Just a few months ago I had a calendar full of trips, parties, large group gatherings, live theater/concerts, and a long-anticipated graduation ceremony and celebration for my daughter the law student. My, how things have changed. So many things I never imagined happening, have happened, and not happened. Here we are, in this new reality.
So many ways of doing things that we once took for granted, have changed in an instant. We all have had to quickly adapt personally, professionally, and businesses have had to make big changes at a pace which may have taken months, or even longer, to decide in the past.
The retail industry is familiar with change. The processes of buying and selling goods and services has certainly evolved, yet many retailers have struggled with the changes that have been building over the past few years, let alone what has happened in 2020. Let’s review some of those past changes.
A trip down memory lane. A few decades ago, department stores ruled the retail industry. In the 1980’s, it was a major accomplishment to be offered a spot in one of the management training programs at any of the big chains such as Macy’s, Lord & Taylor, or JCPenney. It was also the age of the specialty store chain explosion: The Gap, The Limited, Casual Corner, Merry-Go-Round, Radio Shack to name just a few.
Malls were THE place to be. If you are too young to have experienced the mall culture of the 80’s and 90’s, just watch a few episodes of Season 3 of the Stranger Things series on Netflix to catch a glimpse of those glory days. It was the epitome of “if you build it, they will come”.
But times change. Shopping patterns change. Technology advances. By the late 1990’s, the internet was still in its infancy but growing quickly. In 2007, smartphones got really smart. Some say that was the tipping point: the beginning of the end of malls.
By 2015, customer traffic in malls had been on a steady decline for several years, yet mall developers denied they had a “traffic problem”. I remember attending ICSC’s REcon event (real estate’s biggest trade show) that year and heard developer after developer blame the multiple years of traffic decreases on the individual retailers. Their malls weren’t experiencing traffic decreases, so they said. Yet strip centers, power strip centers, downtown urban renewals, and planned communities with mixed-use retail, restaurants, housing, and event venues were gaining in popularity and in customer traffic. And the online sales were growing year after year, never experiencing a dip as a percent to the total retail business.
The common denominator. So what do department stores, some specialty store chains, and mall owners/developers have in common? Those that ignored emerging trends and took a stand of “we’re too big to go under” have been dropping like flies. Those that failed to anticipate how customers would want to shop, ignored customers’ preferences, failed to innovate and adapt to change are the ones appearing in headlines now with phrases like “closing hundreds of locations” and “bankruptcy”.
It is no easy feat to guide a multi-million (or billion) dollar organization through changing trends when they happen over years or decades. It is extremely difficult when changes are thrust upon an entire industry over the course of a few days or weeks.
Creativity. Harvey Mackay writes a weekly business article that is picked up by many newspapers across the US. He recently wrote an article about how important creativity is in business. He referenced a study done a few years ago by the American Marketing Association where they asked 500 CEOs and company presidents: What do you have to do to survive the next 5 years. 81% said they needed creativity and vision. 81% of them also said their company was not doing a good job at it.
IBM also conducted a case study of 1,500 CEOs a few years ago. Less than half of those CEOs believed their enterprises were adequately prepared to handle highly volatile and increasingly complex business environments. More than 60% of those interviewed believed that innovation and creativity were the keys to managing through uncertainty and massive shifts such as economic downturns, new government regulations, growing volumes of data, and rapidly evolving customer preferences. A key finding from this study was that creativity was the #1 leadership competency of the successful enterprise of the future.
Innovation. Creativity does not require a high IQ or high degrees of education. Creativity can come from anywhere and anyone. In fact, some of the most innovative ideas have come from people who simply have had great moments of imagination.
How consumers purchase has been evolving for the past 2 decades, yet many organizations have chosen to drag their feet on making the necessary changes to how they do business. Now, they have no choice. Now, the old stalwarts of brick-and-mortar retail must innovate, or die.
There is still a need for brick-and-mortar retail stores. The format is definitely not dead. But in order to survive in our new environment, retailers must innovate, adapt, and change.
Vision. The first step we often think of is “How?” How is not a bad question but getting to the point of asking “How?” needs to be timed carefully. Ask “How?” too early and it can shut down the whole process. The first step is identifying a vision for the future. By asking “What if?” a retailer can start the process of entertaining ideas of what is possible. Once you can see that your vision of “What if?” is possible, then you can work on the planning stage which includes “How might we?” And then move into taking the action steps to put your plan to work.
Growing or Dying. In nature, living things are either growing or dying. In nature, there is no status quo. When a business stops innovating, the process of dying begins. Change is inevitable. There is always risk in making changes, in doing something new. But there is greater risk in taking no risks and making no changes.
Retail Level Up provides coaching, training, and consulting services to individuals and teams. Visit www.retaillevelup.com to learn more and to schedule a free consultation.