Retail Survival It's About Choices

“No one can tell what goes on in between the person you were and the person you become. No one can chart that blue and lonely section of hell. There are no maps of the change. You just come out the other side. Or you don't.”―?Stephen King, The Stand

This week in The Business Brief, we discuss retail survival and what it takes to survive change. Businesses will always come and go; I can choose to be an armchair critic or choose to be a vocal instrument of change. So I have chosen the latter. Everything is about choices. If you pursue, 'it looks good, feels good, as others are doing, as a strategy,' remember there is only one leader in every category; everyone else gets what's left over. That should help you understand why the right choices matter.

The Markets

Any bids on what the market is thinking? If you are betting that the economy is still collapsing, you hope businesses will want more technology and services from consulting firms. You may be disappointed. If you think the worst is over and retailing and consumers will rebound, you may be disappointed. That's where we are right now at a critical juncture of uncertainty. Central banks may hold on a little longer with higher rates, but holding on too long will cool the economy and result in an outcome that will not be welcomed. No one should dismiss this risk. The economy is about consumers. There are few, if any, industries out there that do not rely on employed humans, have a disposable income, and can spend without borrowing so that the economy can continue to flourish. What we need going forward doesn't get much clearer than this.

Personal Log: No magic in business survival

Imagine what business survival meant in the 1900s.

In our search for brand and business longevity, we all sit like little kids in an auditorium to see what magic tricks the wizard has for us. We are looking for the one golden nugget that will give us the edge we've been looking for. But alas, you are not alone in the room. Everyone else in the universe is there with you, taking notes. Reality sinks in: you are not walking away with the breakthrough strategy you hoped for to separate your brand from the herd.

There is a reason for that. Like fashion, it doesn't look as good on us as on the model walking the runway. Copying one another's strategies is like showing up to a gala with half of us wearing the same outfits. It's not good, not good at all.

But then you stumble on something and are very quiet about it—not because it's a secret; everyone sees them; it's just that you see something else. Brands that have stood in place for a hundred years, some over one thousand years. You'll say they are anomalies; they didn't have the same challenges. Oh, but didn't they? This one place has seen many wars, famines, plagues, environmental disasters, and threats to their future because of change. This one place is a small hotel with 37 rooms and a restaurant, and as of 2019, it had high-speed wifi. This hotel has lasted over 1,300 years and passed on through 52 generations of the same family.

I wrote about this in my first book, The Last Retailer Standing: Relevant Leadership Relevant Brand. I didn't want to write a book with made-up ideas and catchphrases; I provided a street-smart understanding of how they did it. They weren't alone; there are hundreds of businesses out there with long histories. There had to be something unique about their best practices. And there are.

The hotel, in this instance, is called Nishiyama Onsen Keiunkan. It was founded in 705 AD. It's secret like the others, in one short sentence. For 52 generations, they learned to be constantly aware, agile, and adaptive to change. They didn't rely on gimmicks, luck, or hope. The same will apply during this age of AI.

Technology - Humans are getting angry

Other humans are in their Luddite moment. This week, there was an arson attack at the Tesla German Gigafactory CNBC News. Of course, there is a "Stop Telsa" movement in Germany. The Germans have something more to be angry about, especially the influx of Chinese EVs entering the world market and Europe. Tesla will be a small player compared to what BYD will unleash. However, Tesla also plans to have the Model 2 arrive sometime in 2025, a lower-cost model. We shouldn't be surprised by resistance to change this, and other moments are happening with Carbon Taxes and will with AI and, for that matter, Robots that I shared with you last week with Figure.ai

That brings us to the four stages of change. The first is Shock, followed by Anger, and then comes acceptance and commitment. Shock has been brewing for a couple of years, and now, as legacy auto manufacturers are gearing up to produce EVs, Anger is hitting workers. Worried that more robotics and AI are on the way. However, much of this anger will move to acceptance when they realize that much competition is coming from Asia. They will see the importance of shifting direction, followed by commitment. The biggest drawback of EVs is price; it isn't as much about range or dislike for EVs. Most of the public gets the climate issue.

Social/Politics: Blocking TikTok

Blocking TikTok in the US and Canada would likely cause havoc and mayhem in the social media Universe. Small businesses, entrepreneurs, creators, and influencers wonder where to turn. However, alternate news and politicians must be in a frenzy over this one. Simply put, you are about to lose an audience. Will ByteDance sell TikTok? I'm not so sure that will happen as easily. However, one has to wonder if it is really about Chinese interference or if TikTok is giving many other social media sites a beating. I believe it is both, and I am sure that a great deal of lobbying will be revealed. And think about the number of new generation voters that will be unhappy that their grandfathers had no vision!

Do not doubt that all other social media brands aren't waiting to benefit from blocking TikTok.

Retailing A New Paradigm

Advertising-Instant Personalized Video Content

Yes, you heard it right. This isn't just being traced and followed by algorithms showing you a product through your activities on a website, perhaps as a loyal customer of a brand when you log in and send a search for a product. AI systems can now develop content videos with a voice and create them explicitly to address your search. Simply put, AI-generated video content with a voice-over. The AI reacts to your search, and there's the content. But it's not just advertisers who create content that will be impacted. We can expect it in entertainment and news creation. In an interview with The Logic, Loblaw talks about its own initiatives. The key here is that you need an integrated organization that transforms into an AI factory to play in the future, produce insights, and make profitable use of that data.

