With all the talk about retailers responding to the challenges of online by changing the way their stores work, improving service and improving the overall shopping trip, I was looking forward to taking in a few stores on my recent trip back to the UK. The United Kingdom, with its grocery retail dominated by giants such as Tesco, and WalMart-owned Asda, would surely be at the vanguard of the big retail response to the online onslaught, right?
Wrong.
Whilst in a previous blog I demonstrated how high street retailers seemed to be delivering more effectively for shoppers versus online big retail’s in-store response seems to be invisible. Let’s take a look at Asda, and a couple of stores I checked out, for evidence of a retail revolution:
Aisles of boredom
It’s difficult to tell from this image which products are actually being sold here, and that’s the point. There is no differentiation. Asda has squeezed out all personality and opportunity for engagement in the name of efficiency. The place looks and feels like a warehouse. This offers no additional value compared to the cold blank screen of a computer monitor.
Fun free zones
This picture shows the confectionary aisle in one Asda store I visited- if ever there was a category where fun and engagement belonged, surely it is here. Surely amongst candy and chocolate, there is an opportunity to offer some theatre, above and beyond racks of product? Apparently not. Not one jot of anything. With fun, engaging brands galore in this category, I’d expect such a lot more.
Failing on the basics, failing where it matters.
Fresh produce, however, is one of the most important weapons in the physical retailers’ armory. Having my toothpaste picked out and packed by a stranger is totally OK, but many shoppers still like to personally choose their fruit and vegetables. Surely here, in this strategic (and profitable) priority category, we’d see big retail lifting its game?
Well. No. Whilst there is a semblance of trying to make the store look a little different in this area, we’re still looking at industrial-sized piles of product. Or, as the picture shows, industrial sized gaps where product should be. How on earth can a company like Asda perform like this? This feels like corporate complacency – perhaps something they could get away with when they were the only shopping option for miles around, but when another retailer is a mere mouse-click away – this complacency could be dangerous. The store was littered with shelves like this (see the biscuit aisle on the right).
Using the wrong weapon; missing the target
The focus across most of the big retailers is still on price. Big retail seems to work on a rather one- dimensional marketing mix, particularly when under pressure. Big marketing dollars are being spent across the board with price promises, as if price is all that matters. Whilst price has always been part of the consideration set, but is rarely the only consideration. Shoppers before and since the invention of the smartphone made their decisions based on the value being offered.
What has changed in the twenty-first century is that e-commerce has completely overhauled the value equation, and smartphones have destroyed the walls that retailers (literally) built around their shoppers.
Retailers (big ones) historically worked on a simple convenience, curation and price model which e-commerce is rendering uncompetitive. Retailers are not sitting ducks by any means, and many are making many changes to their offer, but their stores are a huge albatross around their necks if they cannot make those stores create relative value for their shoppers. A large store nearby used to meet shoppers’ needs for convenience, but now online is even more convenient: a good range used to meet shoppers’ needs too – but now online can win on range: and with often lower costs, retailers online can often hammer the ‘bricks’ retailers who have huge physical overheads to cover.
Show-rooming is a symptom of a retail world which no longer delivers added value. Whilst one of big retail’s response to the online onslaught is offering their own online space, the massive costs of stores will still weigh heavy on the balance sheet unless they can create value in the future. Surely for big out of town retailers, their challenge is to once again turn their stores into something which delivers competitive advantage, and that means they need to create value for shoppers.
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