‘Disruption’ in retail doesn’t impact consumers. They’re doing just fine, thank you.
My cousin came to visit, and he brought his 8-y-o-daughter, the only of his kids not in summer camp. And she was bored.
“Is there Netflix on this,” she asked, tossing her head toward the TV on the wall.
“Uh, yeah,” I replied, scanning the room for ‘that’ remote. Finding it I handed it to her. “Do you want me to-”
“I got it from here,” she said taking the remote from me.
We Don’t Care About Your Precocious Niece
As ever, developments in digital methods for engaging with consumers are evolving at a frantic pace. From my recent travels I have picked up one very strong, consistent signal being transmitted across the global digital marketing spectrum:
When we talk about the ‘disruption’ created by mobile-empowered commerce, we’re not talking about the consumer’s experience. Consumers are not being disrupted at all. The disruption is being felt by brands and retailers who are heavily invested in running the same show they have run for the past 4 decades.
My interactions with my niece didn’t leave me in awe of the tech fearlessness of the younger generations; we’re all past that. But it did make me think about channels: What if, for instance, TV manufacturers stuck to some artificial convention and refused to make devices that played non-broadcast content? Would fans of House Of Cards be disrupted?
Television is – in the most ironic way – operating in a truly “post-channel” world, where the notions of time and place are all but eliminated. Netflix started this in 2007 when it added streaming to its existing DVD-by-mail rental service. Hulu, for its part, has a slightly different model, still on demand, that also launched in 2007. Worth noting that 2007 is also the year when the ultimate channel-killer – the Apple iPhone – was first released.
Looking back on it, 2007 was a landmark year in the annals of consumer freedom.
This new “post-channel” way of doing things has also invaded the outer reaches of the commerce galaxy. Advertising is evolving into content, and even influencers are no longer “staying in their lanes”.
What television has managed to get ahead of – that brands and retailers are taking longer to figure out – is how to operate in the “on-demand” world that consumers have already embraced elsewhere in their lives.
From the design of stores and malls, to the way supply chain is optimized in different retail segments, to the financial model of gambling on a sizable inventory investment, nearly every aspect of a consumer’s shopping experience is driven by processes and/or structures that resist being “on-demand”.
But consumers don’t care. To enough of a degree that a recent article in HBR gave serious contemplation to a retail world without stores.
Meet the New Boss
Notionally, the consumer has been in charge since the beginning of retail. “The customer is always right” has been a mantra of the commercial world since 1914. Consumers continue to be “right” because the tools they use to go about their daily business have – in the age of mobile – effectively reduced the roles of retailers and brands from being required to being optional.
Where retailers have had success retaining consumer interest is where they have offered ways for consumers to shop that didn’t necessarily require a store visit: subscription, click and collect, same-day delivery, personalized delivery, and delivering breakthrough consumer conveniences. Coupang, the Korean retailer, has arguably set the global pace for bridging the purely online consumer experience with the personal touch that characterizes the world’s most successful retailers. They have shown us that success in a no-channel world means isn’t purely driven by technology superiority.
With mobile connectivity through smartphones, consumers have freed themselves of conventional retail limitations and are forming their own experiences with whatever tools feel comfortable to them as they go about their lives. It means that, in all parts of our lives, we are no longer locked into a physical location. Depending on the trust of the available financial systems and the general willingness to be flexible with timing of delivery, consumers can literally get whatever they want from pretty much anywhere in the world.
For businesses built on the core of scale instead of individuality, this reality presents a challenge. For businesses whose models combine the notions of scale and individuality, this is a ratification of their gambles.
Instagram had just launched, no one really said ‘selfie,'” said Sun. “Not everyone owned a smartphone yet and people weren’t using them for everything they are today.
We live in a post-channel world, where we are no longer locked into a physical location or requirements put in place by downstream parties. The role of mobile in our lives is not as a technology, but as a behavior pattern. That may not be obvious until you stop and consider your own actions. Then it feels like an intuitively held truth.
Success in this different era will belong to those who deliver experiences and capabilities that encourage and enable our freedom of doing. In commerce this means a shake-up of many established players in payment systems, supply chain, real estate, fixtures, manufacturing, and more. A recent article in Business Of Fashion entitled, “Four Things American Department Stores Must Do To Survive” points out that retail’s problems are being “driven by the rise of connected culture – from e-commerce to the ‘sharing economy’ – consumers are never going to return to their former shopping habits — and this is disrupting retail across the board.”
Brands in the luxury apparel category are beginning to de-emphasize their department store relationships to, in effect, revitalize their consumer relationships. Coach Inc. said in 2016 that it would decrease its wholesale distribution by 25 percent; by January 2017, Coach Inc. reported double-digit earnings growth. This example of a brand channel-shifting to better align with consumer behavior speaks volumes about the nature of disruption in commerce today.
The partnership between brands and retailers is the foundation upon which modern commerce was built: a manufacturer and a retailer each had their roles, and they stayed in their lanes. Entire sub-industries has developed to support and enable this relationship: supply chain, point-of-purchase systems, inventory management, advertising, and on and on. Consumers, however, have discovered that, these days, this construct may not suit them much of the time, and, thanks to the capabilities available to them thanks to mobile connectivity, they capriciously change their behaviors. Disruption is the result.
Only not for the consumer. They’re doing just fine, thank you.