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The Transformation of Retail
By Michael Koch, Sr. Director, Samsung Electronics America
Retail in the United States is transforming at a pace not seen before. The transformation is due largely to (1) demand by the consumer and (2) the various business entities “re-inventing” themselves to stay alive.
These changes are cultivated by product advancements in addition to the “work/life balance” demands on the American worker. This worker is working more, at home less, is making more and investing less. As the generations in the current labor force and buying force is growing, the distinct separation of needs/wants by generation have to be considered in retail environments.
Think about this: for the first time in our history there are five generations of people in the buying force today. These people range from those born before the Great Depression and Franklin Roosevelt as president to those that are the first generation of children getting a career job that were born after September 11th, 2001.
All of these generations, however, are not motivated to purchase for the same reason, and as consumers, they are even more different than ever before.
The larger issue is this: while the products and technology have advanced exponentially, the retail environments are very much the same stagnant displacement of products in place since the 1950s.
Retailers can differentiate themselves with customer service, but they need to do it profitably
The secondary issue is that our workforce in retail does not possess the skill sets for selling that was once so prevalent in the marketplace. No longer seen in retail are the true sales person that was highly skilled in speaking with you and understanding what made you “tick” and what makes you buy.
The combination of these two issues is the death of retailers and the reason why some are faltering now and are struggling to re-invent their brand. Most are aware of changes needed, but fail in the basic ideation steps needed to create something new, something special, and something this new consumer can relate to.
As “experiential retail” is the latest buzz phrase to capture the industry, some examples of trend setters include Walmart (grocery online ordering for pickup and delivery), Target (RFID technology for no contact buying in store), Amazon (Prime with same day delivery of ordered products through strategic placement of warehouse consolidation), and some companies experimenting with “un-store” concepts.
The un-store concept is not new. It has been seen previously in temporary holiday setups and trade show venues for years. Now seen in permanent remodels by Nordstrom and others including the Forbes award winning Samsung 837 flagship in Manhattan, bold ventures by retailers worldwide are starting to transpire into real world applications. These retailers are focusing on how their product relates to the consumer activity rather than the traditional environment of product laden displays that ask the consumer to choose. The single common thread in these experiences is the drive to establish an interpersonal relationship between consumer and product based upon the activity the product will be used for.
At risk is the cost of this endeavor and the inability to accurately measure intangible results and KPIs. At stake is consumer passion and driving the connection between consumer and product in a way that people can feel comfortable in and relate to easily.
This is exactly why retail needs to change today in order to survive tomorrow. What has worked in the past will no longer work for the consumer of the future.