Covid, the great accelerator!
Are traditional retailers a dying breed? That is at least what some of them are starting to fear in sometimes desperate attempts to reinvent their businesses. The Covid crisis has forced them all to accelerate their bets on ecommerce, home delivery and new products, solutions and business models.
For many retailers, this was not really from the heart: had it depended on them, they would have waited much longer to really bet on, online. For many, online business is still an uncertain area in which they can barely defend themselves from the big tech and pure players and in which margins are generally even lower.
The retailers who had already prepared themselves well, were able to switch very quickly: website, logistics, marketing, (home) delivery, attention for specific online assortments, ... Everything was already there, it just had to be scaled up.
Since Covid has caused the great acceleration in user adoption, there is really no escape now: retailers must go online and face the competition from the Amazon, Bol.com and Zalando of this world.
How do they best tackle this? Hybrid Retail could be an essential differentiator for traditional retailers
In a keynote Jo Caudron gave at the Evolve Event at Google Belgium, he dived deeper in this pressing matter. The video predates the Covid crisis, but the model of hybrid retail is more relevant than ever because of the digital acceleration that we are now seeing.
You can check out a video (in Dutch) below the article.
Go Digital?
To be on a par digitally with giants like Zalando or Amazon is simply not realistic. They have armies of developers at their disposal working on the constant improvement & innovation of their online platforms. Traditional retail would lose this battle before they even got started.
A kiddy corner and amazing coffee?
On the other side of the spectrum, a kiddy corner, groovy mood lights, and an amazing cup of latte will not pull your customers back to your stores. Investing solely in physical channels results in a loss as well, taking into account that your customers are structurally visiting your stores less and less for fundamentally different reasons than ambiance.
Omnichannel?
Unfortunately, omnichannel also didn’t prove to be the all-in-one solution digital gurus had prophesied. It’s rather obvious that when I buy a piece of clothing online, my purchase will seamlessly be added to my offline loyalty card. This doesn’t add intrinsic value to my customer experience. It’s a given, customers expect it.
Omnichannel is the prerequisite to participate in the game. It doesn’t get you qualified for the Champions League.
The Answer is Hybrid
In the Keynote below (in Dutch) from the Evolve Event at Google Belgium, Jo Caudron, Co-founder of Scopernia, pitches the Hybrid Retail Model. This strategic framework puts the emphasis on creating value and innovating on the bridges between online & offline, giving traditional retail a new competitive advantage against the Amazons of this world.
identify functions (we call them ‘hybrid hacks’) that are valuable to clients and that can only be delivered because there is a physical network of shops
In short this means that you try to identify functions (we call them ‘hybrid hacks’) that are valuable to clients and that can only be delivered because there is a physical network of shops with real, experienced and customer-centric people working in them. So it is not just about relying on the legacy of the physical network to save you, it is all about using your shops and people as a unique differentiator because the digital players simply do not have one themselves.
This can translate into anything that customers find relevant and enhances their overall experience. An example will clarify what we mean. If you have a product that is complicated (think consumer electronics), that you want to taste (think food, luxury items, …) or that you want to fit (think fashion) you can easily bridge the gap between online inspiration and information to expert advice in a shop nearby.
This way you have dozens of showrooms nearby any customer, the only thing you have to do is identify the doubt or need online (maybe via chat) and fluidly push people from their online journey to the offline continuation and closure. As simple as this example might seem, most retailers are not yet doing this in a structural way. If the hack we just described is a USP towards your customers, just remember it is something Amazon simply can not deliver. You win.
Depending on the kind of retail business you are in, you can come up with dozens of functions that could be relevant hybrid hacks.
Step 1: fix your digital capabilities by scanning, benchmarking & copying your digital rivals.
Step 2: innovate your physical points of sales in light of the Hybrid Retail Model.
Step 3: build functional bridges between online & offline, a Hybrid space that digital native players simply can’t touch.
Retail should prepare for the New Equilibrium
As we have described in previous blog posts, the goal of Impact Transformation is to prepare organizations for the New Equilibrium. This is the new balance that takes into account the major challenges we now face and redefines both the economic and societal rules of the game.
Retailers must also find this New Equilibrium. What are their ground rules for a world where the cost of sustainability does get factored into the product price, leading to price increases and perhaps a slowdown in replacement purchases?
Retailers must also find this New Equilibrium. What are their ground rules for a world where the cost of sustainability does get factored into the product price, leading to price increases and perhaps a slowdown in replacement purchases? This might make products not only more expensive, but also more durable, so that it doesn't matter at that we use them longer. Perhaps in this New Equilibrium for retail, many of the products sold will be more locally produced, can be repaired locally, and will be part of a stronger social embeddedness in the local community.
What if retailers develop their online presence not only in response to the arrival of digital challengers, but equally in response to a growing group of customers who can no longer or will no longer travel to stores on the outskirts of the city? Should we then focus more on inner-city experience stores combined with home delivery? This too will be an important component of the possible future.
If these possibilities materialize, the importance of the local and physical will only increase, yet consumers will also want the digital and online experience. This makes hybrid retail an essential tool for retail in the New Equilibrium.
Reach out to us if you want to talk about what Impact Transformation can mean for retail and beyond. We can help you prepare for the New Equilibrium, prepare for the future.