Bazza & Bull is the Top Brand. Again.

Photo by Gabriel Santiago on Unsplash

One of the endearing things about Australia is the style and wit of nicknames. Some aren’t particularly imaginative (Bazza) and some are - calling the smallest bloke on the team ‘Bull’ for example.

And this perfectly illustrates the misunderstanding of the whole notion of brand.

The range of perspectives on branding is astonishing. At the one end of the scale there is that group who believe it is all wank and does not really matter, and at the other end there is the group who create the wank with jargon and buzzwords.

The long version is that your brand is all of:

  • Brand Equity
  • Brand Values
  • Brand Principles
  • Brand Essence
  • Brand Identity
  • Brand Positioning
  • Brand Image

And as many more as you can come up with.

That is what many people think a brand is.

The reality is different.

Your brand is ACTUALLY whatever the customer thinks of it.

You may think you are Barry Special, but if everyone else thinks you are Bazza, you’re Bazza. But I am guessing most brands are more Bull than Bazza.

The 7 Immutable Truths of Prosperous Shopping Centres

Bal Harbour Shops is the most lucrative, most productive, and most profitable shopping area in the world. Located in Miami, Florida, the mall is renowned for being the hotspot for individuals who belong in the high-end market with money to burn on extremely expensive products. (Image from http://www.therichest.com/

Bal Harbour Shops is the most lucrative, most productive, and most profitable shopping area in the world. Located in Miami, Florida, the mall is renowned for being the hotspot for individuals who belong in the high-end market with money to burn on extremely expensive products. (Image from http://www.therichest.com/

Not all malls will survive, not all malls will die. The question is what to do to ensure your mall is winner?

In the coming evolution of malls, there are a few (IMHO) self-evident truths to be considered.

Truth 1: The Offer

The offer (retail mix) will change, possibly unrecognisably so. At one point the malls have become the go-to place for any shopping, primarily offering convenience. The mainstay of the mall became the easy shopping for functional comparison goods like fashion.

In the last decade or so the trend has been towards more experiential forms of retailing, but to be honest ‘experiential’ meant adding food - ala ‘eat street’. This was a relatively one-dimensional view of ‘experience’.

Recently the emphasis has widened to include services (healthcare, libraries, gyms).

The two obstacles that prevent malls from evolving sooner and better are:

Lack of retailer-led innovation.

Mall owners can only facilitate the infrastructure needed to retail; they are not retailers or even in the retail business. Too many retailers are acting like deer caught in the headlights of e-Commerce (or the B-Double called Amazon.) And, very importantly, ‘retail experience’ has become a buzzword and few people seem to be able to articulate.

The other obstacle is the lack of flexibility.

Some of that is caused by local government planning regulations. And some of that is self-inflicted, as investors demand rigid lease structures (to minimise risk and differentiate from other investment classes) but these structures do not facilitate agile retail and innovation.

Truth 2: Time Horizon and Lag

The malls that will survive have owners who play the long game. The current system has considerable inefficiencies caused by the (a) different investment and performance profiles of landlords vs tenants, and (b) the resultant friction costs caused by the lag in relative fortunes.

The solution is to adopt an ‘agile’ lease structure. I will address this in another post.

Truth 3: Balance of Power

The balance of power between landlord and tenant will oscillate during the transition, even if it now favours the retailer in most instances.

Truth 4: eCommerce

The nature of eCommerce will influence the format of the new mall.

It is shaping what customers expect to be available, both in product, expediency, price and service. Responding to this challenge requires two tactical responses:

Attack by differentiating:

A physical space with real people interactions cannot compete with a virtual/digital space on many of these elements, so it is critical to find/create and then focus (relentlessly) on the differentiators.

Defend by Seamless Integration:

This is what the commentariat mean by ‘multi-channel’ retail. Ensure the customer can seamlessly move between channels, irrespective of  the specific stage of the purchase journey.

This will eventually determine the retail mix of the mall in very specific ways. (Keep reading Inside Retail and I’ll share those thoughts in future article.)

Truth 5: Technology

Technology will play a key part in the functionality and features of the new mall.There was a short segment on the Today Show (The Future of Shopping). The crux of the message was frictionless payment (true) and walk-in-walk-out shopping (not so true).

True:

In Psychology, there are two types of stress: one is called eustress and then the old fashioned distress. Point-of-sale causes distress. That is why tap-and-go payment resulted in higher frequency of purchase. Trütsch  found (2014) that “contactless credit and debit card adopters undertake statistically significantly more transactions by their corresponding payment cards compared to non-adopters while this also holds true for overall card services payments.”

Not so True:

Walk in, walk out shopping (WIWO) with no interaction at all will be adopted to some extent by certain consumers for certain types of experience. WIWO shopping behaviour is adopted where less friction is desired, but less friction is not required in all elements of shopping.

If there is no friction there is no interaction, if there is no interaction, there can’t be a (pleasurable) experience. (Ahem.)

Truth 6: Fundamentals

The malls that survive will do so because they address the core values that underpin all consumption. An important consumption value is “the experience”. But there are five additional patronage values.

The more complete (and strategic) the Landlord is about responding to these values, the more prosperous the future. Strategies like ‘community engagement’ and ‘placemaking’ are tentative steps in the right direction of tapping into some of these other consumption values.

Truth 7: No one knows

No one knows for sure the exact nature and details of what that looks like specifically. But on aggregate, the mall owners can and will figure out what works.

If you are an owner or investor, I hope it is you.

