Barbara Lawrence, Co-Founder and Managing Partner, sits down with Alexandre Beaussier, Partner at SBT Consulting | Human(s) Matter, to discuss the future of retail and opportunities for growth.
Barbara: Retail is struggling, at least in the states ….
Alex: Yes, it is struggling, it’s in the midst of profound transformation, that’s for sure. And it’s deeper than most people realize.
B: You’re talking about the executives who are facing the challenge?
A: Yes. Most people have started to realize that they need to focus on the customers’ experience, and they’re starting to realize that this transformation is more profound than they originally thought. They thought that bringing a planned experience just meant bringing in design, entertainment, whatever, but it’s about changing everything. It is based on the expectations, needs, and context of local customers. The experience only makes sense if it is constantly evolving to fit the customers’ evolving expectations. Otherwise you could design an experience, in a few months, it’s not relevant anymore because expectations have shifted and evolved.
B: Would you say that the “best” have allowed more latitude locally, store by store, and that they’re capable of shifting and adapting to particular trading areas? How relatively tight or broad are the latitude bands?
A: It depends on the brand, the sector and the price point, so it can vary a lot, but what is dying is the retail model where everything is optimized from a brand point of view, very brand-centric and process-centric view of how to operate a network of stores. What is emerging is a model where you have empowerment of store management, even store staff, where they can adapt the model of their store to the needs and expectations of their customers.
B: Doesn’t their database have to be incredibly specific for each trading area in inform and enable this?
A: Yes, you have two challenges: one is collecting the right data and having the right database to be able to predict with models, but you also have a more human challenge, which is to value the insights that store management and staff can collect from their conversations with customers – this is the level of granularity that, most of the time, is not listened to at all.
B: What’s underlying that?
A: They don’t trust the staff, they lack the processing tools to do the analyses, and they don’t have the right technology to do the analytics. But they could.
B: Who is doing a good job from a retail standpoint?
A: Decathlon, it’s an international sporting goods store. Their branding strategy includes having their own brand for each sport they sell, including: soccer, mountaineering, sailing, etc. Plus, they have an impressive system in place that enables them to listen to the customer through staff feedback and by engaging with their customers online – like they have a policy of removing any product from inventory that scores below three-stars based on customers’ reviews.
B: Can I assume the staff is highly motivated?
A: Yes, plus the staff is very knowledgeable about the sports they’re working with. What is quite amazing is that the layout and atmosphere of their stores is not very remarkable, but what makes it a very good experience is the staff - they are very helpful, very knowledgeable, they’re not very transactional at all.
B: So, it’s about the service, the human interaction that makes the customers feel valued?
A: Yes, exactly. Most brands we see are spending millions on rethinking their retail concepts in terms of layout and furniture, but if they don’t simultaneously completely change their management and operations model, then it’s a total waste of time.
B: Are there other examples, from outside of the sports industry, or are there multiple success models?
A: ULTA Beauty – my understanding is that ULTA also has a very good, omni-channel integration, which acknowledges the actual customer’s journey.
B: I feel like ULTA’s competitors should be worried – ULTA is an entry point brand appealing to Gen Zs … bright, optimistic, happy, and their stores fill the gap between drug and up-market brands… very mainstream.
A: That’s the service part, which is extremely important to their experience. Even with omni-channel experiences, there’s still a big challenge associated with store staff transformation, because you still have some store staff who believe that if they promote ecommerce or social media, they will lose sales.
B: Is that because you’re losing the impulse shopping part of it? You want them to come to the store.
A: There is still store staff misunderstanding – they think that if they promote omni-channel, they’ll lose business. Retail stores’ contribution to the over P&L of a brand is not fully mapped. Stores are becoming more and more like experiential billboards – they provide experiences, they build relationships between the brand and its clients, but the transaction may happen elsewhere. So how do you measure that performance? Today, store’s ROI is still measured by the store’s P&L, which is naïve and outdated. Management should view performance using a very different vocation for these stores. For example, you can have flagship stores on expensive avenues that are not meant to be profitable – instead they are showrooms.
B: Where does customer journey mapping fit in all of this?
A: It could happen at very different levels – for instance renovating a store, designing a new concept for a store. You can use CJM to better understand your customer – what draws them to the store, what they do before and after, that could help in the design concept of the store, not being a closed physical space, that most physical platform is connecting different services relevant to the journey you have mapped.
B: I’m interested because CJM is frequently shown as an internally focused, homogenous, and linear pipeline. Our work shows that the most actionable CJM are the opposite: outside-directed, tailored to reflect key segments’ behaviors, and that the visualizations are cyclical – not linear – which makes senses as all category shoppers do not approach the category in the same way.
A: Yes, journey mapping is a strategic tool used to personalize the experience as much as possible. What we are trying is to take this customer experience topic and approach it from a neuroscience point of view, which means that we have to understand what an experience is and understand what’s going on in the head, the mind, and the body of the customer, to be able to say I have lived an experience. Because if you don’t have memories, you haven’t truly lived an experience. And this is something that can be engineered.
B: Let’s discuss other success drivers you are seeing that we may not have touched on. Where do you see examples of missed opportunities to drive above-plan growth?
A: There is this consolidation of all the insights, it’s about breaking the silos of data ownership – you still have the owner of the satisfaction data, the owner of the traffic data. The data is very segmented so you can’t build an integrated vision of the customer expectation, it’s still very complicated.
B: Where does it typically come together? The CIO?
A: The data itself yes, but the insights, not even. The CMO only has data on satisfaction, the retail or CCO will have data on performance, traffic, and maybe in HR the data on employee engagement and satisfaction. Each of them have their own data sets and they’re managing their own insights. The goal should be to consolidate those insights.