Why the Internet Retailer is the China of the Global Economy
You know the story. China is on the move and they’re coming for your job. They can do it cheaper, faster and better than the rest of the world and while the economies of the West struggle to keep a nostril above water, China expands with the vigor of a 90’s baseball slugger.
And then there are the structural advantages. Labor is cheap, plentiful, tireless and keeps its mouth shut in China. The Central Government helps by making big investments in strategic markets. They’ve developed sophisticated, hyper-responsive supply-chain arteries, the efficiency of which would make an ant colony positively green with envy. Chinese employers are unencumbered by minimum wages, labor unions, OSHA, the EPA, health insurance or diversity training and freed from the yoke of these Western luxuries, rocket toward the domination of markets.
So how do we, as economic patriots and rationally self-interested business leaders, stem the blistering pace of Chinese economic hegemony? Innovate. Create. Essentially, do new stuff.
Use all the things that make it structurally impossible for us to manufacture a smartphone for $1.37 to design what comes after the thing that comes after the smartphone. Use all that overpaid, underworked, advanced degreed labor to build something people want to have.
Now jump cut to the world of retail: Amazon and ecommerce only sites are China. Traditional retailers are the U.S. Yes, this is an anology.
Online retail in the U.S. is growing faster than China’s economy and the bulk of that growth is enjoyed by online only shops. And why not when they have so many structural advantages? It’s easier to track and measure the behavior of a visitor to an online store than it is to follow a shopper around the concrete aisles of an actual store, making note of everything he or she glances at. Online retailers don’t pay rent on showroom space. They don’t need a private army of salespeople or cashiers or janitors or security guards or “greeters.”
Internet retailers can do it all cheaper, faster and better and charge customers less for it, all while enjoying the healthy margins that an utter lack of 20th century overhead allows.
So what’s a traditional retailer to do? How do they keep their stores from turning into no-cost showrooms for their online-only cousins? How do we keep Best Buy from becoming Radio Shack and Radio Shack from becoming Shane’s Rib Shack?
As with America’s place in the global economy, the prescription is the same for retailers: innovate. Use your perceived weaknesses as your strengths and give customers something they actually want.
Many of the top traditional retailers are following this prescription with gusto to the tune of something called Integrated Retailing, while others call it Interconnected Retailing or Omnichannel Retailing. No matter what it’s called, the goal is the same: connect and engage the customer on all available shopping channels for a complete and immersive brand experience. This was one of the top themes at this year's Internet Retailer conference.
Start with the customer and understand who they are regardless of whether they’re visiting a website, a retail store, a social site or dialing the call center. Become channel agnostic. Give your web visitors a reason (and a good one) to visit their nearest retail store. Give your retail shoppers a good reason to download your mobile app. Give your mobile customers a solid reason to come back to the Web.
For many of those retailers determined to survive and flourish in the face of these economic and structural headwinds, the cornerstone of the above effort is a single location, accessible in the store, on the Web or via mobile device, for the customer to see every detail of their relationship with the company in real-time. It’s a place to deliver up to the second information on orders and shipping, provide intelligence based recommendations that take each touchpoint into account and show the customer how deeper engagement with the brand (how-to classes, early access to sales, exclusive promotions, buying online and picking up in the store) can actually drive measurable value for the customer. Retailers all have different names for the central hub. There’s usually a “My” in the title somewhere.
MyLowe's is Lowe's central customer portal and allows for customers to engage deeper with the brand.
Today’s savviest retailers are investing unimaginable time and treasure in the construction and optimization of these central nervous systems and the bets better pay off. Driving customer adoption means the game has changed, allowing traditional retailers to close the gap on competition and close the loop with customers as each interaction with the “My” portal allows a better understanding of the wants and needs of the customer. The inability of retailers to drive adoption will have the opposite effect; forced back to an ever smaller drawing board with fewer resources and precious little time.
What do you think? Do you agree that if the traditional retailer doesn't innovate its retailing strategy, it will be left behind? What retailers have you seen that are delivering killer omnichannel retailing to their customers? I'd love to hear from you in the comments section below.