This was the summer of e-commerce shakeups.
Walmart bought online retailer Jet.com for $3 billion to boost e-commerce and grab more share of consumers’ wallets.
And Macy’s announced the closing of 100 of its 675 stores as it deals with weak sales in many locations.
Scrambling for Sales
A statement from incoming CEO Jeff Gennette said the decision represents "an advancement in our thinking on the role of stores.”
What he meant is that brick and mortar’s value has dropped significantly, and it can’t stand alone in a world gone digital. The real estate at 100 stores is now worth more to shareholders than selling suits, shoes and perfume.
Those are just the two latest store-closure standouts in an industry where digital, new competition and shoppers’ changing tastes are making life hard. Sports Authority is going out of business, shutting everything down fast. Teen clothing store Aeropostale filed Chapter 11 and is closing hundreds of stores.
Walmart specifically realizes it’s a race to meet consumers online: web, mobile, Amazon Echo — whatever and wherever the shoppers are.
But Amazon keeps eating away at Walmart’s base and its physical stores are losing steam. Earlier this year, the retailer said it would close 250 stores. After the Jet.com deal, the Economist reported, “Walmart still accounts for a tenth of American retail sales, but that has declined from 11.6 percent in 2009, according to Cowen Group, a financial-services firm.”
Pinpointing the Problem
When organizations fall behind digitally, the problem is often largely an organizational one, with some technology issues thrown into the mix, too.
Many companies — and their leadership — still live in a Kodachrome world where they control the conversation, dominate the market and set the trends. That legacy mindset can kill a company today. And when retailers wait too long to embrace digital transformation, once reality sets in, it’s hard to scrape your way back to customers’ hearts and minds.
To understand the pattern here, just look at the newspaper industry.
For years, newspapers enjoyed consistent growth, high profits and near-monopolies in local markets for news and advertising.
Then, industry leaders failed to recognize the web’s position as a force that would disrupt, and ultimately destroy, their old business model. I spent seven years in the newspaper business and was there the day the web showed up. Papers have been looking for their silver bullet ever since.
Digital disruption is also happening in cable television, where customers are cutting the cord in favor of Netflix, Hulu and other less costly, more appealing subscriptions. TV isn’t as bad off as newspapers, but it’s on its way.
Customers Are One Step Ahead
Today’s customers are in control of your business — not the other way around — and the digital-induced threat is more prevalent than ever. It doesn’t matter if you’re in financial services, media and entertainment, or even higher education: customers are shifting their actions toward digital more rapidly than most of us ever expected.
All these years after the web came onto the scene, too few organizations are truly, radically geared to move as fast as their customers, who are changing behaviors and transitioning their purchase power to an online world. And too many organizational leaders are telling their investors and boards that they’ve been doing the right things — that the business’ approach to digital is under control when the tail has been wagging the dog for a long time.
The reality is, websites and mobile apps built only two years ago are just scratching the surface of digital customer engagement. They don’t account for things like social media engagement, digital signage, real-time notifications and proactive alerts that present an offer, update relevant information and news, or predict a customer’s next purchase.
Lessons from the Leaders
When it comes to digital disruption and digital customer experience, leading C-level executives are starting to take notice. Forward-thinking organizations are investing in tools, technology and strategy to get ahead and stay in the game:
- Hotel chains like Starwood are learning that great digital customer experiences, efficient online booking engines and phone apps that can unlock your hotel room door generate loyalty and more revenue per room
- Online banks like Chime and Simple that cater to the digital and mobile-savvy set are seeing millennials flocking to open accounts, invest their money and obtain loans
- Disruptive CPG brands, like digital direct-to-consumer Dollar Shave Club, used lower prices and great customer service to build a massive customer base that loved their products. Consumer goods giant Unilever loved it so much — and realized it could not replicate Dollar Shave Club’s success easily — that it recently paid $1 billion for the company
Digital Is Just Business
Digital has created a whole new world and a whole new level of expectations. Organizations require vision and permission from executives and boards of directors to try new approaches and take a few risks. They need funding to build in the right capabilities for ongoing digital innovation to win, serve and retain customers. Now, more than ever, getting that support is well worth the uphill battle.
Digital isn’t just a fad. Digital business is now just “business.”
Organizations that realize this and build a strategy and digital technology platform to keep up with customers and stakeholders have a fighting chance when that disruptive competitor shows up on the scene.
Customers’ changing habits can move mountains. It’s time we learn to anticipate those moves and be ready when they show up, expecting the best from their digital experience.
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