The Customer is our North Star

It’s the consumer, stupid!

You’d be forgiven for believing that retail in 2017 is all about technology. There is a lot of talk of the ever growing importance of eCommerce, big data, location based marketing etcetera, etcetera. There’s no doubt that eCommerce is now incredibly important and is continuing to grow at a very impressive rate across the globe, especially when viewed against the backdrop of stagnating or falling traditional high street retailing. In 2016 eCommerce accounted for 10% of global retailing. However it did grow at an impressive 20% plus in 2016 and this is against stagnating or declining traditional high street retailing. Global retail is a $21 trillion business so at 10% eCommerce is hardly small beer. Moreover the forecast is to have eCommerce take an impressive $4 trillion slice of global retail by 2020.

But all of the tech talk and impressive online sales growth is to miss the really really important point surrounding retail.  The technology is only an enabler and can never be the end in itself. For example let’s put technology in perspective. 100 years ago cutting edge tech was the Model T, RCA and wireless trading rooms connecting Wall Street to the great Atlantic liners of the time. So tech moves on. And so it is for all the breath taking innovations surrounding the transaction and discovery stage of a customers journey. However the fundamentals of retail remain as they’ve always been and that’s to satisfy the consumer. The technology is incredibly important but only when it benefits the customer.

Whereas 2000 years ago, when hungry we’d head out and do a bit of gathering or if you were up to it maybe a bit of hunting. 100 years ago, we’d head out to the local grocer, butcher or baker. 50 years ago we’d head to the local super market. Now we would in all probability pick up a device.
More often than not that device is most likely to be in our pockets. But here’s the rub, the start and end of the journey is pretty much unchanged from 50 or 100 years ago. Not sure? Well then check out this interesting bit of research presented in a handy quick view info-graphic from the nice people at Business 2 Consumer (B2C) http://tinyurl.com/mxfrjmm
 
Like my last post it again underlines the fact that the physical is still very very important. So although the customer journey is now likely to take a circuitous route and involves a much more educated and informed individual the journey still starts with a need and finishes with a physical product. Just as surprisingly the consumer’s preference is to find the solution as close to home as possible, again just like 100 years ago. Back then it was because of transport considerations, in other words it was convenient. Well in 2017 it is still much more convenient to have the service or product fulfilled locally. It’s only when your customer cannot find the solution with you, or worse when it comes to those pesky screens cannot find you at all, that they move quickly on.
So how do you position yourself for retail success in 2017 with so much change and innovation? Our suggestion is you go back to basics and concentrate on the consumer and their journey. At COVA we have a very simple philosophy and that is the “Consumer is our North Star”. When we develop an approach or feature we simply ask does this benefit the customer? If the answer is yes then we go all in. If it’s no it gets binned. After all in our business if it doesn’t benefit the customer then it’s just a vanity, a piece of fluff and not worthy of our time and effort.
We think this is a simple criteria and one worth embedding in our culture. Because once we bought into this approach the road map became very clear. What does the customer want and how do we get it to them? When we answer those two simple questions with the customer at the centre, decisions become easier and more obvious.
The consumer habits have changed but the underlying motivation remains largely unchanged over the decades. As I outlined in my previous post the physical retailer still has many advantages over the pure play eCommerce retailers. But that shouldn’t mean you ignore the benefits having a digital presence can bring. The consumer now expects it from you. If you don’t offer it they’re off to a competitor who does. Let’s put it this way, you opened your shop due to the belief you’d get footfall in the chosen location. Well now you need to understand your customer is mobile in every way. It’s no longer just footfall it’s now about where your customers eye balls fall. The irony is that having that eCommerce presence is actually a driver of footfall. Grab the consumers screen time and reap the rewards not just online but in store too.
So if you keep your customer at the heart of what you do you’ll move to providing the solutions they demand in 2017. The consumer journey starts and finishes as it always did but the bit in between takes a little thought. It’s not difficult and the effort could see you grab your fair share of the projected $27 trillion retail sector in 2020. Hopefully there’s a little food for thought here. If there is and you’d like to discuss further give me a shout at mark@covaworld.com
(Interesting that the hunter gatherer parlance still manages to influence our modern language as the homo sapiens skills have gone from hunting for food to hunting for bargains).
At https://covaworld.com we do an out of the box solution for retail aimed at the Suppliers and Retailers allowing for close co-operation benefiting all involved. You can be up and running in 5 minutes and punching way above your weight in the most cost effective way.
              http://www.business2community.com/infographics/local-seo-statistics-must-know-infographics-01557523
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Retail is now technology.

Retail is all about change. Formats get reimagined, in-store merchandising changes daily, departments get increased or decreased in accordance with demand or seasonality. Our marketing campaigns move and adapt with the times. If you’re in retail in you’re in the business of change. It’s dynamic, always has been.

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Retail has been to the forefront of technological change too. The very first commercial installation of an elevator by Otis was in a five storey New York department store. Escalators followed soon after and became common place in the US in the early part of the 20th century. The first cash register was patented in 1883. Its development influenced the recording and management of data that had wider implications beyond retail. Retail gave us the price gun, the bar code, modern consumer marketing and even the widespread use of the computer. British tea chain J. Lyons & Co saw the potential for computers in retail as far back as 1947. So technology and change are part and parcel of retail, so what’s the difference with the new world of retail?

Well the difference this time around is the fact that the retailers are no longer driving the change and as a result no longer in control. The change is now being driven by the consumer. And yes that can be a little bit scary.

