Heading Into Retail in the Age of ‘I’
Updated: Jul 11, 2019
We are entering the age of "I"—a time when the world is increasingly tailored to each of us individually. We’ve come to regard this customization as the norm in the digital world, giving little thought to the recommendations put in front of us by Amazon, Netflix and other online merchants. Instead of pondering the sophisticated AI and machine learning-driven algorithms powering those suggestions, we simply accept them, and more times than not, make a purchase.
The personalization we expect in the digital realm is quickly migrating to the physical world as 3D printing expands into clothing, shoes and even food. Customizing physical experiences will accelerate as augmented reality is used to digitize a physical space, displaying contextually relevant information. And virtual reality (VR) is coming on strong; Walmart has deployed 15,000 VR headsets to its stores across the U.S. that it uses to train associates, and it is also setting up VR installations in its parking lots to offer VR experiences drawn from the “How to Train Your Dragon” movie through its partnership with DreamWorks.
As our world increasingly becomes tailored to individuals, I felt the time was right to pen a book to explore in greater detail the impact of the age of “I” in retail, including shopper expectations and the challenge traditional retailers face. The end result is “Retail in the Age of ‘I’,” which will be officially released at the CART Event at the upcoming NGA Show in San Diego.
Noted economist, Harvard University professor, author and editor of the Harvard Business Review, Theodore Levitt proclaimed that “the purpose of a business is to create and keep a customer.” We can shape this to retail, stating that the purpose of a retail company is to acquire, grow and keep customers. While seemingly obvious, few retailers actually have data supporting measuring the effectiveness of their programs and initiatives in support of that purpose.
I believe that retail is rapidly approaching a crossroads. One path leading to an efficient, highly automated, yet coldly barren, shopping experience. The other path puts technology in service to people, helping retailers bring their purpose to life through building relationships with each individual customer.
Modern Methodology and Value
iRetail is a methodology for helping retailers thrive at the dawning of the age of "I" where iRetail is defined as: A new worldview for retail where all activities are aligned with creating, building and keeping relationships with each individual customer, using lifetime value as a proxy for measuring the quality and effectiveness of those efforts.
The foundation of iRetail is the individual customer. There are four additional "I's" in support of that focus: Intelligence drawn from big data to serve the individual customer, the need to integrate systems and process to deliver the seamless shopping experience customers are demanding, providing immersiveexperiences as the physical and digital worlds of retail fuse together, and continual innovation in service to the customer.
The shift to iRetail happens in the questions you ask. For example, each week retailers ask themselves: “What products should we promote to achieve our budgeted sales and margins?” The typical answer to that question appears in the weekly ad. That’s been the norm for decades.
But now step outside yourself and put yourself in the mind of the customer. The customer is not asking, “What products should I promote to hit my budget?” The customer is actually asking something like, “Can you provide me value on products which are meaningful and relevant to me?”
That simple change in perspective can be incredibly powerful. Retailers are seeking to answer the customer’s question with the weekly ad. What retailers are effectively saying to the customer is, “We’ve got a couple hundred products on sale in our flyer, there’s probably something in there you like to buy." Is that really what you want to convey?
Innovative technology provides a better answer. Why not a weekly communication to each individual customer providing savings on products that the specific customer wants to buy that week? I don’t mean just communicating a handful of products drawn from the mass weekly ad that may be relevant to the shopper. I’m talking about drawing from all 40,000 SKUs of product in the store to provide meaningful savings on the specific products that customer intends to purchase that day or week. Retail historically has been based on a "products in search of shoppers" approach. I am calling for a complete reversal of that paradigm: Customers in search of products. And if you really understand the implications of that it changes everything.
The value of marketing personalization is well-established. But why hasn’t it spread further across the industry? A big reason is that retailers want someone else to fund the "personalized offers" they send out. And that someone is brand manufactures. And therein lies the disconnect.
Just Another Part of the Brand
Brands want to grow their business by gaining new shoppers, and to a much lesser degree, work to keep existing brand shoppers. But in the age of "I" it’s all about the customer, retailers needing to provide meaningful savings on the exact products each customer wants to buy. A dependency on brand marketing funds creates a barrier to truly focusing on the individual customer. And that dependency makes retailers vulnerable to someone who will.
Consider this: Whole Foods does not sell big CPG products and is not dependent on brand marketing funds. Amazon is free to unleash its AI and machine learning recommendations technology on the entire Whole Foods product assortment, providing personalized savings to each customer. Amazon now looks like an entirely different kind of threat, far beyond simply selling groceries online.
Toward the end of my book, "Retail in the Age of ‘I’," there is a chapter titled "Taking Action," in which I’ve created a methodology for helping retailers make the shift to iRetail, including a series of questions for each of the "I's" retailers should be asking themselves. The result leads to a gap analysis, which, in turn, feeds developing a roadmap, helping the retailer identify needed capabilities moving forward.
The retail industry has available to them technologies and capabilities never before possible. Retailers can either continue to follow, unwilling to accept the yoke of innovation, or they can jump into the game and create the future.
(Published in Winsight Grocery Business; Heading Into Retail in the Age of ‘I’)
Welcome to retail in the age of “I.”