As always, many of these truths must be addressed by spending money. The challenge is to do so when the return on investment is over the horizon, or maybe even unquantifiable. Ultimately, this will be the real differentiator for shopping centre landlords: a commitment to investing in a future with uncertain returns.

I didn’t say it would be easy, or that it wouldn’t require courage; just that it is possible.

Dennis Price: Co-Founder at www.yearone.solutions

Is Elon Musk the Emperor with no clothes?

Like everyone else, I harboured a general admiration for Elon Musk of Tesla fame. A successful, focussed, visionary person who has achieved great success, right.

 I didn’t quite feel the same towards Jeff Bezos - Amazon’s lack of profitability concerns me.

 Then I read this article. (Read in full - well worth it.) Here is a sample:

The key for Amazon making it all these years was to keep people focused on everything but their financials. This is not an exception. Faceberg will never have earnings to justify its share price. In fact, it will never have user rates to justify its ad revenue. It’s not unreasonable to think that everything about the business is fraudulent. That should trigger large scale audits and investigations into its business practices, but Facebook is on the side of angels in the cultural revolution, so its all good.

Probably the best example of our carny-barker economy is Tesla. To his credit, Musk has built a real factory that builds real cars. No one is going to say the Tesla is a work of art or even a practical car, but it is a car and the technology is impressive. The trouble is the company does not exist to make cars. It operates as a tax sink, where government subsidies flow into it and some portion of those subsidies turn into payments to the principles in the form of stock repurchases, debt service and compensation.

This only works if people think the venture will either one day turn a profit or the technology that it creates will result in something good down the road. To that end, Musk is regularly out doing his Lyle Lanley act, making all the beautiful people feel righteous by backing his ventures. He’s also telling Wall Street that he will soon be making and selling enough cars to turn a healthy profit, even without massive tax subsidies. The trouble is, that’s probably never happening, at least not with current management.

And then there was another article I read soon after - this time with the more usual glowing perspective.

Tesla has safety issues.

Elon Musk’s response to the issue is hailed as exemplary.

Then I thought about it, and I think Elon’s approach sucks.

At it’s core; here is his plan:

“Going forward, I've asked that every injury be reported directly to me, without exception. I'm meeting with the safety team every week and would like to meet every injured person as soon as they are well, so that I can understand from them exactly what we need to do to make it better. I will then go down to the production line and perform the same task that they perform.”

So in essence:

1. Knowing about the individual injury is very important to me as the CEO.

2. I will invest a significant portion of my team in a meeting discussion this.

So far, so good.

3. I am going to meet injured people personally. After you have been injured.

4. I am going to take your incident (sample of 1) and make sure that such an incident don’t happen again.

5. Then I am going to invest even more time by showing you I will get my hands dirty on the do the same job.

Items 3-5 are really problematic for me.

I appreciate that it (a) plays well for the layperson and casual observer, as well as (b) being likely to make the individual feel good and (c) may even mitigate the potential future claims. I get that.

But, here is the thing.

I think a CEO should be more proactive than this. It is great at managing feelings, but I am not sure it will fix the problem proactively.

There is no indication that by fixing everything on a case by case basis will actually ever address the systemic issues.

His approach does not scale.

If a workplace injury has the (pleasant, albeit unintended) consequence of getting the CEOs attention in addition to the time off and the compensation; I wonder if workers will really take the safety issue as seriously as they should?

If you get kissed by a pretty nurse every time you hit your thumb with a hammer, I reckon a few blokes may well be prepared to be a little bit more careless than they otherwise would be.

Safety is fixed on two levels:

  • Processes and systems  (that produce safe work)
  • A culture of taking responsibility, being diligent and looking out for yourself and your mates.

I am not sure that the path Elon is adopting is the quickest way to get any of that fixed.

This article is not so much about Elon. After all, how much can you know about a person from two articles. The more salient take out for readers are this:

There is always another perspective.

Read and learn constantly - things always change.

An open mind is not one that is easily persuaded; but one that is open to consider the facts, and to change a view based on new facts.

Don’t believe everything you read.

Be prepared to go against the popular narrative.

Changing your view is often as a result of the cognitive dissonance, which is not a pleasant experience. But if the Emperor has no clothes on, the Emperor is naked; and that will be a fact and should be called as such.

(Image from https://www.businessinsider.com.au/

Put the cookies on the top shelf, because ...

There are so many misguided  gurus with a platform on social media. But for so many, if you paid a penny for their thoughts, you’d get change.

So much of life, these ‘gurus’ will tell you, is about just being happy. And ther more people hear it, the more they believe it. And then they start saying things like that to their kids. How often have you heard parents say that they ‘just want their kids to be happy.’

The fundamental structure of how humans think is termed a mental model. There is a specific mental model called Hormesis.

Hormesis refers to the idea that nothing is inherently bad or good. In small enough doses, something “toxic” is actually beneficial. Examples include exercise, vegetables, alcohol, radiation, etc. The idea was popularised, or at least well articulated by NN Taleb in his book - Antifragile.

The term is usually applied to these physical or chemical elements as mentioned, but in reality it can be extend to other aspect of our life. Psychologists differentiate between stress and eustress, which is a ‘positive’ stress. Athletes and performers need that nervous energy to perform at their optimal level.

We all need a certain amount of tension to function. The pursuit of happiness is destroying this mental model by labelling everything that is tough as bad.

It is totally dysfunctional, and unrealistic and in fact unhealthy to pursue happiness above all else.

Without the YIN of pain, suffering, stress and tension, you can’t have the YANG of victory, satisfaction and sense of achievement.

