That was an overly dramatic title, utilized primarily for its guaranteed ability to grab your attention. And now that I’ve got that, there are a few things I’d like to talk about. No, I’m not going to chime in on the retailer casualty counts, because if you’re reading this, you’re painfully aware of what’s happening to the US retail market. And it’s no joke.
Other than to acknowledge that this massive sea change is happening, this is about how the retail world could look different after all this is all over. (And in retail, let’s be honest, it’s never over.) But maybe, just maybe, some of these can be realized before it’s too late.
Growth Isn’t Infinite
Up until circa 2007-8, many of us who were born after the 1960s mostly knew a world where growth in the greater economy seemed limitless. Yes, there was a recession stateside in the 1980s, the Asian financial crisis of 1997, and the dot-com bubble, but companies grew. Whether they did it by expanding into new territories, mergers and acquisitions, innovating their supply chain, or expanding their product or service offerings, the general and collective movement was forward, with globalization driving no small part of that momentum.
But during the financial crisis of 2008, things came into a very real, very harsh focus. The high-definition, ‘I can see your cake makeup’ kind of focus. What many believed would be a brighter and more prosperous future, was in a very short time, greatly diminished or destroyed entirely. For many, this was the first of a series of wake-up calls, that the market’s growth was built on something faulty, it was thus not sustainable, and uncertainty was the new norm.
I’m not saying that the financial crisis is an exact parallel of what’s happening today; it’s a complex system most of us have only a basic grasp of, yet are wholly reliant upon. Moreover, this is not a story about cheating consumers. (I mean, it’s just shopping, right?) The idea is, however, that unbounded retailer growth is not sustainable. Expanding into new markets and adding new product lines are diversionary tactics, if and when the core business and processes are showing their cracks. So, if you can stomach this reality, where do you go from here?
We Go Back To Basics
So what happens when things look uncertain or you have to move forward with reduced means? You start to pay attention to things that you either were too busy or unwilling to address previously. What does this mean for retailers emerging from this ‘crisis?’ You go back to your core values, why you existed in the first place, and to whom you exist to serve. You create products because it’s what people want and it’s differentiated, not just because your competitors do the same. I’m going to say it again. You don’t create product just for the sake of it. And look, the ‘me too’ behavior isn’t just an issue of retail, it’s one of the problems that the financial crisis highlighted amongst the big banks. With many of the banks mirroring each other’s actions, when one was in trouble, they soon were all up sh*t’s creek. Morale of this retail story? When there’s a shepherd who’s dozed off on the job and a clever and hungry lion ready to pounce, that herd of mediocrity doesn’t stand a chance. Coming out of this storm, retailers must move with a razor-sharp focus on product, experience, and the end consumer.
There were many days in my former life as a retail consultant where I would sit in rooms with brands and hear them talk about their different consumer personas, along with who the competition was. And while at the time, professional conduct prohibited me from making the face I wanted to when I heard these ideas, my inner teenager was saying, ‘puh-lease.’ But in all seriousness, there were many times when the ideas being circled around that room absolutely did not reflect reality. Who they thought was their target market was actually who they would have liked their target market to be. While many consumers are aspirational (and that’s indeed a huge driver of retail purchases), the organization itself must be firmly grounded in the reality of who their consumer actually is. She doesn’t have a credit card with hundreds of dollars of extra credit on which to buy a new outfit, she’s actually bringing her lunch to work every day because she wants to have a few extra dollars to go out with her friends at happy hour. Embrace this truth, and look for opportunities to surprise and delight her along the way. The reality is much better than you think.
The Stress Test: Retail With Built-In Flexibility
Just like the banks have had to undergo different tests gauging their ability to weather a crisis (baseline, adverse, and severely adverse for all you finance nerds out there), retailers need to be building their own contingency plans for this new uncertain reality. It doesn’t matter whether it’s a political event, a terrorist attack, or a serious reduction in discretionary income, you have to be prepared for today's and tomorrow’s unknowns. You do this by having systems in place that are flexible, speaking to each other, and can ultimately pivot as the market shifts. This requires everything from assessing the risk of your supply chain to categorizing the stability of the different markets in which you operate, to ensure that you are stormproof. (I’ll spare you the Titanic analogy because that would be overkill.)
The Consumers’ Best Interests Are At Heart (Even If That Means You Sell Less)
At this point, I can see everyone reading this shifting uncomfortably in their seats, and I promise, this my final point. But it’s an important one that must be addressed. What does a world look like where consumers buy less stuff? It’s not just a small possibility; data on the newest generation of consumers shows not just a fundamental shift in priorities but a different way of thinking about discretionary spending. So how will you capture wallet share but also address the greater social ideals by which these future consumers live? You have to level with them, and create experiences (and not just products) that they can feel good about. It’s one part transparency and another part simply doing right by the consumer. And while it’s no small undertaking, it’s an initiative that is helping to drive brands like Patagonia, Reformation, and Everlane to growth. The payoff is immense.
Retail exists not only to meet needs but also to inspire the people it serves. And despite these hard times, don’t you think we’re all still up for it? Yeah, you've got this.