Wednesday, 21 March 2012

Traditional Retailing - Is this how the dinosaurs became extinct?

Ok... before I get going, watch this Coles Advertisement and judge for yourself if it inspires you to rush down to Coles and buy some produce.

With that out of the way... onto this weeks topic
Should we feel sorry for retailers like David Jones, Myer, and Harvey Norman who have continued to deliver bad trading news this week?

Reading of their woes, three things are obvious to me: 1) If you didn't know better, you'd swear we were approaching retail armageddon 2) It is everyones fault but theirs 3) They still only see the internets  potential as a threat rather than an opportunity.

If you get a moment watch this clip of Gerry Harvey... Heck, what happened to the entrepreneur in him? Rather than adapt and succeed, he now looks for the excuses for why things don't work anymore . To a budding online entrepreneur this is nothing but encouraging...

There are many reasons why traditional retail is failing (you could write weeks worth of Blogs about it) but for the sake of brevity, lets focus on two key contributors that relate to the customer revolution. You see one of the many problems facing traditional retail (aside from a failure to reinvent, modernise and adapt) is that there has been a power shift towards the customer. The internet has empowered the customer and smart entrepreneurs are working with that power shift instead of complaining and waiting for the Government (or someone) to give it back to Gerry and friends.

Traditional advertising is failing
Traditional advertising is no longer relevant. Sure there are some entertaining adverts out there but the role that advertising used to play is no longer as relevant as it used to be... Here's why:

Advertising used to be our source for: Finding new products, seeing what everyone else was doing, seeing what cool people were doing and determining which products were better than others.

An ad used to for example be able to show or convince us that not only was everyone drinking Coke, but that cool and fun people were really into it AND it was such a great product, that they were all having the time of their life. (The Coles Ad above, does none of this by the way :-))

These days, we can find out for ourselves. We are so connected now we can see what products our friends use and like. Through rating and comparison sites we can see which products are the most enjoyed and rated by real people and we can compare price and specs easily and quickly.

We have the facts now and we are prepared to share them and use them. 

However, like someone looking in from the outside Executives are catching on and demanding "Social Media Strategies" from their Marketing Departments or paying big bucks to agencies to help them build "Social Media Strategies" - "Go out and build us 10K likes on Facebook!", "But how much is a 'like' worth" "Doesn't matter just do it!"

(as a side note) I can't confirm this, but a birdie at Woolworths told me they spent over a million dollars getting their App onto peoples i-phones! I wonder how they measure the return on that spend?

Generally these "strategies" have ranged from disaster to ineffectual (here's a couple of disasters for fun Eg Qantas and Eg Woolworths) and here is what I think the problem is:

Instead of developing a "social media strategy" to get people talking about their brand... they are better off investing in actually delivering a product and service that is so good, people will talk about them anyway.

You see while Woolworths were patting themselves on the back for the success of their app, they were getting smashed on Facebook for failing to do the most basic elements of customer service Big W ruins Christmas.

The old rule of "Through Advertising (now Social Media) we can influence/manipulate consumers to think the world of us" doesn't work... you have to commit to delivering a service that actually makes people think the world of you!

They're ignoring the customer and trying to manipulate the revolution like a cheap dictator

They could use Social Media to their benefit!
Stop listening to your buyers, agencies, strategy suits and industry guru's!
Just ask your customers and then deliver what they want. Make your customers your buyers! Make your customers your merchandisers! Make your customers your agency!

Through social media you can reach them and you can empower them and you can get them to deliver the feedback for the change your retail business needs. Don't try and get them to buy into your strategies... Make them a part of your strategies

Here's the proof:

Click here and read of the incredibly successful business model that is If you have a short attention span, then just jump to the business model and Company culture and core values sections... should be enough to inspire you.

That's why online sales are impacting traditional retail. It has very little to do with the GST threshhold and everything to do with the fact that we can conveniently and quickly find our own truth on the internet and have it delivered to our door. Then we can rate, review and comment to help other consumers make the right decision. Businesses capitalising on this, don't need expensive buyers, strategists and agencies... they don't even need high cost celebrities and classy stores and as a result tend to be able to offer a better price (even considering delivery) and a more dynamic range.

And on DJ's and the like... well, maybe this is how the Dinosaurs became extinct :-)

So the two steps of the Consumer Revolution so far are:
1) We can join together to get a better deal for all
2) We have each other and we don't need you to tell us what to buy or what a good deal is

For the next one - I'll make sure it's shorter... Promise!

Thursday, 8 March 2012

Banking on the apathy of Customers...

Australia is an interesting market.
The most successful businesses are often the most hated. "Tall Poppy syndrome"?... not always.

Let me mention 2 categories and you check your immediate emotive response when you read them...

1) The Big 4 Banks
2) Coles and Woolworths

Most of my friends reactions are as follows:

1) The Big 4 Banks - "Arrogant", "someone needs to do something about them", "how do they get away with with crying poor and yet continue to rack up record profits?", "they are hurting middle Australia!"
2) Coles and Woolworths - "I shop there because I have to, but I am not proud of it", "their ad's are cringeworthy and treat me like a fool", "their produce is awful, I hate the fact that they bully suppliers and small businesses", "To be honest, I'm not sure that I am getting the best price anyway".

It is true that the media has played a fairly significant part is these reactions, but when you have Wayne Swan attacking the Banks and the ACCC urges grocery suppliers to speak out this is more than a media beat up...

I was speaking about this with a Lawyer friend the other day (yes it is possible to be friends with a Lawyer!) and we got to the question: "Well what can we do about it as consumers?"

His response was, "appears they only care about their shareholders, so maybe the answer is: Become a Shareholder"
This got me thinking... "They only care about their shareholders"... that's obvious and probably fair too. But there may be more to this. Actually, they only care about what their shareholders care about! And their shareholders care about share price and dividends! And despite what we say about these businesses and their practises, they largely deliver for their shareholders!
So as long as you have representative banners in your halls showing smiling customers, as long as you preach the customer matters mantra in your offices... it doesn't matter if they don't like you as long as they keep shopping with you.

So what to do?
Well, you've probably already worked out, like me, that if you alone make a stand and choose not to shop with them or use their service that with such a dominance of the market, they will not even notice. Certainly, the shareholders wont go into a panic just because of little ol me

And so you feel helpless and then apathetic to action... AND THAT IS WHAT THEY ARE COUNTING ON! The apathy of customers!

So back to the shareholders: Do shareholders care about customers? Well if customers started leaving or changing the way they shop in a way that impacted the share price or dividend... you better believe that they would care about Customers.

So lets get to the point... What is the solution? Enter... (drum roll)... Customer Groups
Social Media has provided the solution! 

1 customer can't make a difference, no matter how much we wish that they could.
But what if a group of customers were able to find each other through social media?
What if this group of customers decided to act together for THEIR own good? In the right numbers they become a powerful force. (Just ask Kadafi)

For example... Take 1000 bank customers who act together to go to the bank and negotiate a better deal for the group? I think they'd listen to 1000... if not, a group of 1000 customers business is a pretty attractive gem for other financial institutions to bid for! Either way, each individual in that group gets a better deal.

Or what if X number of customers could start sourcing products and produce together on mass? You'd have to think that direct interaction between producer groups and customer groups could be good for both the producer and the customer (and bad for the big supermarket that is banking on your apathy and the fact that the producer has no other way to sell their goods).

Social media makes all this possible, AND we are only just at the beginning of the Consumer Revolution.

For the next blog... I'll introduce you to a business that is putting this into practise

Want to join the revolution? follow me on @ljecks

Til next time