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American Marketing Association: Brian Solis Discusses The End of Retail as We Know It

American Marketing Association: Brian Solis Discusses The End of Retail as We Know It

by Hal Conick, American Marketing Association (excerpt)

The rise of mobile devices has ensured retail will never be the same. Companies must deliver a new customer experience or risk falling into the retail chasm.

The Mobile Revolution

There’s a “modern commerce revolution” in retail, according to Brian Solis, a principal analyst at Altimeter and author of X: The Experience When Business Meets Design. Consumers are empowered by the flexibility of smartphones and have either subconsciously or intentionally changed how they behave, what they value and how they make shopping decisions. “That’s where all of this disruption is stemming from,” Solis says.

A report from Forrester found that in 2016 mobile devices drove approximately $1.7 trillion in offline retail sales—just greater than half of all retail sales. This means customers are researching on their devices and buying in stores. By 2021, Forrester predicts retail consumers will spend $152 billion via mobile phones—representing 24% of total online sales—and smartphone retail sales will grow 20.4% each year.
Retailers have had trouble responding to this mobile disruption, Solis says, as they still operate in the same “old model” that Kahn referenced. The retail customer journey is now almost unrecognizable from just a few years ago, but many retailers are still trying to make the old customer journey work, Solis says. However, retailers are underinvesting in mobile devices, per Forrester’s report. Companies would have to spend tens, if not hundreds, of millions of dollars to adopt the technology necessary to appease digital-first customers with mobile store maps, mobile coupons and digital inventories. Many businesses simply aren’t doing any of this. Taking bets on digital investments now may mean staying in business in the future, Solis says.

​​“There is a need to create a bridge between the digital and real world so that they blur and essentially coalesce with one another, but that takes experience, design and architecture, and to get there we have to understand customer modeling,” Solis says. “We have to understand how their favorite apps are impacting how they interact with information and then use that to redesign online experiences to be more like the Ubers and Tinders of their world.”

Physical retailers should strive for digital parity, says Micah Solomon​, a customer experience speaker and consultant. Transparency and ease of use have become essential retail qualities for many customers. Opaque businesses with wonky mobile experiences will risk making customers feel inconvenienced—not a driver of repeat business. “Having said that, streamlining isn’t everything,” Solomon says. “The customer experience—the reason people shop—is about entertainment and emotional engagement. You can’t streamline yourself into a successful business in physical retail unless you’re a convenience store at the perfect location. You need to offer something more.”

The Unknown, Changing Customer

That “something more” may lie in the new customer journey, but retail executives lack knowledge of who these customers are. This is deeply concerning, Solis says, as many business executives believe Amazon is sapping their traditional customers. However, he says Amazon is actually cultivating its own base of connected customers. This leaves traditional retailers—tilting at windmills like Don Quixote—trying to protect a customer who isn’t there anymore. The connected customer is different, likely young and has only ever known a digital world. In some cases, they are an older customer who has adopted a digital lifestyle.

“There’s very little expertise and experience within the executive ranks of these retailers because they’re still trying to compete against Amazon with existing resources,” Solis says. “Even when they acquire new companies, they’re still operating within a culture that doesn’t necessarily understand innovation, risk-taking and all of the elements that make innovations so compelling.”

As consumers get younger and become more technology-driven, retailers must understand how to innovate and meet their needs. Kelsie Marian, principal research analyst with Gartner, says Generation Z—or those born between the mid-1990s to the mid-2000s—will “drive unavoidable changes” in retail sooner than most retailers think.

“[Generation Z] has grown up in an unpredictable world in which technology plays a significant role in helping them to be at ease with what’s happening around them,” she says. “To some extent, becoming like them will help bridge the gap from where retailers are now to the future of living in a world in which technology will play a defining role.”

One way to become like Generation Z—or at least know how they shop—is to study micro-moments. Coined by Google, the term refers to the brief seconds of decision when people turn to their mobile device to do, buy or learn something. Solis studied micro-moments with Google, researching how retail consumers use mobile devices to shop.

“We were witnessing that consumers not only were becoming increasingly mobile-first, but if they had their druthers, they would be mobile-only,” Solis says. “What we learned is that the customer journey is incredibly fragmented, and it’s because of how [consumers] behave, but also frustrating because most customer journeys that exist today are not mobile-intuitive or mobile-native.”

Retailers have tried to bolt onto t​he existing experiences instead of speaking to the mobile native, Solis says. However, mobile’s supersaturation of the market has created a new set of expectations that piecemeal technology add-ons simply cannot meet. The linear customer funnel—as well as the customer in the funnel—that depended on brand loyalty have changed. Customers studied by Google had no brand in mind during 90% of their micro-moments. Seventy-three percent of consumers made a purchase decision based on which company was the most useful during their micro-moments of retail research. “We’ve watched an incredible shift,” Solis says.

“Read between the lines: Why would Google do this research?” Solis asks. His answer: Customers no longer spend time on traditional websites and have lost patience with horrible experiences on mobile devices. “This is a [consumer] who [retail] executives don’t know,” Solis says.


Marketing’s Role in the Future of Retail

Marketing must evolve with customer experience, Solis says. Many marketers still operate using traditional methods, but brands are being defined by customer experience. This gives marketing departments across the retail industry a chance to affect more than just messaging, but the entire customer experience.

“I always define customer experience as [the] engagement a customer has with your brand in each moment of truth, then measured overall,” Solis says. “That means that marketing has a greater opportunity to reinvent itself and to become more valuable within the organization; it just has to be ready to accept that marketing is ready for its own transformation, which I think is a great thing and a catalyst to do that is extreme personalization.”

Extreme personalization means marketers must understand customer behaviors and seize the moment—quickly. Google recommends studying micro-moments, Solis says, to understand how different touch points affect different people, such as where, how, when and on which device consumers can be reached. This is where artificial intelligence can become marketing’s “knight in shining armor,” Solis says, as a sophisticated program can crunch numbers quickly and help marketers understand what the new customer journey looks like.
More important than any gadget, technology or customer experience shift is the mindset marketers and executives take into the process, Solis says. “What do you think your role is in customer experience? If you subscribe to the thought that customer experience is each moment and the sum of those moments and that’s what equates to the brand, then marketing should be responsible for uniting those touch points. … Marketers and executives need to really think like experience architects now.”
To avoid falling into the retail apocalypse, Solis says retailers must learn from the companies that failed. Instead of prioritizing shareholder return over customer experience like RadioShack did, for example, start taking small steps into the future even if some steps might mean failure and lost revenue.
“There won’t be long-term shareholder value if you don’t deliver immediate customer experiences because that’s where the value lies,” Solis says. “Unilever was quite provocative when the CEO said, ‘We’re not going to cater to short-term shareholders. We have to transform in order to deliver long-term value. We’re going to make some big bets.’ And that’s what it’s going to take for them to be successful. But I think there are little bets that people can take.”
Whether executives, marketers and retailers start making bets, large or small on a digital world, Solis says that consumers will still have a digital experience. Will it be a good digital experience? That’s up to how much control marketers take of their company’s fate.

Solis’ advice to marketers is simple: “Integrate [experience] so that it’s complementary and additive to delivering that experience that you designed in the first place,” he says. “Brand becomes the experience.”​

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