Taking the easy way out is not the smart thing to do. Wishing for a business environment without competition and change is not a smart thing to do. Not only will it not happen, it is not healthy. Competition and change and lack of cash are not all inherently bad for you. As someone once said wisely, necessity is the mother of invention.

It may not seem like much fun to compete with, say, Amazon, but without those pressures your business will atrophy and die anyway.

You can’t spend your life in bed drinking cookies and milk, you need to lift, run and strain 

Put the cookies on the top shelf.

Because on the bottom shelf it will get your teeth rotten and your belly fat.

The death of the mall is ...

There are many prognostications on this topic, (Or maybe LInkedIn’s algorithm is just feeding me stuff it thinks I am interested in.)

My argument is based largely on the law of antifragility - as articulated by NN Taleb. To summarise a book that runs to almost 600 pages is risky, but let me try:

First, you have to understand these three ideas, all extracted from Taleb’s book:

Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile.

That is the definition of something being antifragile.

An example of something that gets better with stress is for instance your muscles - vigorous exercise puts muscles under stress, but makes it better in the long run.

Getting a vaccine means you are infected with a mild dose of the infection (the stressor), allowing your body to build a better immunity - which is better in the long run.

In the world of business, some competition is healthy and makes you a better organisation.

Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better. This property is behind everything that has changed with time: evolution, culture, ideas, revolutions, political systems, technological innovation, cultural and economic success, corporate survival, () the rise of cities, cultures, legal systems, equatorial forests, bacterial resistance … even our own existence as a species on this planet.

To be antifragile is not the same as being resilient - that is important to understand.

Crucially, if antifragility is the property of all those natural (and complex) systems that have survived - (AND NOTE THIS…)  depriving these systems of volatility, randomness, and stressors will harm them.

The longer something has survived, the longer it will survive. And NOT putting a system under stress will harm the system. (You can’t Netflix and chill forever - your body will atrophy, right?)

You may be tempted to think that it is silly to argue that something will survive because it always has. But that is the same as thinking that just because things fall to the ground because of gravity, sooner or later it will stop doing so. A law is a law.

Today’s pop music lasts a few weeks, before it's forgotten. Classical music has been around for hundreds of years. Which type of music do you think will be around in 50 years? Bieber or Mozart?

If you could only choose one and had to invest ALL your money, would you rather invest it in a 3-month old startup, or in Commonwealth Bank that has been around (in different guises) for decades?

WHY WILL MALLS BE AROUND FOR ANOTHER HUNDRED YEARS?

Because the mall has been around for thousands of years.

According to Casson & Lee, the origins of the market are obscure, but substantial documentary evidence survives from the eleventh century onward, when chartered markets and new towns were established across Western Europe

World travellers still visit Souks in Morocco. (A souq/ souk was originally an open-air marketplace, historically held outside cities at locations where incoming caravans stopped and merchants displayed their goods for sale.)

So, if markets have been around for a thousand years or more, what are the odds that they will be around in another ten, twenty or even hundred years?

The longevity of the market is not only congruent with the philosophy of antifragility, it makes common sense at the level of ‘behavioural economics.’

Back in the mid 90s, I articulated (in my thesis) the two kinds of shoppers:

  • Type Q: The functional, utilitarian patron who wants a Quick shop

  • Type R: The hedonic shopper who is in a Relaxed state

My little typology never caught on, but the idea of the leisure shopper vs functional shopper did. I also addressed then specifically how the existence of the mall was justified because it met the needs of these shoppers. I postulated then that there are six intrinsic values that are addressed by patronising a mall, and upon review (20 years later) they all still hold true.

I won’t address all, but suffice to say that the mall has (always) been about more than quick, convenient shopping, even though that particular ‘value’ drove rapid expansion at a certain point. Immediate gratification is important, but it is not the only reason why people go to malls.

Commentators have said for awhile now that offline commerce will serve only two purposes: immediacy (stuff you need right away), and experiences (showroom, fun venues). All other commerce will happen online. That is simplistic, but that is a clear.

MALLS WILL BE AROUND BUT THEY WILL BE DIFFERENT

Surviving is not the same as staying the same.

Malls have evolved from open, to closed, to open.

Malls have been transient, became permanent, and if the pop-up fad is anything to go by, becoming transient again.

The salient point is that malls have always, and will always evolve.

Westfield Trade Centre may look very different to a Moroccan Souk, but they fulfill the same purpose. That is, both ‘markets’ address the same six values that people seek from any form of consumption, including patronage of a mall.

As long as the Mall fulfills addresses those fundamental consumption (patronage) values, it will survive and even thrive. (In a future post I will address the 7 immutable truths of prosperous shopping centres.)

Next time you see an article titled ‘the death of the mall’, you can safely skip. An individual mall may die like an individual car may crash; but ‘The Mall’ is no more dying than ‘The Car’ is dying.

If you keep changing (or flipping), you won’t die.

Dennis Price : Co-Founder at www.yearone.solutions
 

Retailing with our eyes wide shut

Do you really want to know what ails our Retailers?

When a group of auto executives returned from a visit to Japan in the 80’s one confided to Peter Senge (world-renowned consultant, academic and author The Fifth Discipline) that they were taken for a ride because they weren’t shown the real factories. One executive told him: “They did not show us the real plants. There were no inventories in those plants. I have been in manufacturing for over thirty years, and I can tell you those weren’t real plants.”

He did not realise that he had witnessed real plants without inventory because that is how Just-in-time production systems worked.

