Technology Cannot Save Retail
Thomas Lee is a business writer for the San Francisco Chronicle, my hometown newspaper. Lee’s analyses are usually spot-on, and on occasion we’ve had some interesting conversations about where retailers are going and why they’re going there. On Sunday, Lee’s column focused on the current hot phenomenon, Pokémon Go, from an interesting angle. Here’s what he wrote:
“Forget boring things like products, price and service. The fate of physical retail is becoming linked to the virtual world, with strange-but-true happenings like mass hunts of online cartoon characters from Japan.
Indeed, some in the retail industry see a savior of sorts in ‘Pokémon Go,’ the mobile game rapidly spreading across the world… Some retailers, especially those dangling special offers to lure players, have seen a surge in store visits… Yes, the game can drive traffic to stores, but will people actually buy anything? For retailers, the limitations of ‘Pokémon Go’ are similar to the challenges of trying to get people to purchase something through Facebook or Twitter. People go to social media for entertainment and communication, not necessarily to purchase clothing or laundry detergent. “
I’ve got a simple answer to the question: no. Here’s the slightly longer version: people shop for solutions to their lifestyle needs. If they don’t have a need, they don’t shop. That has nothing to do with Pokémon Go, Facebook, Instagram, Twitter, or anything technology. It’s all about the human need.
Let’s make that real. My brother is a store manager at a hardware store. He recently told me a story about a conversation he was having with a customer. The customer came in and said, “I think I need a variable speed drill “, and then proceeded to ask several questions about drills in general. It became clear in the course of the conversation the she knew next to nothing about drills. So my brother said, “you don’t need a drill, you need a hole “. And with that, he recommended a handyman to drill her a hole (cost $25 vs. “best case ” $50). Now he’s seen the same customer in the store several times for other things – house supplies, garden supplies, etc., and he’s converted a shopper into an advocate.
Retail is all about a retailer’s ability to fulfill the need in a satisfying way. As long as consumers have needs, something called “Retail ” will exist.
Does Retail Need Saving?
The Chronicle’s Thomas Lee brings up another, more important question: does retail need to be “saved “? That’s a loaded question! Saved from themselves, most likely. My RSR partner Nikki addressed one aspect of this a few weeks ago (Stores Aren’t Dying – Retailers Are Killing Them), when she outlined what retailers need to do to match their store offering to how consumers shop today.
But here’s the core thought: It’s not a question of if consumers will shop, it’s a question of how. I’ve said this many times in many ways – the consumer path-to-purchase is as old as humanity; we recognize a need, we investigate the possible solutions, we pick one, we pay for it, and then we “consume ” it. How we do those things has changed dramatically with the mass adoption of Internet-connected mobile technologies, and that fundamentally changes how retailers must retail. The sooner the Retail Industry accepts this fundamental reality, the faster we can all get on to actually making it happen.
And That’s Where Technology Comes In
And that’s where technology comes into the picture. In the past, technology was applied to the retail operational model to serve retailers by helping them achieve revenue growth and increased profitability. Sure the consumer benefited too (lower prices, better selection), but let’s be clear: it was all about operational efficiency. Now, consumers have the technological edge, and if retailers want to survive, they’ve got to alter their operational models to how consumers want to shop, not how retailers want to sell.
So where does Pokémon Go (or whatever Angry Birds-like phenomenon that happens to capture the public’s attention) come into the picture? People don’t wander into a store while playing the game and suddenly realize, “hey! I just realized that I’ve always needed that $350 avocado slicer from Italy – how cool!!! “.
Consumer facing technologies, and particularly mobile ones, are an extension of the consumer, not an extension of the retail offering. That’s a fundamental shift. What retailers need to do is to make it easy for consumers to extend into the Brand to find what they need.
And that’s how Retail will save itself.