Nike’s rethinking of its entire distribution strategy has created some of the most interesting and thoughtful retail ideas of the moment. Nike by Melrose is the physical embodiment of the company’s 2017 edict to their wholesale channel that they would in future directly support only those retail partners that offer a differentiated experience. This will lead, they anticipate, to a reduction from 30,000 supported retail partners to just 40 worldwide.
In Nike’s definition, a differentiated experience means either a retailer is adding something special to the experience, boosting the reward customers gain when shopping with that retailer; or they are super low-friction and incredibly easy to buy from. Footlocker is a great example of the first and ASOS of the second.
Fashion retail has been among the last to feel the full-force of customers deserting undifferentiated physical experiences… but it’s coming. Understanding how to make the required changes now to the experience in stores is critical.
We retailers are being challenged. We’re being told to not just ‘do better’ but at the same time we are being handed the tools with which to do better. Brands want us to thrive, they really do. They’re not cutting out the retail middleman vindictively but because in the era of both massive visibility of choice and incredibly safe and easy access to those choices; their success depends on customers encountering their brands in retail contexts that are either incredibly easy to shop or incredibly engaging, or both. Fashion retailers selling exclusively their own product should also absolutely be taking note of this. Online retailers have become very good at the easy to shop part; many offering incredibly low-friction buying experiences, and some are also nailing the engaging part too. Glossier, Stitch Fix and even the friction reducers such as FlipKart.com to name but three.
Arguably however, it is still the physical space in which the greatest opportunity for incredibly high-reward experiences remains. Something magical happens when humans help other humans solve problems. Frontier investor, Andrew Murphy of Loup Ventures calls this empathic retail and he sums up the fundamentals of this as the things that humans deliver so well; creativity, community and experience. I think he’s right. Machines can mimic concern, they can act as friends in pastiche, they can even tell us they love us; but empathy? That is something distinctly human. It exists beyond logic or programming, it is deeper than manners or culture; it is the elementary exchange of humanity between two people. Physical retail is where empathic retail can most readily be conjured. You can’t fake empathy but you can create the conditions in which it might thrive.
The core requisite is that you understand what choices customers are making when they begin to think about how to fulfil a shopping mission. To do that you need to understand three things:
- The structure of the shopper mission itself
- The need-states present over that mission
- The friction versus reward states of yours and competing alternatives
Looking at number 1, I’ve long recommended my retail clients access LDC’s tools that deal with the importance of putting stores in the right location and truly understanding the evolution, trajectory and shopper mission of those locations. LDC offers products that are unique in being able to pinpoint verified opportunities to meet the changing structure of physical retail.
For number 3; we know that when customers are considering how to fulfil a shopping mission they are constantly consciously and/or subconsciously weighing the effort they’re going to have to put in (friction) versus the gain they’ll get from shopping that way (reward). The two are inextricably linked; sometimes a customer will happily push through some friction if the reward is large enough, where other times the reward level is small so friction reduction rules. Take Selfridges, where everything in the store can be bought cheaper and more easily and yet customers love to shop there, versus Amazon. But even Amazon understand that when it comes to generating sign-ups to their Prime status, the reward-side needs to be high so you find friction-reduction fast free delivery paired with exclusive entertainment and sales events. Reward is vital and empathic physical retail might just prove to be the very best place to create it.
The startup I lead, www.Uncrowd.uk, is developing this new metric, friction versus reward (FvR) into a practical tool for retailers to do things like boost their NPS scores, remodel CX by shopper mission and need-states, gain first-visit advantage and our Friction/Reward Indexing tool is also supreme in helping retailers identify exactly where and when innovation could open up their opportunities to create empathic physical experiences. We’ve developed a free tool for retailers to self-assess their current friction/ reward positioning and access recommendations for improving or strengthening it. You’ll find that tool here: www.FrictionReward.com.
Nike and Unilever are throwing down the gauntlet but I believe they do so ultimately in friendship with physical retail – we need to pick that glove up, accept the challenge and use all the tools on offer to open our minds and to pinpoint those opportunities we absolutely do have to transform the experiences we create and deliver.
Uncrowd are the CX analytics team who know how Amazon/Alibaba/Walmart are eating your lunch and how you can stop them. www.uncrowd.uk.