Albert Einstein once wrote: “Our theories determine what we measure.” He was right, because the evidence pointed to theories of relativity and quantum mechanics for many years – before it was ‘discovered.’

This is a universal problem, captured in the fables. We have all read the story of the Emperor without Clothes.

People did not see the Emperor for what he was.

This raises pressing questions for these uncertain times:

  • What do we see? And what is there really to see? Are we merely seeing what we want to see?All the evidence points to the EMPLOYEE being the most important stakeholder, but we hear, see and believe it is the customer. 
  • All the evidence point to retailers not meeting customer needs being the cause of the failures, but we hear, see and believe that it is ‘online’ that is causing the problems.
  • All the evidence point to the fact that we should embrace, even reward, failure, but we are congenitally incapable of admitting failure, never mind celebrating it.
  • All the evidence point to the fact that people don’t buy on price, but every promotion is a price-promotion and we seem compelled to keep discounting.
  • What does this flaw in our nature mean for the things we (think we) believe on all the topics we need to address in order to build sustainable business success? What does the evidence say about brand, markets, margins and distribution? 

The reason we come to believe in some of the things we do, is because once upon a time they worked. But we ended up treating them as a magic formula revealed by ‘our experience’, when in fact they were just a set of conditions that applied at a point in time.

The challenge with dealing objectively with our assumptions, heuristics and mental models, is that they are essentially self-reinforcing: we see what we want to see, creating a confirmation bias that eventually solidifies into unshakeable beliefs.

It is time-consuming, difficult and it may even mess with our sense of identity when we start questioning long-held beliefs. There seems to be very little incentive to embark on that journey. The only reward will be discovering the truth and in the era of ‘alternative facts’ the truth seems to be over-rated.

The reason this is all so hard is because, forgive me for being blunt, we lie to each other and to ourselves.

Some people keep two sets of books: a real one, and one for the tax man. We do the same thing with our beliefs:

We have espoused theories of how the world works. The theories and explanations are offered to all who care to listen. This is what we SAY we believe and tell others what we believe.

Then we have our actual theories of how things really work. Which we don’t share for fear of ridicule or a desire to avoid conflict or whatever.  This is what we ACTUALLY believe.

What are leaders supposed to do about this?

Like any ‘change’ initiative, the starting point is that of ‘mindset’. And let's face it, right now the retail ladnscape is facing massive change.

Leaders need to develop a different mindset about their company.

When a company is run by people with a management mindset, the focus is on planning, organising and controlling.

When a company is run by leaders, the focus and energy is directed towards establishing vision, growing a culture and promoting an openness to learning. You know a company is run by a LEADER by culture that reveals a willingness to challenge existing mental models.

Managers treat their companies like organisations, leaders treat their companies like an organism.

And that is a difference real leaders will know is worth thinking about.

Dennis Price: Co-Founder at WWW.YEARONE.SOLUTIONS

Image: vigilantecitizen.com

If at first you don’t succeed, F*** it

gymnastics-clipart-flip-clipartfest-gymnastics-flip-clip-art_2362-1004.png

Amazon is coming and they will force this upon you if there is any weakness in your business model. Why not pre-empt it?

If you want to have a successful, sustainable business, you need to make strategic moves that effectively flips your business.  This is true not just inretail, but in any business.

Let me explain what it looks like for a business to f*** over.

Those who never flipped

  • Kodak did not become Flickr
  • Encyclopaedia Britannica did not become Wikipedia
  • Dymocks did not become Amazon
  • Siemens did not become Apple
  • Cabcharge did not become Uber
  • Holiday Inn did not become AirBnB
  • Blockbuster did not become Netflix
  • Sony did not become Spotify

Those who flipped successfully

  • PayPal – once was into cryptography
  • AOL – once was into Video on Demand
  • Twitter – once was into Podcast Delivery
  • Avon – once was into selling books door to door
  • Nokia – once was a Paper Mill
  • AirBnB – once was a temporary accommodation for conference goers
  • Netflix - once was into mail order DVDs

Take Netflix for example

They launched as a DVD mail-order business.

Then they jumped the curved and ‘flipped’ their business model to get into streaming

Now they are getting into direct creative production

What Netflix did is irrelevant for your retail business. Except to understand and appreciate the scale and the disruption and the commitment.

They were a successful DVD mail order business and was overtaking Blockbuster. To go into the content streaming business required a fundamental (paradigmatic) shift in business model, skills, cash flow, technology, customers, marketing - on almost every level they have to change.

They are going through another iteration now in becoming primary entertainment producers. And they will have such rich data about what exactly people like to watch, they are bound to have more successes than failures.

(I won’t be surprised if Netflix starts offering services  to their customer base. I am thinking email, home automation, internet of things applications etc would all be within reach, and they clearly are developing the cultural capacity to ride the curves.)

The critical success factors

One: A cultural capacity (willingness + ability) for change.

Two: The strategic skills to identify the right flips to make

Each of those are separate topic to explore in their own right, but in brief just a few points on each:

1  Culture Change:

It is not an objective you can delegate to a subordinate. Whilst someone may be tasked with project management, the CEO and directors have to demonstrably own it, live it and be willingly measured against its success failure.

To succeed at change, you have to understand the systems archetypes in business, and how your structure is connected to your strategy, the staff to the skills, the finances to the systems and so forth.

2. Strategic Flips

Imagine the stages of the lifecycle. (Some brief notes here.)

It does not matter what business you have, it is not that unique and I guarantee that you currently find yourself in SOME stage of the lifecycle. The trick is to make the plans, take the decisions about a new, scary future before it is upon you.  

