One of the hardest things to manage in retail is the proximity to the product, and the kind of executive thinking this engenders. When consumers are in a store and the product is right in front of them it’s pretty hard to justify an investment that does not directly lead to sales. Conversely, there are usually high expectations that any activity taken in the store should indeed lead directly to increased sales, otherwise, what’s the point?
This has long been the challenge for digital signage in stores. For an ad industry that was used to “eyeballs” as a measurement and maybe some squishy numbers related to brand recall or awareness, dealing with a store mentality of “if I promote it (in any medium) in the store, then they better buy it” was, let’s say, a challenge. The store is not a place where awareness happens. It’s a place where buying happens. At least, that’s how it’s supposed to be.
Of course, digital disrupts even this basic equation, thus the angst over showrooming (going to a store to figure out what you want to buy, then buying it online, often not at the retailer who invested in all that product education). Stores can’t afford to be built on a model of anything other than retail sales – they’re just too expensive. A retailer is not investing in stores as a marketing expense. They don’t care about awareness in the aisle. They expect sales. If a consumer receives a message about a product when she’s standing five feet away from the product, then the message should be judged based on whether she buys it or not, right?
Too many retailers set financial goals based off of an idea of sales growth – our sales will grow by 6% this year. But more often than not it is an expectation that is not grounded in a set of activities that the retailer will undertake in order to achieve that growth. It’s usually more like “the economy is growing at X%, consumer spending is expected to be Y%, the consumer spending cycle in our vertical is coming back around again, so we expect it will be Z% and we’ll capture enough of that to grow 6%”. This is a model of “if you build it, they will come”, with little to no energy expended on the specific activities that would make a consumer want to give that specific retailer a greater share of their spend.
In this kind of thought process, sales is basically the strategy – we will grow by this much, and therefore you must do whatever it takes in order to achieve that growth. This leads to exactly the kind of behavior that has hurt retailers over the last several years, as growth has become far less assured. When sales goals are not hit, retailers turn to short-term fixes: cutting labor, offering deeper discounts. These activities lead to a vicious cycle of less-loyal consumers who are more price sensitive. They don’t see the value of the store, or of the employees in the store, who are shorted on training and understaffed to the point where they can’t help everyone who wants it, and couldn’t do a good job even if they could get to everyone who wanted help. They’re not motivated by service or product education, because they’ve been trained to wait for the discount before they buy.
For all the millions of words that have been written about digital disruption and Amazon’s impact, I feel that this other symptom of retail’s malaise has been largely overlooked. Retailers expect that if they offer sales, consumers will come. There was a brief period of time where that worked, but it worked because retailers were riding on the momentum they’d achieved from previous investments in personal, engaging strategies that connected with consumers. After the ups and downs of the economy, and after a vicious round of cost cutting and deep discounts to consumers, that momentum is gone.
Sales come to retailers that do things that make customers want to buy from them. It’s always been that way. And even more importantly, profitable sales come to retailers that do things that make customers love them. There is a mile of difference between the two.