Finding a 'Theory of Everything' for Retail
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Retail leaders find themselves in uncertain circumstances as the retailing industry evolves, needing laws (or algorithms) to help them understand and predict their audience’s behavior.
They must predict how to handle a world where customers can order from them online while standing in their store or return a product in the store that they bought online. Will this omnichannel approach result in higher sales and higher profits or just higher sales and higher losses? No one really knows, yet.
Meanwhile scientists like Stephen Hawking are on the hunt for one theory that can explain how everything works, a "Theory of Everything." Some say this is a fool’s mission, but it’s hard to argue with the observation that everything seems to be connected to everything else.
I bet that when it comes to omnichannel strategies and the quest to provide a seamless customer experience, the answer lies in a "Retailing Theory of Everything."
Large retailers are plagued by operating in silos, information silos, whereby the left hand doesn’t know what the right hand is doing, thinking or saying. That's the antithesis of omnichannel thinking and knowing how your customers interact with all your channels.
Silos don’t make sense in an omnichannel retailing environment. They disappoint customers and destroy profit margins. What’s worse, the easier retailers make it for customers to place orders anytime and anywhere, the more likely are returns to take place.
My neighbor's college-age daughter is highly fashion conscious. She has a hard time finding clothes that fit, though her mom is eager to have the daughter look and feel fashionable. Yet from a retailer’s perspective, the daughter is either one of its most valuable customers or one who's not bringing in more value than it costs to serve her. It all depends on the data the retailer measures and how it defines the customer's lifetime value. Not all customers are created equal as Starbucks found in a case study.
To tie things all together, a retailer must have a working theory. Here's my outline for retail at a time when merchants are now operating through multiple channels, as follows:
Related: When Marketing Personalization Fails
The omnichannel theory of everything approach.
1. Help customers avoid products that don’t work for them.
2. Educate customers, combining offline and online experiences.
3. Restock and reship product returns in a highly efficient manner.
4. Have a unified inventory and customer database.
5. Share information easily across departments, channels and functional areas.
A "Retailing Theory of Everything" is not something that marketers and executives should just paste onto the side of their stores or set as #4 on their list of top priorities. It should be their Holy Grail or it's meaningless. Such a theory is cause to combine departments, redesign systems, rethink metrics and reinvent processes. It mandates being one company in the customer’s eyes and behind the scenes.
Launching later this fall is the film The Theory of Everything, presenting Stephen Hawking's marriage to Jane Wilde and describing how doctors once told the British scientist he had two years to live. That was in 1965, and Hawking is still alive today, unlocking the secrets of the universe.
Any problem worth solving is difficult, and the complex world of retailing is no exception. My bet is that the answer lies in tearing down the walls, even the ones customers can’t see.