The challenge is often that the decisions and the short-term results are not in the interests of the current management AND the outcomes are not guaranteed, so there is little cultural incentive to take the plunge. Refer to challenge #1 above.

The key issue is this: working on your flipping strategy should be an ongoing focus.

So the question is: Are you currently working on a strategic f*** over?

If not, the future is as predictable as the shape of a lifecycle curve.

DENNIS PRICE: CO-FOUNDER AT WWW.YEARONE.SOLUTIONS

Retailers fail mostly for this one reason

Do you want to know what lies at the heart of retail failure?

In every retail failure, there is a failure of marketing, if we understand that marketing is not what some shysters want us to believe.

Many believe that marketing is about branding, and branding is about this:

The truth is more mundane: A brand is created by demand.

Not the other way ‘round.

Marketing is merely about identifying the need, then finding a path to that need.

That is putting it very simply. And it is not very contentious. The problem emerges when Marketing loses sight of that very basic task, because they lose sight of what people really want.

People are motivated by pain. People are attracted to disaster. They watch more movies that are violent, murderous and dark, than art house cinema. They laugh when you fall, and feel nothing when you avoid the fall.

More people will stop to watch a street fight than a kissing couple.

People will watch a sporting contest because it is contest and victory is sweetened by someone’s loss.

More people take medication to make a pain go away, than vitamins that will (supposedly) keep them healthy.

People take their car in for a service because they don’t want to invalidate the warranty or breakdown, not because it is good for the vehicle and may extend its life.

The very essence of human nature is one of selfishness: we are tuned into WIIFM - What’s In It For Me. And the most important thing is my survival. And survival means avoiding pain.

When you place your hand on a hot stove, the pain is the signal that tells you bad things are happening. We are conditioned to avoid it.

If it is that simple, why can’t we get it right? Why do retailers keep failing?

Look at how car dealers sell cars: they promise that we will be able to release our inner-adventurer or the wannabe F1 driver that apparently is in all of us. Or at the very least that we all we young and sexy again.

How do we buy the cars? We kick the tires.

Cars have tons of features that we never use. The simple word processor has hundreds of features we don’t even know existed.

How do we buy clothes? We pick the style that won’t us look fat. Or old-fashioned and out of touch. And whether it will last. And is easy to iron.

Yet the brand frauds try to sell to us the idea that we all want to run across the dunes and share tequilas at sunset. And that we will be young again, if only … (their brand).

When marketers fall in love with telling stories about lifestyles that people aspire to, they will do well to remember that the one thing we universally aspire to is to not suck, not feel pain, not be embarrassed, not die, not fail and not lose.

Why do so many retailers fail?

For decades, the only ‘pain’ that retailers took away for their customers was the pain of travelling further afield to find their product. Strategically, retailers survived because their competitive difference was their location.

The advent of the internet made geography near irrelevant. It therefore stands to reason that if they don’t solve a customer’s pain in any other way, there is no further reasons for the customer’s patronage.

You may have the only upmarket footwear store in a particular shopping centre, and that will get only so much trade. The reality I that customers carry another hundred stores in their pocket – even as they browse your racks.

The solution is not big data. The solution is not robotics. Or the ‘experience’. The solution is not a better brand. Or more likes on social media. These things may matter, but they are secondary.

The primary solution is to find out what pains the customer and to offer a solution for that.

Dennis Price: Co-founder at yearone.solutions

When the runway stops

Opening new stores is all about execution. You need to DO stuff. The core skill is project management. When you run out of geography, you run out of growth. It is easier run your business through the copy machine.

But as your top-line growth slows gradually, your expenses don’t (the copy machine is still running). So your sales keep growing (slower and slower) and your expenses grow faster and faster. That is recipe for disaster.

Running out of highway is inevitable.

Then the focus shifts to ideas. To innovation, to productivity, to marketing. Away from projects, to opportunities. From the easy, ‘busy’ work to the hard grind of squeezing little bits of incremental improvement from every process and re-thinking or re-inventing or scrapping processes.

The focus moves from internal capacities and needs and processes to the customer needs and journeys. From ‘our map’ and our capital, to ‘their map’ and their money. We move from footprint to brand. We move from logistics and distribution (supply) to demand and leverage.

In the new world, we need to learn to live with 2-3% growth (marginally better than inflation), and break the addiction to growth.

We have spoken previously about ‘margin convergence’; the idea that traditional retailers will have to learn to live with lower margins and that e-tailers will eventually have to increase their margins in order to start producing some returns for their investors. (Amazon being the exception that proves the rule.)

Just like traditional retailers run out of geography, eventually ecommerce will run out new customers too. There are only so many people in the world, after all.

And the pendulum will swing back and the value of ideas, and innovation and strategy and commitment to change and flexibility and willingness to take risks will again be in vogue.

When your plane runs out of runway, slowing down is no option, you have to accelerate to get lift-off, as scary as that may be.

(Image from goodwp.com)

You can't win the war without biscuit bombers

Img: SMH

Img: SMH

Having just experienced another Anzac Day in Australia, I heard the term ‘Biscuit Bomber’ for the first time. Anzac Day is a bit special for us as a family, albeit that we have not actual connection to the day. But being a commissioned officer in the SANDF (South Africa) and being married to a General’s daughter, ‘war’ is more than an idea or tangential memory; it is a lived experience.

I always wish I could achieve with words what the sounds of the Last Post does with emotions.

On the Sunday service following Anzac Day, I heard the term Biscuit Bombers and for some obscure reason this immediately made me think of what I saw the previous afternoon when our local park footy team played Aussie Rules. But before I get ahead of myself, back to the war.