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Now the big guys are working hard to catch up. Getting their messaging and branding right, across all the channels. Ensuring their on line identity mirrors their in store experiencing as closely as possible. The pure on line guys with their dynamic exponential growth don’t have these issues, or not yet at least. The poor relation it seems in the modern retail age is the independent retail sector. After all as a sector it has yet to really get to grips with the new multichannel environment. The larger chains have departments to look after ecommerce. They have the resources to manage digital marketing, social media, click and collect etc. etc. The Amazons, ASOS’ etc. only live on line and don’t need to worry about the high street physical space. The independent could easily be forgiven for raising the white flag.

 

But before that happens we’d like to put forward an alternative view. Our view is the physical space has a very big future. The small independent retailer has a very big future. You might not think so if you’re to believe the press and current group think on eCommerce. Almost to underline what we’ve been saying for some time now I’ve attached a link  ( http://internetretailing.net/2014/04/most-uk-shoppers-still-prefer-stores-to-ecommerce-study/ ) to the latest research from YouGov concerning UK consumer insights. In brief it suggests that consumers still enjoy the act of shopping in a store. It also underlines another of our beliefs that given the opportunity a shopper likes to touch and see product. It’s no longer an either or question when it comes to Brick & Mortar or online retail. As far as the consumer is concerned it’s all just retail now. The consumer is now on Facebook, Pinterest, Tumble, Twitter etc. and they’re using it for browsing and shopping. Your customer is much more likely to believe a person they’ve never met over you when it comes to reading product reviews.

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Your consumer is now browsing, researching and shopping on their phones and tablets. Are you digitally invisible or will they find you where they are looking? As a retailer you need a digital strategy. Your customers are living in a digital world so it makes sense for you to inhabit that same world. Sound scary? Well it really isn’t. When you strip out the big words and tech speak it really comes back to basic retail. The rules don’t change that much, it still comes down to service, convenience and product. This brings me back to our main point which is the physical retailer will trump the online only retailer every time. If you back up the shop with the eCommerce site your consumer can choose to do business with you in many more convenient and varied ways than they can with Amazon or ASOS. We are shameless in our support for independent retail and their suppliers. We favour the diversity, personality and passion of the independent over the larger chains or online only guys. The future is unwritten, it will involve change, but rest assured if you embrace it the future is brighter than you might currently think. Embrace the technology and use it to win, after all isn’t that what retail has done in the past ?

Is financial solvency enough in the new millennium?

insolvency

Is financial solvency enough in the new millennium?

With the 20th Century now well and truly behind us is it time to rethink the way we look at our business models? One of the most important yardsticks when examining a business is whether it is solvent or insolvent. The repercussions for being insolvent are very dire indeed. A business can be cash flow insolvent or balance sheet insolvent. The upshot is however that it is an offence to trade whilst being insolvent. In current insolvency law the area of interest relates strictly to the ability of a business to repay its’ debts as they fall due. As we push further into the new millennium I would suggest that this might no longer be enough.

If we look at our most recent crisis across the globe it was once again sparked off by large financial institutions which were insolvent long before the penny dropped with regulators and governments. If we look at 1929 and the great crash it was again fuelled by large institutions and wealthy individuals such as JP Morgan, Jesse Livermore, William Crapo Durant etc. Our most recent crisis stemmed from a property bubble whilst the 1929 crash stemmed from a stock market bubble. In both cases the causes and outcomes were pretty much the same as people and institutions bought an asset class they couldn’t afford with money they didn’t own. A relatively small group of wealthy individuals and organisations over egged their positions and let their greed run away with themselves and brought the system to its knees. As always there are winners too. Look at Joe Kennedy as he sat idly by and watched the market crash only to pick up the pieces afterward and make a fortune in the process. The transfer of wealth from ordinary citizens across the globe to another relatively small group of individuals and organisations in recent times has been astounding. So can this type of incident be stopped from happening again or are we doomed to repeat the cycle with the arrival of every new generation as they look set to reinvent their very own wheel.

So here’s a thought. What if we had some new and additional insolvency yardsticks? For example what if a company or business was expected to be morally and ethically solvent? Would it be hard to police, could we come up with a set of parameters for such an initiative. Could we write some code to allow for an impartial measure of business moral solvency?

Perhaps we don’t need to. Perhaps we could just get the thought out there to the consumer and allow them to decide which business they think morally solvent. Moral solvency might be a bit of an abstract concept right now as was the idea of breaking up monopolies in the 1800’s but that’s not to say it might not have some merit. If we had a guide for moral insolvency could any of our bankers run riot for the benefit of their own bonus packages. Investors in the main really don’t count for outside of the individual investor by and large the institutional investors primary goal is maximise return largely regardless of where the funds go.

So as you know if you’ve followed previous blog entries I’m all about diversity, the beauty of independent businesses and especially the diverse nature of an independent high street. If we look at the recent corporation tax issues, especially the highly public reaction to Starbucks in the UK and Apple in Ireland, then we might see an opportunity for small businesses in all of this. I would suggest the small independent high street business has much less opportunity to move funds around when compared to the multinational giants. The small business is also highly invested in its locality as opposed to a multinational which views their store as just another cost or profit centre. So could the small locally vested business be more morally solvent than their larger competitors. Again I would suggest yes. I would trust my local credit union more than my local banks, I would trust my local fashion store rather than the larger chains in my town. Why? Because I know them, I see them dropping their children to school, I see them at local sporting events, I see them shopping when I’m shopping. I see them investing in local sponsorship, reinvesting in their businesses and working hard to survive. I don’t believe they are working towards their next bonus but they are working towards getting revenue in to pay their business rates. Rates that pave our roads and keep the street lights on. I’m not altogether sure if Moral solvency would catch the imagination or could be turned from an abstract concept into a business practice. I am sure however that my local high street independents have it in bucket loads when compared to their larger multinational competitors.

Perhaps there’s a thesis or dissertation in this idea or maybe someone has already completed one, if so I’d love to read it. Thanks for reading.