BOOK REPORT - REMARKABLE RETAIL
AUTHOR: STEVE DENNIS
2022 JULY ISSUE
Reported by: Terri Fisher
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From the Desk of the Publisher : Andrew Sia
This book report is written by Terri Fisher, a veteran in the retail world in the United States. I have always said that before this pandemic, it would take any changes in the industry five to six years, and now it is only a matter of months. We learned that if we don’t change and react quick enough, we would be run over by the tsunami.
I hope that our readers will read the book report thoroughly and will also buy the book and keep it handy for any references. There are so many valuable points for consideration.
BOOK REPORT | REMARKABLE RETAIL
AUTHOR | STEVE DENNIS
HOW TO WIN AND KEEP CUSTOMERS IN THE AGE OF DISRUPTION
Available from Amazon
Hardcover at $19.30
REPORTED BY | TERRI FISHER
“Physical retail isn’t dead. Boring retail is.” Steve Dennis has written a remarkable book that every retailer and student of retail needs to read.
The Covid 19 shutdown of 2020 didn’t cause the challenges faced by retailers in the digital age, however it dramatically accelerated them, changing transformation timelines from years to months. In this book, Steve Dennis unpacks the trends that are squeezing retailers today and gives us the essential strategies to bounce back from the Covid 19 downturn and succeed in the years to come.
Dennis correctly argues that it is no longer enough to offer just convenience, decent prices, or even a good shopping experience. “To win, grow, and keep customers today, retailers must be nothing short of remarkable.” Dennis goes on to say that a remarkable retailer is digitally enabled, human-centered, harmonized, mobile, personal, connected, memorable, and radical. He goes through all these characteristics in his book which is also packed with illuminating case studies from some of modern retail’s biggest success stories, and impressive rebounds. He tells us that “Remarkable Retail is your indispensable guide to creating a powerful retail experience that keeps your customers coming back for more.”
The question of the “end of retail” is even more pronounced now as the pandemic has challenged the industry in unthinkable ways. We are seeing the closing of thousands of stores-certainly the ones already on life-support, but also healthy ones that have been struggling to keep distracted customers interested in their non-essential goods. Reinvention, however is not easy! With the two biggest behemoths in retail still getting bigger (Amazon and Walmart), it’s very tempting to throw in the towel. “Shouldn’t we just go where our customers already are?” Do we care if Amazon and Walmart dominate all of retail in the future? Would a world where there is one buyer, one factory and everyone buys everything at two big price-focused companies be so bad? Yes. This would be bad for commerce. It reduces choice. It stifles competition and ultimately distorts pricing.
In the foreword, Sharita Kodali, retail industry analyst at Forrester says this: “This updated edition takes the fallout from the pandemic into account and lays out all the things companies need to think about to position themselves for decades of success. It is a blueprint for how you achieve resonance in the ever-changing, difficult, and capricious journey that is retail. Read it carefully and think hard about how it applies to your business. It matters because the world is a better place when we care about the diversity of and within retail. The world is a better place when retail is remarkable.”
Steve Dennis starts out each chapter with terrific quotes that give a light-hearted view of the stories to come. His introduction starts with: “Everybody has a plan until they get punched in the mouth.” by Mike Tyson. So true!
Retail’s problems didn’t begin with the pandemic. The seeds of serious disruption were planted many years earlier.
A quiet revolution had been brewing. Punches were coming from all directions. The world was becoming ever noisier.
Regardless of the consumer you are after or the price point of your products, retail is still about communicating your UVP (Unique Value Proposition), buying and selling inventory at a desired profit margin, and trying to take good care of your customers. Most corporate cultures had grown leadership from within, and usually through the merchandising ranks. This led to a tendency to look inward and look at last year and “how we always did things”. They should have been searching for external insight and what was happening in retail more broadly. Silos in organization, data, inventory, and performance measures abounded and were the “kiss of death”.
Remarkable does not happen by accident, it happens by design. The journey is fueled by accepting the reality that very good is simply no longer good enough. It is sustained by embracing a culture of experimentation and innovation, as well as building agility into our business model.
Dennis states that “If we want to avoid being taken down by the next punch in the mouth, there are a few key things we have to always bear in mind.
We have to start before we are ready
We have to accept that safe is risky
We have to choose remarkable
We have to remember that remarkable is a journey not a destination”
His book provides a compass to point the way for all of us and gives us the tools to navigate this often treacherous journey.