During the war, rations were scarce because all supplies were unloaded at Port Moresby from a small wharf that was ill-equipped to handle the volume of cargo and was subject to frequent air attack. Using native carriers was impractical, because in the eight days it would take to complete the walk the carrier would eat much of the cargo.

Building roads would have been impossible given the time constraints and the terrain,

Planes could land at local airstrips or drop supplies by parachute, and that became the preferred method.

The famous Douglas DC-3 transport aircraft  and the crews manning them became known as "Biscuit Bombers".

The Biscuit Bombers dropped supplies along the various tracks or into clearings hacked out of the jungle.

The job was hot and dangerous.

They operated without harnesses and without protective gear. They weren’t shot at, but some of these crews were lost in the process.

When I was in the Army, we were taught to appreciate the support crew (being one of them myself) - which outnumbered the frontline troops by 7:1 we were told.

Think about the impact on the troops in the jungle if they did not get their ‘biscuits’.

And at the local park footy, the same applies. Even for that game at that level, there are at least eight to ten officials required to make one match happen, Not counting the runners, the medics and the canteen volunteers and raffle ticket sellers. Without them, the game would not happen.

Without the Biscuit Bombers, the war would not happen.

And in every organisation you have your biscuit bombers. The foreman in the warehouse. The executive assistant. The junior designer. The security guard.

It may vary, but often the sales crew are the glamour folks. They bring in the dough. And act like it. The organisation evolves around them. They are the frontline troops.

In retail organisations it may be the area managers or the merchandisers who get the accolades. Biggest bonuses and first in line for promotion.

But without the biscuit bombers, there wouldn't BE an organisation to strut around in.

Real leaders know that if you want to take home the chocolates, you must make sure that biscuit bombers are empowered to do what they need to do too.

How does your organisation treat the biscuit bombers?

Are you chasing your retail dream?

Achieving retail success amongst the carnage is difficult. And we have this:

  • Sugar causes hyperactivity.
  • Caffeine dehydrates you.
  • Einstein failed Maths.
  • Goldfish have a 3-sec memory
  • Bulls hate red.
  • The Great Wall of China is visible from ‘space’.

If we were honest with ourselves on these things, I’d guess most of us would have heard and believed those things.

They are myths.

How many of the things we ‘know’ about retail is myth and how many are facts?

We believe retail is doomed, multi-channel is the answer and Amazon will eat the world.The only way to be successful, is to be the ‘Uber-of-something’.

 

Let’s consider the facts:

You have to be in eCommerce and there are successes across the board. Boohoo is travelling well, and so is the The Honest Company - and countless more.

Multichannel is the way to go: Former online-only retailers such as Warby Parker, Bonobos and Birchbox have rushed to open stores. Apple and Amazon get trotted out as exemplary case studies, and I have no doubt they are.

Bricks-and Mortar is dead. The retail graveyard in the US is a sight to behold: Abercrombie & Fitch (60 stores) Crocs (160 stores), J.C. Penney (30-140 stores) Macy’s(100 stores), Radioshack (552 Stores), Kmart (108 stores), Sears (42 stores), American Apparel (104 Stores) and The Limited closing All 250 stores

Yet there are ‘alternative facts’, to borrow a phrase.

Collapsing valuations of once high-flying brands like Trunk Club and One King’s Lane and a host of others. (Walmart announced it was acquiring ModCloth for a fraction of the VC capital invested to date.) There is plenty of red ink at SurfStitch and Temple & Webster.

Uber is the poster child for the ‘gig economy; but is still losing insane amounts money. In the last three months of 2016 alone, the company lost $991 million and there is no short-term indications that the business model is viable. (Only time will tell whether investors with deep pockets propping it up are proven to be greedy with a herd mentality or perspicacious.)

Amazon is a true Black Swan event and no comparisons can be made to any ‘regular’ business. Amazon is more than a conglomerate it is a platform, making money of a diverse range of products from web hosting and cloud services to retail. It is worth noting that it took them a decade to show their first profits. You need extraordinary patient and rich investors to keep you afloat for that long and this is hardly normal.

The only reasonable conclusion that one can draw from this is that commerce is a tough gig. There is no single strategy (online, multi-channel or brick-and mortar) that is the ‘right’ strategy.

There is a strategy that is right for your business, your market, your proposition. And if you execute that strategy well, success necessarily follows - barring the uncontrollable externalities.

It therefore seems that the only sensible approach is to stop fretting (even obsessing) about who is doing what (successfully or not) and to focus on what you can control. (I used to teach my MBA students that the ‘competitive analysis’ is the most overrated and probably least necessary part of the business planning process - IF a business plan was required. I wonder how many remember.)

To some it may seem to be a rather simplistic conclusion, but core truths usually appear simplistic; but I am a fan of Occam's Razor.

Best to chase your own dream.

The lesson even a smart guy like Einstein had to learn

www.newhistorian.com

www.newhistorian.com

In 1905, Albert Einstein determined the theory of special relativity. It introduced a new framework for all of physics and proposed new concepts of space and time. Then he spent more than a decade years trying to include acceleration in the theory. His General Relativity Theory determined that massive objects cause a distortion in space-time, which is felt as gravity. He published this in 1915. Science geeks will understand the magnitude better than us, but suffice to say that it literally changed how we understood the world.

However he needed proof of the theory. Proof would not only provide him professional validation, but provide the finances to pay off his wife who had divorced on the promise of paying his (future) Nobel earnings as alimony. So the pressure was on.

