ExtinctHere's what you didn't learn in school about the disruption affecting retail today. A recent article by consultant Chris H. Petersen, "Seven disruptive trends that will kill the 'dinosaurs of retail'" discussed the fate of "25 retail dinosaurs that vanished in the last 25 years" which was the subject of an Entrepreneur article. Those retailers included giants such as Circuit City, Comp USA, Blockbuster, Borders, and Tower Records, companies which literally dominated their category or channel. Others named in the article were retail innovators in their own right until new disruptors outgunned them. The point is that neither longevity, size, or specialization guarantee retail survival today. So how can today's retailers avoid being extinguished by current disruptive innovations?
Disruptive innovation refers to any enhanced or completely new technology that replaces and disrupts an existing technology, rendering it obsolete. (Picture how we went from the Model T to the KIA; from giant mainframes to personal computers; or from fixed-line telephones to cellphones/smartphones).
Disruptive innovation is described by Harvard Business professor Clayton Christensen as a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.
Today's major disruptive retail trends have led to the rise of the consumer, the rise of technology to help retailers best serve the consumer while wrestling with competitive forces, and the demise of "the old way of doing business."
I. The Consumer.
Evolving, innovative, disruptive technology has led to consumer-dominated behavior that reaches across many channels. As we know, today's consumer now shops any time and everywhere using a variety of helping tools.
The consumer is capable of having a personal, seamless experience across their entire shopping journey to explore, evaluate and purchase, tempered by how retailers DO business, provide service, deal with their competition, etc.
* The consumer journey starts online, although stores remain a destination for experience.
What can retailers do? The successful retailer of the future needs to not only master online and offline, but how to connect with the consumer across many touch points, especially social media.
* Mobile juggernaut. The latest stats show that there are now more cell phones in use than people on this planet. Smartphones now exceed 4.5 billion. Mobile is the majority and will be the preferred screen for shopping.
What can retailers do? Retail survivors must optimize for mobile engagement, and also broadcast offers and connect with consumers wherever they are. The store of the future will not only have beacons to connect, but to track traffic via mobile as well.
* Stock availability / Virtual aisle / Endless shelf. More than 50 percent of consumers expect to shop online and see if stock is available in store.
Omni channel consumers now fully realize that stores can't begin to stock every model, style and color. While consumers can see hundreds if not thousands of products in store, they know that there are millions online.
What can retailers do? The survivors are literally creating a seamless experience between online, store and mobile apps so the consumer can "have it their way" anywhere, anytime.
* Consumer experience still rules. Consumer experience still needs to come down to senses: Tactile, visual, and psychological.
What can retailers do? Virtual dressing rooms, better in-store experiences, and adoption of new disruptive technology to address and satisfy these issues.
* Personalization of products and services.
What can retailers do? New survivors are emerging with "mass personalization" opportunities to custom tailor your clothes or curate your personal wardrobe assortment and send it to you.
* Social Connections and the influence of the opinions of others. Social has become a primary source of research and validation on what to buy. Today's consumers are 14 times more likely to believe the advice of a friend than an ad.
What can retailers do? Today's major brands are giving much more attention to and spending more dollars on social media than traditional media.
Disruptors share the common purpose to create businesses, products and services that are better -- usually less expensive and always more creative, useful, impactful -- and scalable.
What can retailers do? Put into use as soon as possible disruptive technology solutions such as price and assortment intelligence, behavioral economics, customer experience analytics, predictive analytics, and more to help understand, meet, and outgun the competition and service the customer.
A Note on Predictive Analytics.
Dr. Christensen subscribes to predictive analytics as, "the ability to look at data from the past in order to succeed in new ways the future." Predictive analytics solutions, the capability to forecast consumer purchase trends in order to sell the most products at the best prices at any given time are coming on strong.
Bottom Line For Your Bottom Line
There's never been a time of more disruptive change in retail. Retailers who are the most adaptable to change -- and not the strongest nor more intelligent of the species -- will be the ones to survive.
It's a case of keeping yourself on top of the tsunami of change through the mastery of today's and tomorrow's new disruptive technologies.
*Thanks to Chris H. Petersen, PhD, CEO of Integrated Marketing Solutions, a strategic consultant who specializes in retail, leadership, marketing, and measurement.