It is worth noting that during this retail catastrophe, many companies were posting strong overall growth and profits. And while some paused or scaled back their agendas, many companies (At Home, Five Below, Tractor Supply, Ulta Beauty, and more) announced new store opening plans even when lockdowns were still in place.
The power in retail has shifted to the consumer. We no longer GO online, we LIVE online. In most categories, digital channels which more and more means MOBILE, are central to the consumer’s purchasing journey. Shopping channels are blurring. The role of the store itself is being redefined.
The differences between the retail haves and have-nots are becoming much more pronounced. This became increasingly obvious as the impacts of the pandemic shook most parts of retail to the core. Stuck in no-man’s-land, swimming in a sea of sameness, are the retailers that offer decent prices, but not the best; an “okay” shopping experience, but nothing really special; some sales help but nothing particularly useful. The fact is, even before ecommerce began its steady rise, the Sears and JCPenney of the world were struggling terribly. Their misfortunes were exacerbated by the long-term decline affecting most regional malls. During 2020, brands that had developed and deployed strong digital and omnichannel capabilities did better than those that had not. Organizations with agility built into their operating models responded more quickly and effectively to the rapidly changing retail environment.
“It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.” ~Charles Darwin
It is helpful to realize there is no “new normal,” just the next normal or-perhaps the next weird. Shift will continue to happen. We must start today, from the place where we find ourselves.
As store and shopping center closings hit new highs during Covid, and bankruptcy filings became more common, the remaining pieces of the “retail pie” will be shared among fewer competitors. Also, cash will be king, allowing certain powerful companies to scoop up other businesses at fire-sale prices. In August 2020, Authentic Brands Group acquired Brooks Brothers. A few months later, mall operators Brookfield Properties and Simon Property Group bought the assets of JCPenney out of bankruptcy. We are seeing the resurrection of brands that once seemed dead, only to re-emerge as online only companies. Retail Ecommerce Ventures, according to Dennis, is building an entire business around this strategy, resuscitating Pier 1 Imports, Dressbarn, and many others. When Dennis was asked how many moderate department stores does the United States need? His answer was “Two-one (mostly) on the mall and one off. My money would be on Macy’s and Kohl’s as the last men standing.”
“We cannot solve our problems with the same level of thinking that created them.”
~Albert Einstein
Whether you are an economist or just applying common sense, you already know that supply and demand determine how markets operate and which companies ultimately will generate customer and shareholder value. Once something becomes ubiquitous it tends to become uninteresting. What is abundant is no longer special. But where strong consumer desire meets scarcity, we find potential and opportunity: the potential to win and keep customers which will drive profitability and make us remarkable.
Many of the high growth digitally native brands such as Wayfair, Casper, Chewy and more can offer both great service and value pricing because their investors will accept margins (for now) that are far below historical industry standards. Pressures to demonstrate a path to sustainable profitability are escalating. But for the time being, venture capitalists have allowed many of the disruptors to deliver incredible customer value, fueling larger revenue growth. Not exactly an even playing field.
Physical retail is not dead, just different. As an example, Dennis has been referring to Sears’s prolonged descent as “the world’s slowest liquidation sale” for quite some time. On the other hand, quite a few well-known retailers failed to get the “retail apocalypse memo”. Brick and mortar dominant brands such as TJX, Lululemon, BJ’s Wholesale Club, Dollar General, and many others are all profitable and continue to open physical stores. Together, they have announced plans to open many hundreds of stores per year.
Regional malls and their department store anchors have actually been on the decline since the late 1990’s, when Amazon’s annual sales barely eclipsed the revenue of just one of the nation’s top-producing malls. The first wave of disruption actually came from the national expansion of big-box category killers and discount mass merchandisers. The most recent wave of disruption has come mostly from the rise of off-price and dollar stores. While it is convenient to blame Amazon, the growth of online shopping is only one piece of the puzzle.
The hybrid nature of store and on-line shopping is here to stay and the role of physical stores will continue to adapt to that reality. Many stores will continue to be in service to their traditional roles of presenting and stocking merchandise for the customer to look at and take home. Others will be part marketing center, idea center, product showroom, and/or order fulfillment and returns center. The dividing line between ecommerce and physical store sales is far less clear than it used to be. The differences between retail’s winners and losers are, however, clearly diverging, a fact which was made even more apparent by the Covid crisis. The market continues to bifurcate, and the collapse of the boring, mediocre, undifferentiated “middle” is accelerating.
