Illustration: Jamie Padilla

Recently, some companies have said some intriguing things about the omnichannel and the relationship between brick and mortar and online (for the record, when I say “online” I’m including mobile devices). I’ve also read some interesting things about generational behavior that made me think about the future of brands and retail structure.

It’s no surprise that buying patterns are different for the millennials (born 1982-2000) than they are for the baby boomer (born 1946-1964). Millennials have faced, and will continue to face, different and more difficult economic circumstances than boomers. And of course, they take technology for granted. They shop differently, have different priorities, and are less likely to be brand loyal.

I’ve written about brands that were originally focused on the boomers aging out, and the complexity around maintaining the loyalty of your original customer base while trying to appeal to younger customers. The first thing to note is that right now, boomers spend way more than the millennials. But, for obvious reasons, that’s going to change. If you’re a company that likes customers with money to spend, it’s hard right now to ignore the boomers.

It’s like you need to have two companies. Though obviously there’s some overlap, you probably can’t sell exactly the same product line to both groups. Again, with some overlap, there are differences in distribution. The groups shop in different places. You reach customers differently. Millennials are more likely to trust new brands. Boomers may stick with what they know. Millennials are more connected than boomers. They get their information differently. But right now, there are two things going on that maybe make this a bit more intriguing.

First, we’re facing tougher social, political and economic conditions as a country than we’ve faced since the Great Depression and the Second World War. Second, the pace of change is unprecedented. We as marketers interested in selling product to people are particularly focused on the omnichannel. I hasten to add that while I use that term, I don’t completely know what it means yet. Neither do any of you. We’re finding out together. I’ve started to wonder about the value of the so called strategic planning process in companies, at least as it’s traditionally carried out. I’m not sure I have any idea what will happen a year from now, let alone five years.

Before I stop griping and say something potentially useful, I want to tell you that the last numbers I saw suggested we had 50 square feet of retail space in this country for every man, woman, and child. England, with 10 square feet per person, is second.

“I find that companies are cautious about change. But that caution is often what gets them in trouble. The best companies recognize the need for some changes early on and implement it in a way that’s invigorating and positive.”—Jeff Harbaugh


• Retail space is going to contract.

• Malls (with the exception of the high end ones I’m told) will be in trouble. Fewer people are visiting them. They will spend less. This is a slippery slope. Lower traffic means fewer sales which mean some stores close, which means lower traffic which means more stores close.

• Advances in robotics and technologies like 3D printing means that more product can be customized in a short time scale.

• Online/mobile generated sales will continue to grow (duh) energized by our logistics capabilities that get product to (and from) consumers quicker.

• Inventory requirements for retailers will decline as will the square feet needed for physical stores.

• Real product differentiation will continue to be hard to achieve. Making a product at least occasionally hard to find will matter.

Decisions about where and how to distribute will need to be made on a case by case basis. That is, unless you do your omnichannel connection with your consumer so well that it doesn’t matter as much where you’re distributed as long as your merchandising is well done.

In my consulting business, I find that companies are cautious about change. But that caution is often what gets them in trouble. The best companies recognize the need for some changes early on and implement it in a way that’s invigorating and positive.

But many companies don’t manage to change early and well, or maybe just don’t have a way to compete. As they flounder, it creates opportunities for new brands and retailers. Here’s how, in what I think our environment is going to look like, I’d take advantage of that. I don’t think I’d characterize myself as a brand or a retailer. As you will see, I don’t think it matters. You are kind of going to be both or neither.

Let’s assume we have a product we think’  people want to buy and that they are millennials. The first focus will be on characterizing the customer you want to sell to. The second will be reaching them. Both are easier to do with a much higher level of specificity than they used to be.

Next, you’re going to develop the best web sites and mobile aps you can. I don’t see any print advertising in your immediate future. You’re not going to tell customers why they should buy your product. You are going to solicit their opinion as to what they think of your product and how you can improve it. You will tell your story and ask them to participate.

Now the plot thickens. Retail presence might be in pop up tents, in vans or trucks, on blankets at beaches, in a lift at a ski resort, in stores, in people’s houses. No location would be permanent. You might end up with 400 stores, but none of them would be in the same place for more than, maybe, a week. Your “stores” would be wherever your customers wanted them to be. Maybe you announce where the stores are going to be. Maybe not. Maybe there are clues online.

The “inventory” at each store would depend on the product and the size of the “store.” Physical product would be limited and next day delivery critical.

I know pop ups and products in vans, etc. isn’t a new concept. But I’m not aware of any brand/ retailer that has their entire retail presence either online or physically mobile.

Oops. Actually, I am. Amway, Mary Kay, Tupperware. Okay, not precisely our industry or target customers, but their models would probably tell us a lot about how to manage this kind of retail operation.

As brands and retailers get a more nuanced understanding of the relationship between physical stores, online and customer behavior I can imagine a dynamic model which might involve no permanent locations or perhaps a flagship store in one location reaching out to customers in a defined geographic area through temporary retail oasis in various forms, locations, and durations.

What I want to suggest is that this concept addresses most of the emerging market conditions I describe above. Existing retailers aren’t going to try it, and I guess brands depending on existing brick and mortar retail channels might not either. But if you’re a new brand thinking about your retail presence, is this something you might think about?

ABOUT THE EXPERT:  Consultant and analyst Jeff Harbaugh has been writing the Market Watch column for 20 years and has been in active in our industry since 1991.  Read more of his ideas and analyses at www.jeffharbaugh.com.


Source: The Evolution Of Marketing & The Future Retail Model
By:  Jeff Harbaugh – Transworld Business  1/22/2015

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