Today, I spoke with Dr. Barbara Kahn who is the Patty and Jay H. Baker Professor, Professor of Marketing at Wharton. Dr. Kahn is publishing a new book this week which is “ The Shopping Revolution: How Successful Retailers Win Customers in an Era of Endless Disruption.”
Here are highlights and implications for the luxury industry from our interview today.
Luxury Daily Questions: What is the future of store based retail.
“Although there is no question that e-commerce and mobile commerce sales are increasing at a rapid pace, I don’t think any retail analysts would predict the end of physical store retailing. However, there is also no doubt that the store experiences will have to improve to meet rising customers’ expectations. In addition to improvements in physical merchandising and better inventory control, customers will demand better experiences in the stores. In luxury, I believe consumers will demand personalization and customization, and some sense of surprise and delight.”
Luxury Daily Questions: How do you define the experience within the four walls of the retail store.
“Customer experience can range from easy, convenient shopping, probably best exemplified in the U. S. by Amazon’s new Amazon Fresh stores with their “just walk out” technology, to luxurious, fun shopping like what one experiences at Eataly or luxury retailers, such as Louis Vuitton or Gucci. Store experiences can also be interactive either through state-of-the-art in-store technology, augmented reality displays, or just experienced and helpful sales associates. Great store experiences are also defined by our five senses—whereas online shopping can provide visual and audio components, only physical stores can add in enticing smells, tastes and tactile experiences.”
Luxury Daily Questions: What is the role of AI in retail.
“What we are seeing in modern retailing is a seamless integration across all channels, allowing the retailer to merge the purchase histories across these channels. These retailers are also increasing touchpoints with their customers. All of this allows them to collect “big data” on their customers’ shopping experiences. With this data, artificial intelligence or machine learning can begin to understand what drives shoppers’ purchases. This will allow retailers to improve the shopping experience and to personalize and customize to meet customer demands. It also helps with better inventory control.”
Where we are today
I submit to you two words; intelligent and disruption. According to Merriam-Webster, disrupt is, “to break apart, to throw into disorder, to interrupt the normal course of unity.” Clayton Christensen, author of “Innovator’s Dilemma,” wrote that “disruption is a process, not an event, and innovations can only be disruption relative to something else.” The rise of Bitcoin (intelligent currency), five billion people connected via mobile phones (with intelligent sensor packed phones), computational intelligence in smart products, IOT and services produced are evidence of the process of intelligent disruption.
I believe that the process of intelligent disruption for the retail industry will accelerate into the next decade. Those unprepared will be left behind as they will not see intelligent disruption, are not prepared for it, and by the time they understand what has happened it will be too late.
Disruption is a part of natural evolution as Charles Darwin wrote in the “Origins of the Species.” Darwin’s words apply to business today. He said “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” Rupert Murdoch, summing up his business philosophy, said “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.”
How we got there
The telegraph, telephone, transcontinental railroad, wars, economic booms and busts, the automobile, electrification, satellite, air travel, communications, Internet, smartphone, space travel, computers all had their roles in disrupting the ways of people and business. One of the greatest commercial inventors of the 20th century was Thomas Edison. Edison’s approach to rapid change and intelligent disruption applies to today. Edison would take a “needs first” approach to intelligent disruption vs. an “ideas first” approach. He would ask what was the practical application for his intelligent disruption efforts. History show us that, industries that adapted grew, new industries and companies were created while others faded.
The last decade (2007-2017) was the smart decade. It was a period of unprecedented rapid growth. Mobile phone users grew from two billion in 2007 to five billion according to a 2017 report from the GSMA. Smartphone connections increased rapidly over the last decade to 5 billion in 2017 from 179 million in 2007, according to the GSMA. Each year for the past decade, smartphones have gotten smarter with the increasing addition of smart
Ray Kurzweil, the head of engineering for Google explained that rate of change today is exponential. He said this “translates to us experiencing 20,000 years of change in the 21st century.”
What can you do?
How you can harness the power of intelligent disruption for growth today? Advertising agencies and brands need to understand technology and its resultant impact on these organizations, products, customers, user interface design, service and their employees. There are five THINK actions advertising agencies & brands can take to stay on the cutting edge of
Think differently about participation industry event of the advertising industry such as CES, World Economic Forum, Mobile World Congress, C2, and other industry events. They are excellent venues and opportunities to keep up with the pace of change. Careful pre-event curation yields highly productive insights, business and connections. It can move organizational mountains and provide the needs insights and view of the world, need to take actions.
Help companies facing similar business challenges where knowledge and know-how can be shared.
Innovate with pilots in the marketplace to trial products and services to gather feedback.
Non-industry partners can aid research, such as academic organization and think tanks.
Keep close with customers, partners and competitors and understanding their challenges.
While the pace of change is accelerating so is the ability to capitalize on these trends and to rapidly expand your business and profitability.