Far too much of retail is still filled with tired old ideas and a failure to pursue innovation. Many of the retailers filing for bankruptcy, or closing large numbers of stores have barely changed in over a decade. The same old mistakes, made by the same old people, particularly an overreliance on deep discounting is repeated year after year.
Mr. Dennis states what we have all felt ourselves, that an “awful lot of retail looks and feels pretty similar. Virtually identical storefronts and websites. Look-alike promotional signs. One-size-fits-all marketing campaigns…Department stores in particular have been swimming in a sea of sameness for decades.”
The retailers that are struggling usually have both strategic and executional issues. They often sit in the middle of the price spectrum, offering neither great product value and convenience nor anything unique from a product, experience, or service standpoint. They sell fairly average “safe” products to the great masses of the population. A little bit of everything for everybody, nothing special or remarkable for anybody. They apparently cling to the hope that a slightly better version of mediocre will turn out to be a winning strategy. These brands act like they are still in business. Dennis states that “They think that some customers will actually miss them when they’re gone. I see dead brands. And they don’t even know they’re dead.
”Switching over to Amazon, Dennis believes that “Amazon’s ability to sustain hyper-growth over the long term will increasingly be driven by more aggressive investment in physical retail.” Amazon has been experimenting with and expanding various “click-and-collect” operations. At the end of 2020 it had more than 2800 Amazon Lockers across nine hundred U.S. cities. Amazon private label brands are also a big opportunity for their growth.
As many online companies go public, their financials disclose that many of the fastest-growing, highly valued digitally native vertical brands are burning through cash, and many appear to have little or no chance of breaking even in the near future. As one example in the book, Wayfair, the online home furnishings pioneer, lost nearly $1 billion in 2019, more than 17 years after its founding! Chewy, the online pet supplies company, is a similar story with a long string of robust sales growth performances but with operating losses.
The one sure beneficiary of all this upheaval is the consumer. Once the dust settles, it will be clear that consumers all over the world are realizing more choice, lower prices, and improved convenience that we could scarcely imagine even five years ago. As Dennis says often in his book, “It’s time we realize that it’s all just commerce. Our job is to figure out how to best meet the customer’s needs anytime, anywhere, anyway.”
“The biggest risk is not taking any risk. In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” ~ Mark Zuckerberg.
Every once in a while, someone will bring up “opportunity cost,” although we rarely hear anyone bring up the cost of inaction. Change, particularly the kind that is demanded by the accelerating pace and profound impact of disruption, is incredibly hard. Failing to change, however, is ultimately far more difficult. Few brands can afford the price of irrelevance. And it turns out the status quo is very, very expensive.
Steve Dennis closes out the first part of his book by asking us to keep five questions in mind:
- Could the pace of disruption be about to hit your business even harder and more profoundly than you currently can imagine?
- Could your current value proposition not be nearly remarkable enough to fight and win in the future?
- Could your organization not be changing significantly or quickly enough?
- Without starting to make aggressive changes in the immediate future, will you not only fail to thrive, but actually not survive?
- Have you built-or are you building-agility into your operating model so that, when you find yourself in the throes of inevitable disruption, you are able to respond quickly and effectively?
For most of us there is only one choice. We must choose REMARKABLE.
The second half of Mr. Dennis’s book is all about the journey to remarkable. He talks about the Eight Essentials of Remarkable Retail. He devotes a chapter to each of these essentials and explains what they are, why they are important, and what it means to embrace them. He illustrates how to bring each Essential into practice through real-life examples of retail brands that are experiencing great market success. For contrast, he also often highlights the decidedly unremarkable exploits of industry laggards. The eight essentials are:
- Digitally Enabled
- Human-Centered
- Harmonized
- Mobile
- Personal
- Connected
- Memorable
- Radical
I’d like to request that you read Steve Dennis’s remarkable book in order to find out about these essentials for yourselves. They are worth reading and worth implementing in your companies.
The journey to remarkable is inherently about planting seeds, cultivating what starts to grow, and eventually reaping the rewards of our hard work, and a new willingness to take risks.
It is worth remembering, as the ancient Chinese proverb says, “The best time to plant a tree was twenty years ago. The second best time is now.”
With warm regards,
