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“Sadly, quite a few retailers picked an especially bad time to be boring.” — Steve Dennis, Author of “Remarkable Retail”
In today’s ecommerce environment, it’s no longer good enough to be good enough. Brands need to be remarkable, according to Steve Dennis, bestselling author of “Remarkable Retail” and a former C-level executive at Neiman Marcus and Sears.
Dennis joined a recent episode of the Unpacking the Digital Shelf podcast, “Retail Worth Remarking On,” to share his perspective on the changing nature of retail and why companies need to be more customer-centric and less channel-focused.
Dennis says the need for retailers and brand manufacturers to be remarkable has become even more vital over the last two years, as consumers have flocked online and to curbside pick-up.
“The COVID crisis made me more convicted towards this idea of the need to be remarkable, because as the pressures have gone up on all retailers, trying to be a little bit of everything to everybody — or hoping that being what I often refer to as a “slightly better version of mediocre” is likely to be a winning strategy — clearly the evidence shows that's not been the case for many, many years now,” Dennis says. “As more people and more brands move online, and as competition continues to ratchet up, it's just really difficult to survive if you're not truly remarkable.”
So, what does it mean to be remarkable in the digital age?
It’s about more than being extraordinary, Dennis says.
“It’s about being differentiated, which I think is extraordinary and the way people commonly think about remarkable,” he says. “But it’s this idea that people will talk about your brand, which to me also suggests there's much more of an emotional connection.”
Dennis says one of the obstacles that keeps retailers and brand manufacturers from being resilient is that they’re too focused on beating competitors based on price and “running errands,” or doing all the rudimentary things they need to do to get their product to market and in front of consumers.
“If you're going to try to really have an emotional connection with people, if you're going to charge a premium price or just break through the noise that's out there in the marketplace, you're going to have to do something at a whole new level that does make that emotional connection and does help customers,” Dennis says.
Dennis says for retailers and brand manufacturers to level up their experience, they need to concentrate less on omnichannel and more on customers as the ultimate channel.
In his book, Dennis says remarkable retailers must see the customer as the channel and develop a hybrid approach to meet customers’ needs anytime, anywhere and in any way.
Rather than look at digital and brick-and-mortar retail as separate channels, retailers and brand manufacturers need to understand the symbiotic relationship between the two channels.
Dennis says his executive experience at two Fortune 500 retailers and serving as a strategic advisor to top companies taught him that “digital drove physical, physical drove digital, and increasingly it was all kind of one thing … It’s this idea that physical and digital — from a customer standpoint — we're blurring and blending and becoming more hybrid.”
Consumer shopping behavior has become much more hybrid, so retailers' and brand manufacturers’ go-to-market strategies also need to be hybrid and reflect a mix of different formats and distribution channels.
In his book, Dennis outlines six new forces driving the COVID-19 economy, which include the following.
There’s often been this idea that success in retail either exists at the accessible, large assortment-based end of the market or at the specialty and luxury end of the market. However, Dennis says, you can find retail success at either end of this spectrum. Where retail has struggled has been in the “unremarkable middle.”
COVID initially was an accelerant for ecommerce, but as online sales moderated as the pandemic continued, it showed that brick-and-mortar is still an integral part of the shopping experience.
COVID caused rapid shifts in different spending categories, as consumers began to see home and wellness products as essential items.
Many large retailers have contracted or closed several locations, according to CNBC. However, 2021 saw more store openings than closings as retailers gradually adapted their operations to a new normal.
Dennis says these trends don’t necessarily indicate brick-and-mortar retail is dead (or waning), but retailers that don’t embrace hybridization will see their physical footprint continue to contract.
The rise in remote and hybrid work will force many retailers to retool their strategy and relocate stores outside of major urban centers.
Dennis says rather than focus on omnichannel retail, companies need to concentrate on hybrid and harmonized retail, which embraces the convergence of digital and physical channels.
During his appearance on the Unpacking the Digital Shelf podcast, Dennis focused on how hybridization and harmonization can help retailers place customers — rather than channels — at the center of their strategy.
Dennis says the focus in recent years on omnichannel actually made omnichannel become synonymous with standing up ecommerce capabilities, rather than true integration across diverse customer touchpoints.
It also intensified the competition between digital and physical retail. However, instead of channel thinking, retailers and brand manufacturers need to focus on harmony.
“Harmonized, to me, was really this idea of we have to be one brand for the customer. The customer doesn't care how we're organized or how we measure success. The customer is thinking about the brand wherever it happens to live.
says Dennis. "And oftentimes that's on their smart device, or maybe it's on their laptop, or maybe it's when they're in their store with the smart device. We have to have that orientation to what the customer is doing. It's our job to provide a harmonious experience for them.”
Dennis adds that harmony is about resolving friction in the customer experience. It’s not just about retailers providing a seamless experience, but about providing a truly memorable shopping experience.
Dennis gave the example of Target, Walmart, and Best Buy, three retailers that are as well-known for their seemingly ubiquitous brick-and-mortar presence as they are for their ecommerce experience.
“The shift they had, probably three or four years ago, was to stop thinking about their stores as liabilities that needed to have their costs reduced and needed to be shuttered or downsized, and to start thinking about them as assets,” Dennis says.
The three retailers have achieved harmonious execution in that they jointly harness digital and physical retail to be remarkable for customers.
Customers can shop online and pick up in-store, or vice versa. Their stores also serve an important purpose in the sense of delivering instant gratification to customers — something they can’t get even with one-day Amazon Prime delivery.
“Nobody's just an online customer or just a brick-and-mortar customer. There's so much overlap and it depends a lot on what it is you're buying and what your alternatives are.
And the more you understand that the more you realize ‘there are these discordant notes or friction points in the way we do business with the customer online or in a store and I’ve got to root those out.’” — Steve Dennis, Author of “Remarkable Retail”
Transforming the customer into the channel and executing hybrid and harmonized retail will require more retailers to focus on collecting the right customer data, drawing insights from this information, and being willing to experiment with new models.
Dennis says rather than traditional customer surveys, some retailers are finding success and gathering higher-quality data by establishing a more direct relationship with consumers, whether it’s through their loyalty programs or DTC channels.
He says it’s also worthwhile for retailers and brand manufacturers to experiment. They can adopt traditional approaches like A/B testing and personalization tests, but they also shouldn’t be afraid to experiment with their business model.
“Nike is a great example of where they have really used more of a mobile-based membership model to collect more data about their consumer, but also to deliver to them more in real time. And secondarily, they have been experimenting very aggressively with a number of different retail formats.”
As Dennis argues, in today’s competitive ecommerce environment it’s no longer enough to do the basics — whether it’s competing on product availability or price. Retailers and brand manufacturers now must offer both a differentiated experience and a differentiated product.
Retailers also must ensure their offerings are memorable and intensely relevant to consumers, and available anywhere, anytime and in any way they want them.
“It comes back to really understanding who the customer is and why they're going to choose you over the competition, and really driving deeper on that. That can be a product example or that can be a store format,” Dennis says, adding that product differentiation and a tailored distribution strategy as we’ve seen with digitally-native brands demonstrate other ways companies can strive to be remarkable.
“The journey to remarkable is inherently about planting seeds, cultivating what starts to grow and eventually reaping the rewards of our hard work and a new willingness to take risks,” Dennis says. “It's worth remembering, as the ancient Chinese proverb says, the best time to plant a tree was 20 years ago. The second best time is now.”
To learn why companies need to be more customer-centric and less channel-focused listen to the full podcast episode “Retail Worth Remarking On.”