A Global Game-over for Traditional Retail – Michael Van Den Berg

Thanks to the article of American retail expert Doug Stephens, I was very tempted to share a global perspective on Retail. Not only in the US, the retail as an industry is so dramatically disrupted, also in Europe the landscape is changing super fast.

Doug’s pledge is to establish a value for physical media impression instead of traditional -only sales KPIs which for ages rule retail senior management and board-room’s performance agenda’s. Although those sales KPIs need replacement quickly, uplifting store performance is not going to help traditional retailers (meaning those owning a lot of physical stores) to win the battle. At a bare minimum, blended them with several digital KPIs.

As mentioned in my previous ‘Game-over’ article – ‘How the Pope beats the retail CEO’, I already emphasized the needs to establish more Digital (experience) KPI’s to beat the monstrous competition from eCommerce. However there are embarrassing examples of traditional boardrooms being scared of embracing ‘the digital ghost’.

My first point to just focus on the physical side of retail (meaning stores), there is only a very small minority of retailers (mostly fashion retailers) which own high street store(s). Even when you establish a physical media impression KPI, as Doug suggests, it will only make sense maybe in NYC, London or Tokio. But the vast majority don’t own just one high street store, they own a chain of department stores where investment in physical media experience will hardly pay-off. The proof is in the pudding. Let me share 2 renown and very recent examples.

In 2016 Toys R Us opened a flag ship store at Madison Square Garden costing hundreds millions of $$. They ignored fully their 10 year old online experience. It was a strong vision of their CEO as away to renew the company……We all know how this ended!!!

Hudson Bay is heading for the same exit door; CEO Richard Baker convinced his board to invest hundreds of millions $$ in a set of HB department stores in Germany and The Netherlands. According to the financial times he was convinced he would differentiate his stores by investing in a physical and personal experience. Not even a year later, people are not coming into the stores, they don’t buy, let alone they line-up in front of the store. Not even at the first day of the Grand Opening at the high streets of Amsterdam.

The German stores have been sold already with a loss. The Dutch stores are likely going into bankruptcy. (even faster than I predicted last year in my post). Possibly its loss from around $80 million (source Financial Times) may bring down, even in North America, this once Canadian retail pride.

It is a strong lesson for every sector that old business rules still do apply: never underestimate geographical and cultural differences. Again HBC is finding out the hard way.

On top, ‘Shopping Experience’ has transformed. Despite the shift from the human experience the tech experience through online platforms like Instagram and Facebook are setting the retail experience stage. The ROI of online impressions is by far higher than in-store impressions. Holding on to a vision of investing in a large team of ‘Hosts’ to increase the in-store experience (as Richard Baker envisioned for HBC in Europe) is another strong sign of ignoring the digital play, staying in your comfort zone where nothing grows. eCommerce will eat you!

Customers simply won’t line up anymore for a fabulous store experience unless you are Amazon (or Apple) where people line up to see the latest and greatest of tech experience!

Growth hacking the Goliaths... Michael Van den Berg