Loyalty Reimagined treated us to two days of fascinating insight from some of the foremost retail leaders, analysts and commentators working today. Here, we pick out four of the key learnings from our guest speakers.
The number one reason businesses fail: “navel gazing”
The legendary management consultant and economist, Peter Drucker, once told Doug Rauch, former president at Trader Joe’s: “the more successful you are, the more likely the fruits of your success have the seeds of your failure. You stop paying attention.” Becoming myopic, not focusing on the broader environment, is the quickest route to failure.
For most industries, the key competition comes from outside the industry itself. Take typewriters, as Rauch pointed out. An industry that had lasted over a hundred years was so fearful of Japanese competition that they never saw what would eventually usurp them: the computer.
“How many of us thought a bookseller in Seattle would send Walmart’s stock tumbling when it bought Whole Foods?” Doug asked. Competition from leftfield is certainly currently making its impact felt on the retail industry, and in the face of this threat there are only two options: you either innovate, or you die.
The secret to happiness is more than just pay
Lord Mark Price, former Managing Director of Waitrose, believes loyalty and happiness are intrinsically linked. “The supreme purpose of the John Lewis Partnership,” he said, “is the happiness of the people that work there.”
Happiness leads to more commitment, longer employment and better training, which in turn wins customers because of better service. Better service means more loyalty, and a more sustainable business model.
But what is the secret to workplace happiness? It is not, in the opinion of Lord Price, simply a matter of pay. Far more important is recognition—thanking others for their good work. Employees are, on average, thanked only three times a year, and yet when they are it leads to much higher happiness levels that remuneration alone.
Equally crucial is empowerment. “It’s the difference between owning something and caring for it, and feeling like a slave to someone else,” said Lord Price. Giving employees the tools to let them achieve what they want to – and providing recognition when they do – increases happiness to create a more engaged, advocate-led workforce.
Beware the “800 pound gorilla”
Amazon are a confusing competitor in the retail industry, as Natalie Berg, Founder of NBK Retail, highlighted. “It sells everything from diapers to treadmills,” she said, “but also produces hit television shows while selling computing services to the US government.”
With unlimited ambitions, it wants to become a supermarket, a bank, a healthcare provider and more. “Amazon doesn’t just want share of wallet,” warned Berg. “It wants share of life. It doesn’t just want to be a retailer but the infrastructure and the rails that the retail sector runs on—that’s quite a scary thought.”
It may look untouchable, but the former bookseller still has its work cut out. “We’re a way off Amazon finding a scalable physical format,” said Berg. “The way it will eventually differentiate is through speed, but speed and infrastructure is meaningless if you don’t have a compelling range to sell.”
Recent acquisitions and partnerships with the likes of Whole Foods, Morrisons, Booths, Dia and more show that Amazon is well underway with the hunt for established ranges, but there are ways to compete with the behemoth. As Berg puts it: “Focus on W.A.C.D.: what Amazon can’t do.” Demonstrating expertise, fostering relationships with customers and collaboration with other retailers will be crucial.
“Increasingly,” said Berg, “we’re seeing a trend toward ‘co-op-etition’—retailers joining forces to better service their customers. In some cases, to survive the threat from Amazon you may even have to learn to work with the giant itself.”
Your story can be your strongest selling point
The futurist and journalist Andreas Ekstrom posed an interesting question: how do successful companies turn their customers into fans?
Take Apple, which charges €90 for its laptop chargers—functional and stylish power cables, granted, but simple power cables nonetheless. “Nobody in their right mind would pay €90 for a power cord,” said Ekstorm, “except everyone.”
Is that because of the beauty of the product? “I would argue,” countered Ekstorm, “that the smartest people at Apple work in the pricing department.” Through raising the price so considerably the product becomes associated with lifestyle. A customer will forget what they are actually buying, as it seems like they are buying so much more.
“If Henry Ford capitalism was all about slicing costs to bring cheap quality products to everyone, Steve Jobs capitalism was about doing it the other way around,” posited Ekstrom. “Bring the prices up as high as possible, but still have everyone buy the product.” But seeing as both models proved so successful for each business, surely there is something more at work?
The answer is ‘the story’. As Ekstorm explained: “We all know the Henry Ford story. We all know the Steve Jobs story. We like them equally well, even though they are completely different. Through storytelling, more than anything else, you can turn the most critical customer into a fan.”
With the increasing proliferation of choice and competition arriving from all angles, it’s becoming clearer and clearer that the retail sector needs reinvention. At Loyalty Reimagined, we heard first hand from the retail leaders crafting new advances from traditional ideas. To stay ahead of the curve, we need to reimagine what we know about competition, staff happiness, shopper engagement and more—we need to reimagine retail itself.