Customers, community and COVID - three Cs shaping the future of omni-channel retail, according to Angela Ahrendts
- The future of retail comes back to knowing and understanding your customers, says Angela Ahrendts, veteran of Apple and Burberry - and COVID-19 provides another reason to sit down and have a conversation with them.
If you're in sport, they always say don't ever take your eye off the ball. Well, I think in retail, don't ever take your eye off the customer.
In an omni-channel age, that’s not necessarily an easy ask, but for Angela Ahrendts, it’s a foundational position to take when considering the future of retail. Ahrendts’ track record in this space is formidable. She spent five years as the senior vice president of retail for Apple, prior to which she was CEO of Burberry and VP of Liz Claiborne.Today she sits on the board of Ralph Lauren.
All told, she’s been at the forefront of a lot of change in the industry, but her worldview comes back to one piece of advice to retailers:
We come up with all of these names - multi-channel and omni-channel - and I'll listen to these dissertations and I always say, 'But what about the customer? Who's your customer? Where are they? How do they want to engage with you? Where do they want you to come into their space?'. There are so many options, so many choices today. There are Boomer customers, there are Gen Zs and Millennials. Well, you know your product, you know your company, so who is your customer and where do they want to engage with you at?
There’s no hard and fast rule here, she says:
We talk about everyone going online. Maybe you have an app, maybe you don't have an app. Maybe there's other ways you should market and talk to your customer that you never considered before? I think it's about having a strategic review with your customers, you sitting down and understanding where they are, how they want you to engage with them. It's time for everybody to take a pause and just really deeply study and get much more strategic about this, because there will only continue to be more options. Every company can't choose all 15 different a la carte options. You'll never be able to afford it, you'll never make an impact. You've got to be so much more strategic when engaging with your customer today.
That’s perhaps now more important than ever as COVID-19 wreaks havoc in sections of a retail industry that was already in the throes of a disruption that was painful for many. Ahrendts takes the view that there is opportunity to be had in the current climate, particularly around the take-up of retail tech:
I would argue that the US was starting to fall a little behind, when you live in the UK and you see how ubiquitous technology is there or you go to Asia and China [and see the same]. COVID has introduced digital commerce to a much older consumer and and I don't think that'll ever reverse. A lot of Boomers that maybe were going to the grocery store every week, I think their habits, their behaviors, have been forever changed. That's great.
It’s the same story with digital payments, she reckons:
I was always shocked at how many people didn't use Apple Pay or weren't that aware of it, but again, now you've got this whole cohort of big spenders that have been forced to go digital. They've had time now to learn about all these digital payment options and they would much prefer to do contactless. So I think that COVID has accelerated everything digital, and I don't think that'll ever reverse. Maybe it was the catalyst we needed to catch up?
On the other hand, there are clear downsides. Ahrendts spoke before this week’s appalling quarterly numbers from Macy’s, but her comments highlight an issue that the US retail institution flagged up as a COVID-created pain point, for it and other brands:
One of the facts that people forget is tourism was a huge driver of retail, especially in the Top 25 cities in the world. When people travel, they spend five times more than when they stay at home. Fifty million people travel to New York City every year, 55 million people to LA every year and London and Paris. You have tourists coming in, spending five times more. So for half of cities, retail was tourism...Cities will still be important and I believe that people will still want to travel. You'll still want to take your kids to to London some day or to Paris. So I do believe it will come back, but it will take a little time.
That may mean rethinking the profile and location of the physical element of omni-channel mix, she suggests, in order to meet customers where they geographically are:
I don't think that that necessarily means going from having 100 flagship stores in these big cities to all of a sudden having to have thousands, although a lot of chain stores have that already… For certain brands, you will still want that flagship presence in those big markets. That is not just revenue, that's also marketing, that's eyeballs. But there may be high demographic markets that are 50 miles outside of a city where you may want to have a smaller store strategy that you typically didn't want to invest in before.
An associated change here comes back to customer experience. Stores in tourism hot spots looked to volume of traffic more than the experience delivered. If however those faceless volumes have gone for now and the emphasis shifts to servicing a more localized audience, retailers need to focus more on what they're offering those customers.
