can differ dramatically from country to country: “When you are in a new country, you must go out and meet the customer. Do not assume what they want or what they would buy. Understand who the customer is, spend time analysing them and make sure you pass that information onto your buying department,” he said.
Retailers often fail due to a lack of understanding of how fast the customer is moving he added.
Constant innovation with purpose and focus is crucial, whether it is innovation in the channel you choose, loyalty schemes or in outreach community programmes. Jennings gave the example of Woolworths’ MySchool programme as an innovative outreach initiative.
Hire talented people
Jennings emphasised the need to hire talented people with passion: “Train them, develop them and most importantly, let them make a mistake or they won’t grow. Too many companies are run by fear,” he said.
He added that it was important to have a management team who can ruthlessly implement strategy and that frontline staff need to ensure that every interaction with the customer is perfect.
Keep change at the centre of your business
“Customers don’t want to be served by retailers, they want to be thrilled,” Jennings said. “You shouldn’t try and drive traffic to your store, your business should be a magnet to attract people. Retail is theatre: We are the writers, the stage producers, the actors and the set designers all rolled into one. It’s not about discounting, it’s about remaining relevant.”
He said the time for the traditional department store had passed: “The department store has become an irrelevant dinosaur with too much competition from specialty stores.” However, he added there was still a place for the standalone trophy business, such as Selfridges or Harrods in London, which attract people for entertainment as well as shopping. However, these businesses are expensive to run.
“I am a big believer in bricks and mortar, and am still a believer in the high street, providing you are prepared to embrace change, be innovative and be an omnichannel retailer,” Jennings said.
“Retailers have to create that wow-factor that keeps customers’ attention and keeps them relevant. You have to be extraordinary.”