In retail you’re either a religion, a community hub, or a commodity

Being a successful retailer used to be a question of stocking the right products. Given that consumers all have their own preferences this usually devolved into trying to offer either the best or the cheapest, or products tailored to the unique needs of a specific market segment. Or, putting it another way, you could choose to sell expensive suits, cheap suits, or suits for the broad and tall.

Today – as globalisation, the internet and social media bite into retail – retailers have been working hard to build a compelling in-store experience. The theory is that by providing a pleasant and streamlined buying journey (or, at least, a more pleasant and streamlined journey than your local and online competitors) you’ll encourage consumers to shop at your store. This has driven the recent wave of investment in omni-channel, in-store WiFi and mobile apps.

The problem is that consumer behaviour is changing.[ref]The destruction of traditional retail @ PEG[/ref] No longer do we identify a need and then head out to the store to find a product to fill it. Browsing is something we do in a spare moment, sitting in front of the TV with a tablet, or via a smartphone during our commute on the train. We purchase when we realise that we’ve found something we want or need, wherever we are at the time and via the channel that is the most convenient.

Building your business on the assumption that customers will come to your store looking for a product in no longer a viable strategy. It’s not enough to provide the best products or the cheapest. Nor is it enough to provide a more pleasant experience than the competition.

You need to find a way to draw customers to your store before they want to buy something. Retail must make itself part of the consumer’s identity, it needs to become one of their habits or rituals, rather than simply providing a convenient delivery mechanism for someone else’s products.

Three options seem to be emerging from he turbulent market we’re in at the moment.

  1. Make your business into a community hub
  2. Create a religion
  3. Resign yourself to being a commodity

Make your business into a community hub

Build a business around a passion that you share with your customers. You’re not a record store; you’re a hub for independent music. You’re not a clothing alterations shop; your a hub for people tweaking or making their own fashion. You’re not a scrapbooking merchant, you’re the centre of a creative community trying to capture their memories for posterity.

Pure Pop[ref]Pure Pop’s web site[/ref], just around the corner from where I live and whom I’ve written about before[ref]Pure Pop @ PEG[/ref], has built a thriving community around independent music. Starting life as a record and CD store, Pure Pop has added coffee, beer, a stage out the back, and breakfast to the products and services it offers. Customers don’t just head to the store to buy music CD or vinyl. They’re might be seeing a band, having breakfast or simply catching up with friends after work. And it was the community that Pure Pop turned to when it was discovered that the shed out the back that housed the stage didn’t have planning approval, running a Pozible campaign to raise the funds for a (fully approved) replacement[ref]Buy a Brick To Save Pure Pop @ Pozible[/ref].

[vimeo width=550 64113576]Source: Pozible

Local scrapbooking resellers are working their way to the centre of a creative community by providing the spaces, workshops and products that community members need to pursue their hobby. Starting life selling paper, stamps and albums via a party plan, they are branching out to provide workshops and retreats where people can learn about their hobby and work on their projects. They’re also there when someone in the community finds themself needing an album, pages, cutouts or glue.

You can also build a community at scale, as Amazon has has shown with the company’s more abstract approach, building a business around low prices, convenience and group recommendations. For many people Amazon has become the hub where they share their preferences, discover new products (books, music, films, clothes, food…) that they might like, or save their wedding or birthday wish-lists.

In all of these examples it’s the community that’s important – not the products. Your business provides a place (both physical and virtual) for the community to gather and share stories, and you then populate the space with the products and services that support the community. As long a people are part of the community they will purchase the products and services that you provide.

This has the interesting effect that you don’t actually care which products and services are consumed.

Create a religion

You can make a portfolio of products that convey a lifestyle, an identity that consumers want to brand themselves with and display to the world. From the Marlborough Man to ‘Think Different’, the challenge has been to make your image something that the consumer want’s to wear as a way to signal something unique and interesting about their own character.

Apple doesn’t sell computers; it sells the tools needed for a creative life. From 1984 video through ‘Think Different’ to the hipster adds, Apple has worked hard to build an identity based on how the company’s customers want to see themselves.  Apple also provides potential customers with convenient ways to learn about and explore the company’s products before they purchase – to get the religion. From their first ‘gateway’ product – an iPod or iPad given as a birthday preset – they can visit the Apple store, take courses and ask questions. They skip between channels as they learn more about the Apple way. As some stage many of them will tip over the edge, buying a desktop, laptop or Apple TV and start telling their friends ‘I have a Mac; you should get one too’ with an evangelical zeal.

T2{{5}} (recently bought by Unilever{{6}}) is part brand, part retailer. T2 doesn’t sell tea by other brands, preferring to create it’s own blends and then provide customers with opportunities to explore them. The company is not simply the end of someone else’s supply chain: it provides the tools and materials that people passionate about tea need.

[[5]]T2 web site[[5]]

[[6]]Danielle Bowling (6 September 2013), Unilever acquires T2 tea brand, Food Magazine[[6]]

T2 Queens Plaza, Brisbane
T2 Queens Plaza, Brisbane

Source: T2

Unilever probably saw something similar to Nespresso in T2. Nespresso started as convenient way to make espresso at home, but has grown into a quasi-religion. New owners proudly display their purchase and try to convince their friends to buy one too. And, as @andrewmic{{7}} is want to say, Nespresso is delightfully agnostic about which channel customers choose to transact via.

[[7]]Andy Hedges @ Twitter[[7]]

With these companies it’s the mission, what the religion represents, that’s important. The business provides the dogma and materials that consumers need to be part of this religion. As long as consumers identify with your religion they will purchase the products and services that you provide.

This has the interesting effect that you don’t actually care where or how the products and services are purchased. You only care that they are your products and services.

… or you can end up a commodity

Third, and last, we have the commodities. Sometimes consumers just want coffee and some cake. They’ve spent the afternoon seeing a movie and wandering around the mall and they need a break. There’s a café in front of them, so they head in and sit down.

It wasn’t the café’s reputation that drew them in. Nor was it the engaging experience. It was simply the convenient location.

For all our attempts to draw the punter to a store, sometimes the best strategy is just to be at the right place in the right time. We might not be able to charge a premium price. However, if the location is good, we can expect steady walk-in trade.

It’s not surprising that many retailers are deserting the high street and heading to the malls. The high street is emptying out while the malls are packed. (Of course, there’s still the challenge of convincing consumers to buy something.) The retailers are just heading to where the customers are.

If you don’t develop a relationship with the consumer then you’re no more than a commodity. You might happen to be convenient when the consumer decides that they need something, but even if the customer is in your store they might find it more convenient to use a mobile application to pass the purchase to an internet retailer rather than heading to the front of the store.

The religion, the parish and the commodity

Some consumers might get your religion. They’ll become the true fans that will sustain you{{8}}:

[[8]]1,000 True Fans, The Technium[[8]]

A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can’t wait till you issue your next work. They are true fans.

You value is defined by the identify you provide to you customers. You need to work hard to touch consumers who don’t have your religion yet, reaching out via multiple channels so that they can learn about what you have to offer, encouraging them to make you part of their identity.

Others might just want a local parish. They identify more strongly with the topic that you’re associated with, than with you yourself. They’ll be loyal while you’re the hub for their community. When they or their community moves on, however, you’ll be left behind. You need to work hard to keep new members flowing into the community, to allow for those that leave.

Most will just see you as a commodity. You’re convenient and you allow them to scratch an itch. Location is king and cost is a constant problem, regardless of wether you sell expensive suits, cheap suits, or suits for the broad and tall.

Image sourceMichael Coghlan