Sir Stuart Rose Believes Retail Needs to Innovate to Survive

In Customer Engagement, Featured on App, Marketing and Sales, Omnichannel, The Mobile Customer by Vaughn HighfieldLeave a Comment

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Sir Stuart Rose has been in the retail business for over 40 years now, even being knighted for his contribution to the British retail industry. So, when he has something to say about where the future of retail could be going, should be going, people tend to listen.

But where does he think things are going? Well, by looking backwards he suggests that moving forwards isn't as daunting as it first seems.

Sure the pace that things are changing by is so much faster than ever before, but it's also just another change – something that's always been happening. Retail has never, really, stood still.

At the Internet Retailing Conference, Sir Stuart argued that when you look back you can see history repeating itself.

Where we once had lots of independent stores and small businesses, they were quickly replaced by chains, department stores and supermarkets. Now though, department stores are all but gone, the supermarket still reigns supreme and those little ‘Mom and Pop' stores have found their way online and back into the hearts of consumers.

Because of this repeating nature, and the role of the Internet growing, it means that what we saw before will probably happen again online.

So what has really changed retail – besides the Internet and eCommerce?

The recession; or so Sir Stuart believes. While a rather controversial thing to think, he sees the recession as a good thing for retail.

It was a way to weed out the bloated businesses that could sit on their laurels and not adapt to change, nor prepare for what was to come next. These companies folded and failed in this tough period and now they aren't around, it leaves a more focused market for others to hone down and improve their focus on customer care and experience.

Some companies survived the turbulence, others were hit and pulled through, but – as Sir Stuart pointed out – the ones who rode through the storm largely unscathed haven't started doing anything different in this post-recession environment.

Unlike those companies that bounced back, they haven't learnt anything at all, and they're far more likely to be on the back foot in the long run because of it.

But what about the customer and their experience within the evolution of retail?

Well, here's the interesting thing: Sir Stuart believes that the customer is no longer key.

Instead, the customer is everything. And because of this your company needs to be offering them everything they want, when they want, how they want, and where they want. There's no real compromise on this either as the Internet has embraced this idea already – although it's not the perfect model just yet.

This also means that you can no longer attempt to price products at something you're happy selling at, you have to price it at what the customer is happy to pay for.

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So don't expect to get away scot free when you put things at a high price or at a price that a customer could possibly afford. It's about how they perceive the value of your product. If it appears worthless, then why would they pay for what's on offer?

Take a look at Apple, its iPhones are never the most powerful on the market, but they appear to have worth and so people clamber over them to get one.

It's also worth noting that despite being incredibly popular as a service, Ocado doesn't turn over a profit.

This doesn't mean it's a failed business and needs to be closed, instead it means that, while it's a service that consumers love to use, Ocado isn't efficient enough to make money – therefore the problem lies with how it operates.

As we move forward, Sir Stuart foresees this idea and business model coming in more and more. Just look at the tech start-ups that are now worth millions – they had early years of turning over no profit and barely breaking even.

It's about crafting a service and an experience first, and then worrying about the money later.

So, what does Sir Stuart propose?

He certainly doesn't have all the answers; if he did then surely he'd be doing it already?

But what he does say, above all else, is innovation. If you don't innovate and offer your customers something beyond what they currently want, you won't succeed moving forward.

It was only three years ago when Sir Stuart was reaching out to retailers about mobile payments, NFC payments and how the mobile phone will rule the roost.

Nobody listened, or at least didn't act upon it at the time, and now retailers are playing catch up instead of having everything in place for when consumers were ready to use the technology.

You can't be reactive, you have to be proactive.

The biggest thing right now is the disconnect between the young and old customers. Younger customers embrace technology far more than older ones do. This isn't to say that older customers don't, but younger ones are more native to it, they explore and play and what may seem intuitive to an older shopper could be clumsy and tiresome to another.

When someone successfully marries the two together, meets a middle ground that resonates with both demographics, then – according to Sir Stuart – they've secured themselves as a leader in the next evolution of retail.

Here's the tl;dr:

  • Don't slip into the same mind-set you had pre-recession
  • Innovate now, not when everybody else begins doing so
  • Bend over backwards to deliver the experience your customers want – it's no longer in your ballpark how to decide what to offer them
  • Find that golden ground between old and young customers

 

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