Ahrendts points to her time at Apple to illustrate her point, citing a massive crowd-sourcing exercise across 55,000 employees to ask how they felt the firm could best serve needs in local communities. The outcome was Today at Apple, the retailer’s ‘modern day town square’ program, where stores are used by visitors as a hub for teaching sessions, debates, community sessions and so on. Ahrendts recalls:
When our employees shared that they felt that isolation was a big issue in their community, one of our objectives for Today at Apple was to encourage connection. We built that into the program to help them introduce themselves, so at the end of the program they would make sure that everyone knew each other. They'd take a photo together and put it on the big screen. We’d say we knew it was successful if, when they came back to attend another Today at Apple session, they came back with someone they met at the first one. That was a human connection that would help offset one of the issues that our team felt that they had.
[Employees] were taught to have eye contact, to shake hands, to introduce themselves with their full name as they welcomed [customers] into the Apple Store. That was all a part of the training from the very beginning. Even though there were so many people, the goal was always to welcome them in. They took the time to have that personal connection Then as every programme evolved, it kept that and then added to it, to help make a bigger impact in the community. So I think it can be done.
Today at Apple is undoubtedly a remarkable engagement success story, but could it be replicated in an age of social distancing? That’s far from clear, although Ahrendts acknowledges that this particular COVID legacy is something that’s going to need factoring in to the retail experience:
Not being an expert on the whole social distancing thing, but I would argue that all of the stores that stayed open have managed to do it. They've all figured it out. Some smaller stores or luxury stores, I would argue that they weren't that crowded to begin with before all of this happened, so it appeared they already were doing social distancing. I do think that you're going to have to market the fact [of enabling social distancing], that it's almost a Good Housekeeping Seal of Approval. I think people will want to know that you care about it.
Being seen to care is an area where many physical retail outlets need to demonstrate increased awareness and up their experiential game, she suggests:
When it comes to experience, I don't think that most physical retail brands had been evolving fast enough. I don't think you and I could sit here and say, 'Oh their experience, it was incredible'. It was pretty traditional - it was four walls and some people standing inside…I think that there will always be physical stores. We're humans - we love to look, we love to touch. It's almost more entertainment.
The answer isn’t just focusing all attention on tech, she says, although digital solutions will have their place:
A lot of us talk about iMessage, because there is a generation that would prefer you talk to them that way. A lot of us talk about social commerce, with Instagram and Facebook. There's a lot of conversation about conversational commerce. I don't think any one of those is going to go away.
But be careful not to overuse or abuse such platforms, she cautions, as customers do not want their privacy invaded:
If all of a sudden I get a message from a brand I've never heard of, from a product I don't care about, I could think that's a little invasive and you could turn me off to your brand. So I think iMessage and WhatsApp absolutely have a place, but at what point in the customer journey? Is it maybe after [a customer] bought something once or twice from you?
Do you also ask them how they would like you to communicate? I would love a website or an app someday to say, 'Hey, Angela. We see you're on WhatsApp and iMessage, and you're in our app. What are the two most important ways you would love us to communicate with you?'. I would have tremendous respect for that brand. I think [social media] will become important channels, but I think you have to do it very wisely to make sure that it doesn't have the opposite effect.
With that in mind, Ahrendts suggests one piece of useful spend retailers should consider:
We have so much data. Wouldn't it be worth it to hire a couple of analysts to come in and scrub your data? I wake up every morning to probably 40 emails in my in-box and throughout the day there's some companies that blast me four and five times a day. It just feels so old. There's nothing intimate about it, there's nothing personal about it. It's just the way that they've always done it. I don't think [those companies] are going to win in the future. I think it's a lazy way and it doesn't make me feel special and personal when I wake up to these 40 emails. If anything, it's an annoyance and I start to block them. We're smarter than that. We've got tremendous data and there are so many ways to communicate. The company that will win, will be the company that gives the customer choice and asks customers how they would love them to communicate.
It's got to be a much more serving mentality than ever in the history of retail.
There’s a lot of good advice coming from Ahrendts here, but at the heart of it all is a retail 101 that’s not new - put the customer at the heart of what you do. There’s a real danger in this time of retail sector crisis that many brands will panic and reach for a flashy tech ‘silver bullet’ that will supposedly solve all their problems, but tech can only be an enabler, not the answer. As Ahrendts says, retailers need to take this awful current situation and use it as a chance to re-examine customer first principles. And don’t forget to include the customers in the conversation!