The easiest proof was to be provided by astronomers who could measure a gravitational effect on stars specifically during a total eclipse. He had a few hurdles to overcome. Firstly he had to find astronomers who were willing to devote time and resources and reputations to what was mind-bending theory. Then there was the challenge of finding an eclipse to photograph (before someone else proved the theory) and finally, there was the matter of World War 1 that made everything more difficult by an order of magnitude, not made easier by the fact that he was a German Jew, effectively making him an enemy of both sides.

The first attempt to photograph the eclipse was thwarted by bad weather and to make it worse the Russians confiscated some very expensive equipment was .

Einstein was naturally devastated. With w war in full swing, the chances of getting another crack at it seemed nearly impossible.

But he kept working.

And he found a flaw in his calculations.

If the first attempt at photographing the eclipse had succeeded, his theory would have been disproven. He would have been the laughing stock of the scientific community.

He remedied his formulae.

Then  there was another opportunity to photograph another eclipse.

Several simultaneous parties departed for Australia, which offered the best vantage point.

The photos were taken, the calculations made.

Einstein was proven right.

The failure of the first expedition was a blessing in disguise.

Many failures are.

Whilst we are dealing with a fresh, raw failure it may not seem like it. Sometimes it takes years. But how often do we live through bad times, only later to realise that ‘that was the best thing that could have happened to me’.

A retrenchment, a business failure or a lost sale does not mean it is the end, unless you want it to be.

More often than not, a failure is a blessing in disguise, an opportunity to do better and a challenge to keep going.

Success is not final, failure is not fatal: it is the courage to continue that counts. (Winston Churchill.)

Why we need Donald Trump in Australia

Trump is the kind of President Australia needs

That headline was an example of ‘click bait.

It has little or nothing to do with the actual topic under discussion, but it something the writer knows will get clicks. (In this case, absolutely nothing.)

After you have clicked on the click bait, you are bound to be annoyed. But, I don’t care because your eyeballs have been captured.

Do you know how Facebook et al measures ‘engagement’ with its advertising product?

The technical term is ‘more than zero’. That is anything more than zero pixels, for more than zero milliseconds. That counts as a view.

And advertisers are charged for those views.

Back in bricks-and-mortar land, we have the same thing.

A really cool ‘brand’. Or a stunning fit-out. Funky music. Posters in the window that make grand lifestyle promises.

The problem starts when people ‘click’ and enter the store - and everything sucks from that point in. No service. Poor assortment. Meaningless pricing. Dodgy product quality. The stuff that really matters is missing and the customer leaves with a sour taste in the mouth.

It is in instances like these that good marketing works against you. You will catch the customer once, maybe twice. But unless you can fulfill the promises with an authentic offer that actually matches the brand, it will become increasingly harder and harder to capture the customer.

Even if you change and fix all of that; it is a matter of twice bitten, once shy.

One of the retail businesses that I admire most in Australia is Lowes Menswear. They have survived and prospered for more than a century - and at the core of that success is perfect congruence between brand promise and execution. They have resisted ‘image drift’ and just kept on executing those fundamentals straight out of the Retail 101 handbook.

In technology we talk about a WYSIWYG program. In the ‘real’ world, What You See Is What You Get should also apply because that is how you earn (and keep) consumer trust.

And trust is the currency of any successful business.


Check out our new initiative: WWW.YEARONE.SOLUTIONS

The BOT revolution for retail

No way I will talk to a machine, or is there?

At least that is what I told Siri.

And she just laughed.

Because she knows stuff.

THE BOT REVOLUTION IS COMING

Reason 1: Look at the numbers.

Reason No 2: The Big 3 are playing in this space and that should tell you something. 

●     Facebook: Messenger & WhatsApp

●     Amazon: Alexa

●     Google: Allo

That is not to mention applications like Slack and dozens of others who have their own bot-solution. I was personally confused with Facebook’s strategy to buy WhatsApp for such an exorbitant price, particularly when they already own Messenger. As bots have gained in popularity, it is beginning to make more sense.

Reason No 3: The learning curve with Chatbots is flat (few barriers).

You don’t even need an App for that, because there are services like Magic that does not even require an App Platform, and whilstOperator is an App, it is completely agnostic about what you want and simply gets onwith the job of getting it. Like a global concierge that you just ask and it happens. (US and China only, more countries to follow.)

The buzz words are chatbots and conversational commerce, and it is worth thinking about the trends to understand if and why they are important.

BASICS & DECISIONS

Chatbots are applications that respond intelligently to user input. It is a simple process to install the application on your own website, your own app or run within an existing messaging platform.

The chatbot maker can choose to build conversations that are programmatic and structured. That is, you build a conversation tree that reflects conversational options. As you can imagine it is difficult to anticipate every possible variation, it is important to build a sensible fall back option.

Or you can choose to use Natural Language Programming (NLP). It is vastly more complicated and you will need a developer for this. This can also evolve into the real AI (Artificial Intelligence) or ML (Machine Learning). These bots get smarter over time. Think how SIRI gets to recognise different accents of the same words.

Chatbots have many uses - from dating to gambling to news, but in the retail environment two broad types of activities; SALES and SERVICE. We are looking at Chatbots as a means of delivering Micro Learning. Imagine the CEO could ‘talk’ to all staff across a country-wide network of stores, get feedback and pass on tips and focus for the day – all with no ongoing cost after setup?

