At the NRF Big Show last month, we had a conversation with a sales executive from a big store technology provider. When we asked him how 2015 had gone, he expressed some disappointment, blaming the fact that retailers spent their time and money updating their payment systems to be EMV compliant, putting off any other store oriented implementations. That opinion was seconded by another store systems provider that I talked to, although he expressed hope that “sooner or later, retailers are going to have to re-invest in the stores. ” These reality bites stood in sharp contrast to what was being demoed on the expo floor itself, where solutions providers were busily showing off technologies that assume that a converged digital and physical selling environment is a fait accompli.

That’s a problem, because consumers think a converged digital/physical shopping experience should be a fait accompli. Nonetheless, retailers aren’t moving quickly enough. Another solution provider mentioned that his sales pipeline isn’t flowing as it (theoretically) should because “of the 4 or 5 things that my retailers can afford to capitalize, there are 20 more on the critical to-do list! “

The Store As Entertainment

Retailers need to find a way to multi-thread needed improvements in the stores if they have any hope of retaining their customer base. I’m a staunch supporter of the notion that there will “always ” be stores. I’ve said it a million times, “people love to shop! ” Let’s face it – it can be fun to explore! There’s entertainment value in shopping.

Or… maybe not so much anymore. How people entertain themselves nowadays is very different than in times past. There’s a Direct TV commercial running lately that highlights the problem. The scene is of an early American settler family considering Direct TV. But as the opening shot shows, this 19th Century family is living in a 21st Century suburban community. While the wife pleads for Direct TV, the husband intones, “We find our satisfaction elsewhere! The boy has his stick and hoop, the girl – her faceless doll! And you have your cabbages! “

That scene is pretty analogous to the disconnect between retail stores and shoppers today. Aisle upon aisle of a nicely displayed assortment just isn’t enough to spark much excitement anymore (unless of course the products are perceived to be exclusive). We live in a world of rapid commoditization. Let’s think about that: commoditization is something that happens when a product becomes “substitutable “. One of the outcomes of that is that “price ” becomes a much bigger factor in the total value equation, and today’s price transparency and fierce price-driven competition only exacerbates this challenge.
As Walmart continues to learn, just being “the low price leader ” just doesn’t cut it as much as it once did. People are demanding a more complex value offer.

So the question is, how does this fit in with a supposed need to make the stores more entertaining? One of the dictionary definitions of “entertainment ” is, “hospitable provision for the needs and wants of guests “. Or put into another word, “relevance “. RSR has been talking for years now that in order to be relevant to more consumers, retailers need to take a customer-centric view of their brand’s value. We’ve called it “the 5-C’s ” (for eachcustomer, offerings made in the right context, with the right content, reinforced by community feedback, and turned into a transaction via commerce).

This approach doesn’t necessarily mean “personalization “, but it does mean “appropriate to the need and want to be fulfilled “. That is why on the NRF 2016 expo floor, no technology provider could define the one-right-way to enable the customer journey. It varies from retailer to retailer – and coincidentally that’s why the very first question RSR asks retailers when we get into discussions about their “omni-channel ” agenda is, “have you designed the desired customer experience for your Brand? ” The bottom line for retailers is that if they do not either (1) find a way to offer more exclusivity with their Brand, or (2) “wrap ” their products with services and relevant information delivered the way consumers what it delivered, stores will quickly lose their relevance.

Add Some Value

What retailers must avoid is to simply be aggregators of demand. Although that is one of Retail’s two big functions in the ecosystem (the other one being the “last mile ” for distributing supply to consumers), it’s simply not enough to win hearts and minds anymore. This gets back to Bill Gates’ famous 1994 statement about disintermediation ( “Banking is necessary, banks are not “). In the context of the consumer product ecosystem, retailers are the first level of aggregation for demand. But if you were to take the idea that aggregations are unnecessary in today’s world, then why do we need retail stores, or retail companies for that matter? Whereas in the past, demand (people) came to the supply, now supply can go straight to demand without the intermediary of a retailer. That’s exactly what happened to books sellers, and the music and video distribution industry in its entirety. And hearing the latest news about Sears and Walmart store closures, you don’t have to be an alarmist to think that mass merchants may be getting pulled into the vortex too.

The answer is simple to say but hard to do: retailers have to add some distinguishing value that draws consumers in. Or in other words, to find a way to make the experience relevant and entertaining to consumers. That’s why retailers have to wrap their products with either services or information, or both. And as the technology providers opined at NRF’16, retailers need to move much faster.

They really don’t have much choice.