Next Generation Retailing - 15-Minute City

I would like to tell you what stores will look like, shopper behavior, e-commerce, and even the evolution of omnichannels. I advise building a relevant brand that can continue evolving and staying relevant. Build it in a local community and dominate. However, be careful, and don't confuse being the only brand in the community with being the best brand. That can lead to false positives and competitive problems.

So, how does this work? Municipal planners are trying to rethink how we live and spend our time at home. Their idea is to create a 15-minute City. The plan is to develop local services within a 15-minute walk, bike ride, and commuter service. Objectively, the intent is to minimize the need for us to drive and instead contribute to local businesses and, yes, be environmentally savvy, thus reducing carbon emissions. The store footprints can be smaller, and the inventory more targeted to the local demographics. I know you will tell me that we've always done that. No, we used to do it and lost it around the 1970s because we believed malls and big shopping centers were the only future. I guess this strategy is stepping back to get to the future. With the fast growth of AI, smaller businesses can survive in these planned areas.

What's wrong with your brand strategy? Lack of Vision

Under Armour's biggest news story is founder Kevin Plank's return. As a result, the market punishes the stock. To date, the corporate strategy still lacks brand preservation. However, you have to step back into history to understand the true issues with Under Armour. The New York Times article from 2020 on the company says it all. Nevertheless, this brand needs to survive, and whether or not it does depends on the quality of its advisors. They had better be visionary and not stuck in their own paradigm or just nodding heads, validating a founder's beliefs or misgivings. They (UA) missed the shift to fashion; brand innovation is not like Nike's, and they are chasing trends and no longer creating them. Kevin Plank clearly sees a problem or opportunity that must be identified and pursued aggressively. But it cannot be on a whim or emotional gut instincts because this doesn't seem to work as a strategy for this brand. And the overall apparel world is in a funk. Older brands are trying to find their way.

Two retail apparel brands in Canada are on my watchlist. They will be reporting their fourth quarter 2023 results in a few weeks. Both have reported downward sales trends in the apparel sector and Canadian brands in their last quarters. The lack of a true vision in retailing, especially fashion, can be detrimental.

Forecasting the Future of Physical Retail - Good Luck!

What does the future of physical retailing look like? It's impossible to be very conclusive about what that answer should be. Forecasting transformation means working very closely or working within retail and even closer with consumers. These 30,000-foot forecasts are not enough. There are many reasons for that, and these are just a few. With rapid technological advancements, AI is knocking down barriers at incredible speed. Changing consumer preferences are being influenced by other consumers from around the world, of course, global economic and political factors, environmental concerns, and innovation in logistics and supply chains.

But what really happens to physical stores? How integrated will technology be in our overall experiences? Consumers already resist cashier-less checkouts; how does that bode for other technological intrusions such as AI? A lot of it is likely generational. Over the years, there has been a lot of hype around augmented reality (AR) and Virtual Reality (VR), but for that to come to fruition in a physical environment means we are all walking around with wearable technology. And what of experiential retailing? The concept is sound, but bringing that to life is a very different matter: bigger store footprints and technology investments all become complicated and too much for many retailers to understand and even begin to plan and implement or fund. However, smaller retailers can create those experiential moments with personalized human service in local settings to foster community engagement.

The reality is that physical retailing "could" become a narrow field of entrants if we believe AI, AR, VR, and investing in entertainment value in store settings are the future. It will weed out small startups that will likely only go online first and push small physical store operators toward ecommerce and social selling. But don't panic; instead, plan for all the possibilities and invest in the future that best suits your brand.

In closing this week's retail discussion, build your brand based on your vision. As I keep reiterating to company leaders, we can't all show up to a party wearing the same strategy or suit. Differentiation and developing clear products and services that appeal to your customers are key to brand relevance.

Dismiss Nothing, Expect the Unexpected, and Plan for the Improbable

At the end of the day - Thank You JB

If you hear a voice echoing from the other end of the parking lot with a Happy Monday or Sunday! You might get startled, and looking around, you wonder who that was from and who it was directed at. Not to worry, you are not alone. It's the young man collecting the grocery carts. He might even share highlights from a sporting event, such as an update on the last World Cup scores. JB (not his real initials) will even offer to put your groceries in your trunk and take the cart from you. He's just happy to help with an incredible desire to serve and a very happy personal disposition about life.

JB obviously lives with some disability. However, it is not for us to know or judge. Instead, we must celebrate and acknowledge his desires and courage. As complicated as our lives are, JB shows us we can rise above them. Happy Sunday to all the JBs!

My presentations are based on real-world experience and research of the world around us. From AI, The Two Minute rule, and How to create a culture where you are Creating Trends and Not Chasing Them.

[email protected]

#retailing #strategy #ceo #marketing #tiktok #marketing