From a retail perspective, it is called ‘conversational commerce’ because a series of SMS-like conversations easily (and very securely) can terminate in a ONE-CLICK purchase. (No doubt Facebook will want to clip this particular ticket in some way in the future, so bear that in mind.)

The other application is to create stock response for your FAQs on your FB page or on your website. (The ChatBot can be installed in your website with an easy copy & paste). Customers can ask questions, the bot reads and responds accordingly. No human intervention - and that is the big cost saving.

One of the more sophisticated examples of such a BOT is one called KIT. It is now owned by Shopify, and it is deployed to ‘take instructions’ from Shopify store owners and then ‘creates’ social media campaigns (like Facebook Ads) - all automated. It costs the store owner $10 per month, and you don’t have to think too hard about creating and scheduling Facebook Ads.

THE UPSIDE OF CHATBOTS

No 1:

Everybody has Facebook/Messenger etc - it’s ubiquitous, so you as the retailer/business entity don’t have to persuade the user/consumer to download yet another app.

No 2:

You get more data from the user (via the associated platform like Facebook) than you would have ordinarily from a one-way medium like email. This enables better targeting and more relevance of your communications.

No 3:

High open rates and engagements.

No 4:

Inexpensive to run (no data charges or costs like SMS etc), although right now most of the early Gold Rush providers will persuade businesses to fork out hundreds of thousands when it should be thousands or maybe tens of thousands to set up bots.

No 5:

Most importantly, Chatbots enable two-way conversation and are immediate and therefore more relevant (than an email newsletter peddling week-old news.)

THE DOWNSIDE OF CHATBOTS:

No 1:

They are really easy to build. You can YouTube it, pay $20 on Udemy or simply DIY because the technology enables you to get basic BOT simply by dragging and dropping elements on a screen.

I can’t do any coding, not even HTML, and I built a bot in a weekend. (Try it out at our Facebook page.) In my explanation that follows I will refer Facebook and Messenger as an example because they are commonly used, but most applies to all messaging apps.

Because it is so easy, expect bot-pollution to occur rapidly. Because of the pollution, consumers will be swamped and it will lose its efficacy very quickly; particularly for the inefficient or irrelevant bots.

Just like email marketing is crumbling under the onslaught of spam and waste, so too will chatbots.  Email click-through rates are now commonly around 2%. Messages can be over 80%. (When was the last time you ignored a message on Messenger or WhatsApp or even SMS?)

But it is even easier to block a bot than it is to unsubscribe.

No 2:

With email marketing, at least you owned an asset - an email address with permission to use it. That meant you could go to any email platform, depending on your needs. I am sure everybody has now left Aweber, and are exploring MailChimp and Active Campaign and the like.

With message bots, you have access to a much richer data sets since you receive profile-related info from Facebook. But you can’t leave the platform (Facebook/Messenger), so you never own that data.

You are also dependent on the platform to make the rules, and what is free today will not be free tomorrow if it has any value.

SOME PRACTICAL SUGGESTIONS

No 1:

Planning the actual Bot. Having now built a few myself, I cannot stress the importance of planning enough. It is tempting and easy to just start building with a vague idea.

No 2:

Adopting a Chatbot strategy. It is very important that you take an eco-system approach. You should think about ALL the bots that you might want to run, and then decide which platforms you will be using, and how you will be using them.

CRITICALLY - you must create a digital asset library and keep a record of the bots and the assets (images, links etc.) that they use. You will have to make changes in the future, and if that means you have to practically re-write the bot, you will spend all the money you thought you were going to save. And part of the eco-system will be a digital product roadmap that will (a) keep you on course and (b) help to manage system when people churn and when the technology changes.

FAIR WARNING

As with any new technology, there will be different types of people to be on the lookout for:

●     The Zealots who believe this is the latest must-have.

●     The Cowboys who will be rushing in with a bravado that is not backed by knowledge and experience.

●     The Hustlers who will be out to make a buck as quickly as possible while there is a premium to be paid for people (who claim to have) the right experience.

●     The Gurus who will be proclaiming words of wisdom from the highest blog mountain.

Right now, there are very few people who know everything. You will find UX experience in marketing agencies, you will find the technical nous typically amongst the technical development community. And you will find the sales-and service experience in the retail community.

Few have all of these requirements in sufficient quantities to be able to guarantee that all efforts will be succeed.

RESOURCES

Purpose

At the bottom of this page there are two videos that explains the notion of ‘fractured value’. That provides the background to why it is so critical for survival and growth to be able pivot, adapt and innovate.

Inspiration

●     Some of the brands doing interesting stuff with bots.

●     A directory of bots that will prompt you to think widely about the applications

●     A slightly different, non-commercial use of Bots we developed

 

Drag-and Drop Design Platforms

●     MotionAI

●     ManyChat

●     Chatfuel

●     API.ai (A bit more complex for NLP)

 

Storyboarding and Planning Tools

●     Twinery

●     yEd

●     LucidChart or Draw.io (Apps that integrate with Google Drive, and is connected directly)

●     List of 17 Free Drawing Software applications

CONCLUSION

Long-timers who may recall some previous writing here on Inside Retailing, may remember that it has been a bit of a Mantra that the required response to the Next Big Thing is NOT to merely jump on the bandwagon.
We suggest you jump on the bandwagon(s) because that is how you build and retain the capability to adapt and change.

In fact, the key to success is not whether you are backing the right technology horse, it is your whether you have the capacity and ability to turn on a dime - to mix some metaphors for you.

You become agile by being agile.

I asked SIRI, and she agrees with me.

Dennis Price: Founder at Ganador: Retail Advisory with a focus on the customer.