As retailers struggle to keep up with the constantly changing technology landscape, the digital revolution is the reason why Accenture CEO Pierre Nanterme says just over half of the companies on the Fortune 500 fallen from that list since the year 2000. They are losing out to companies who are thinking deeply and acting quickly to adjust to the new scene.
This “Fourth Industrial Revolution,” Nanterme says, is characterized by its rapid pace and scale of disruption, which means retailers are forced to adjust faster than ever before. They find themselves implementing what we call omnichannel band-aids to keep themselves afloat, instead of recognizing that what they really need is a heart transplant. These short-term strategies might get them from quarter to quarter for now, but will eventually fail in the long run.
What is an Omnichannel Band-Aid?
Omnichannel band-aids are short-term digital solutions that provide a retailer with some comfort that they are investing in the some initiatives that will appear to help drive long-term value for the brand by adopting in-store technology. These are often not focused on changing or adapting to shopper behaviors and only suits the perceived goals of the retailer.
For the majority of large-brand retailers, one of two things is happening: they’re either doing nothing to accommodate the new market (either because they’re resistant to change or because they simply don’t know how to change), or they’re throwing unproven methods into the equation in the hope that something might stick.
Omnichannel Band-Aids Include:
- Releasing a smartphone app that is essentially just a digital loyalty card and/or store locator
- Simply installing in-store digital displays that are not smart or interactive (just digital ad displays)
- Providing store associates with mobile tech that only shows basic product info
- Limiting data collection to people-counting methods
Why Band-Aids Are Not The Answer
There is little digital foundation in the traditional retailer’s DNA. It’s the reason why e-tailers are often seeing success faster when moving into physical retail stores. E-commerce retailers have digital at their roots, so when they decide to open retail locations, they’re building beautiful smaller format experiences that cater to today’s empowered shopper (i.e. Warby Parker, Bonobos).
A big issue seen with many larger retailers is that they have been slow to respond to these macro changes for a number of reasons: they’re locked into long-term leases or legacy technology agreements, their departments may be siloed, they don’t have anyone in charge of omnichannel or digital operations or innovation, they’re unsure of the best way to reallocate their funds to supplement digital initiatives, they’re not sure of how new technologies really work or how to make them work for their specific brand, and myriad other embedded issues.
The fact is that retrofitting conventional stores with digital tech is not an ideal method for ushering in this new era. Retailers must instead design new store experiences with digital tech and new formats at the core, as it must be a flexible and integrated customer-centric foundation. Retailers need a connected digital heart to keep their pulse alive for the years ahead.
This time should be considered as an opportunity to shift current thinking from incremental change to redefining what success looks like and building for the next phase of their connected retail evolution.
One way for retailers to get the heart transplant they need is to begin testing and learning more rapidly by launching smaller format Connected Stores. Connected Stores showcase 5-10% of inventory (likely different collections region to region, or even store to store) and using tech to expand the aisles, collect shopper data transparently, empower the store associate to sell physically and digitally, and delight the customer. From there, the rest is using the data to design new, continuous and creative customer experiences. Those experiences are where retailers will be able to differentiate themselves and smart, forward-thinking ideas will shine.