I’m sorry, I will have to link to some Dutch articles in this text, as there seems to be something brewing in this country that I couldn’t help but comment on. As always, Google Translate is your friend.
So, here is the timeline. About 3 years ago, the local retail association HBD came up with this brilliant advice that retailers had to make it easier to do comparison shopping. According to them, the Millennial was already doing this big-time and this was sure to increase across all generations by 2016.
Here’s the method described:
It starts with a search via Bing.com, Layar Vision, and Google Goggles (I am stunned by some of these options), which allow for visual searching and identifying a retailer nearby or online carrying said item.
HBD advises that these searches may be overwhelming and a more effective strategy to reduce noise is for individual retailers to develop apps that allow for easy navigation in store.
According to HBD, word-by-mouth marketing is important (via apps like Yelp & Foursquare), and online reviews are important (e.g. Amazon or Google searches). I agree with both somewhat.
So HBD suggests:
- marketing consumers’ pockets (for instance: targeting via QR codes)
- understanding that customers want cheaper AND better products (…)
- Combining efforts to go online together: working as a supplier for the bigger e-commerce outlets, pooling investment to build a joint e-commerce outlet, etc.
There’s so much more gold in this article of 74 pages (incl. 1 page of references), I can’t possibly summarise it all.
So the HBD decided to run some experiments in various cities starting in 2011. Silence followed for some years.
This week, an article and interview revealed that it was a mess. From the article: many retailers expected this to bring big profits, instead the costs were out of control. Another retailer (a butcher) states: I never believed in The New Shopping. Old shopping methods: good service, good products, a smile, work just as well.
From the interview with an HBD representative:
- Clearly retailers prioritised technology over customers
- They focussed on tools, rather than the end-goal (it can be argued that the latter was badly formulated)
- Consumers are changing: multiple devices, more info about products online
- Risk is a physical shopping area to not be interesting enough and lose its value
- Retailers misunderstood the message and HBD communicated it badly as well
- HBD also had to learn how to formulate such an approach better (…)
So… how to respond to this.
Technology moves fast and is in its nature disruptive. It starts with studying computing science and finding out 5 years later that most things you learned in terms of programming language is already obsolete. It’s powered by the competitive landscape of technology (Apple, Samsung, Google) and of software development.
A physical retailer is not usually in that mindset. They buy or rent a space to keep it. They don’t want to move and not necessarily change or take risks. That is not a bad thing either, because customer value consistence if it’s good.
But with technology, you need to make gambles and you need to stick to it, as well as having a strong vision about where you want to be.
The bigger risk is listening to hacks like the HBD (Bing & Layar, really?) and giving away your online channel to giants that will eat you up (Amazon, Bol in the Netherlands, others…). Pure online retail is driven by efficiency. It’s more efficient to keep profits centralised and to push costs from e.g. a supplier down as much as possible. Ease of comparison also pushes prices down.
It’s an equally big risk to not do your homework and not invest in those talents that drive your online strategy forward. A changing landscape needs a champion that rides that wave and makes it their own. It’s a lost cause to invest in gimmicks like QR codes, if you don’t understand what value they really hold and how to replace them if they lose significance.
I was sad to read this 3 years after they published this study, because I don’t think my opinion would’ve been different then. Online is just as important as physical, but you can’t master it without understanding and owning it. It’s 100% not surprising that this initiative failed.
Sorry once again for linking to only Dutch articles in this text.