Hank Darlington 2018-01-05 13:51:39
What’s really going on in retail? Last month I tried to set the stage for what’s happening to retail in general and DPH showrooms, specifically. It’s an all-new ball game. Doing business the way you have for the past several decades won’t work into the foreseeable future. There are two major forces taking place in our economic landscape. The first is the commoditization of goods and services. That is to say people want to buy at the greatest possible convenience and at the lowest possible price. Secondly, there is a shift into the “experience economy” where goods and services are no longer enough. Customers want memorable events that engage them in an inherently personal way. These would be “experiences” that are educational, unique, personalized, surprising and repeatable. Your showrooms aren’t selling commodity products so you are and will be somewhat protected on the first statement. But, because you do sell unique, more expensive luxury products, the second statement above will carry even more importance for you. It is projected technologies will formulate real-time buying decisions based on real-time needs. It is expected technology will decide what items to purchase and when. It will provide advice on where to buy and what price to pay. This will all be based on instant, real-time data input. It’s estimated 25% of all consumer decisions we occupy ourselves with today will be entirely relegated to technology by 2025. It’s already happening! Amazon has developed a device called “Dash Buttons.” It’s a simple Wi-Fi-connected device programmed to order specific products. For example, you place a Tide “Dash Button” in your laundry room. When you need more Tide, you push the button and it’s ordered, delivered and automatically billed. If that’s not enough, the next step up is called “Dash Replenishment Service.” With this, sensors will be built directly into products. These sensors will trigger replenishment orders without any intervention by you. Once again, the 800-pound gorilla in this area — Amazon — already is doing this and it’s making DRS an open application, giving any company with a listing on Amazon access to DRS functionality. Think about all the commodity products you have to lug home from the store on a regular basis: laundry detergents, toilet paper, milk, bread, etc. DRS will eliminate all this, saving you time and probably money. The type of commodity products this could be used for is limitless. Additionally, we’re headed into a future that is going to be artificially flavored. We all deal with “chatbots” on a daily basis. We may not know them by that name, but it’s the “person” you talk to on the phone who asks you a series of questions in order to guide your call. It’s an interactive, artificially intelligent program that draws on cloud-based data to respond in real time to queries and conversations using natural language processing. That’s a low-grade chatbot. My research shows there are more than 100 different types of chatbots out there. In 2015, messaging apps surpassed social networks in terms of monthly active users on phones and are well on their way to overtaking email. Tell me, it isn’t so! It seems like it wasn’t that long ago I mastered emails! Now all my “kids” and grandchildren do is text me! Social networks are morphing into chat networks. WhatsApp, Facebook Messenger, WeChat and Viber now are attracting more users per month than Facebook, LinkedIn, Twitter or Instagram. So what does all this mean for shoppers? Instead of having to download a particular brand’s app or visit its website, they simply can open up Facebook Messenger, type in the brand name and almost instantly are connected to a chatbot. The bot would then guide the conversation, helping the shopper narrow down their choices through a series of simple questions. Here are a few of the companies that have built bot-driven experiences on Facebook: American Express, Bank of America, Burger King, eBay and StubHub. If you want some Oreos, simply say or type “Oreos” on Messenger and Oreo’s cometh! ARTIFICIAL INTELLIGENCE Artificial intelligence, or AI, is here and is only going to become more important in our lives and our showroom businesses. With AI, a personal digital assistant would anticipate our shopping needs, make intelligent recommendations based on knowledge of our personal preferences, personal relationships, physical location, budget, etc. We are transitioning from e-commerce to c-commerce (conversational commerce). With Apple’s Siri, Microsoft’s Cortana, Google’s Now and Amazon’s Alexa, we will merely speak our needs and they will be fulfilled. Even I have Amazon’s Echo. I can ask Alexa to give me news information, look up facts, help control the thermostat and lights — and yes, no surprise, I can order any one of Amazon’s 260 million products by simply saying “Alexa, Please order…“ Another futuristic phenomenon being tested by a number of wellknown companies is virtual reality. By definition, it’s an artificial environment experienced through sensory stimuli (such as sights and sounds) that’s provided by a computer and in which one’s actions partially determine what happens in that environment. Imagine your clients coming in, putting on a headset and seeing your products in 3D, hearing toilets flush, seeing different showerhead sprays, sitting in whirlpool tubs and taking a tour of your main vendor’s factories. Yes, VR will create a world where you can see, smell and hear people, places and things around you. Lowe’s is experimenting with its Holo Room. Cadillac, Chevrolet and other car manufacturers are using VR to show off their wide variety of automobiles. Ikea is using it to allow users to visualize items from its catalogues into its customers’ homes. Marriott and Ritz-Carlton are using it to take potential customers on exotic vacations to where they just happen to have resorts. In our industry, I attended Winsupply’s recent showroom conference in Savannah, Ga., where I spoke on this subject. At the conference, Winsupply introduced “Libby,” a virtual-reality tool it is rolling out to 10 of its showrooms. I put the headset on and designed a master bath — selecting the products I liked and placed them where they needed to go. I completed the room by selecting countertops, wall coverings, lighting and flooring. This was all done standing in one spot with a headset on and a remote control in my hand. This is the second time that I’ve experienced VR and it’s incredible. If all this isn’t enough, we now have augmented reality or AR. This allows us to superimpose digital content onto the physical world around us. I’m pretty sure you’ve read about what the Pokémon Go App is doing in the gaming world. This is one example of AR. On Nov. 30, Supply House Times ran a news item that announced Build. com, a Ferguson Enterprises company, had recently launched a new AR inapp experience — referred to as “In-Home Preview,” leveraging Apple’s new ARKit development platform (check out Page 32 for more details). How long do you think it will be before the 300-plus Ferguson showrooms will be using it? VR and AR aren’t coming, they already are here. We are rapidly advancing into a world where every aspect of a shopping journey can and will be instant, immersive, customized, sensory-driven and informative — all by using this new thing called artificial intelligence. So the main question showroom businesses should be concerned about would be is retail dead? There are those who say “yes” based on the fact software is kicking the heck out of it right now. E-commerce as we know it today is only the beginning of a retail state that will continue to be astounding. The real answer to the above question is an unequivocal “No!” Retail is not dead. Here are several reasons why: • As long as humans shop for reasons beyond the mere acquisition of things, physical retail will remain relevant. • As we become increasingly tethered to technology, brick-and-mortar stores will become even more valuable and more cherished as our hunger for visceral- and emotionallyconnected experiences intensifies. • At its core, shopping is a human activity. • Shopping at its best always holds hope of profound moments of discovery. • The thrill of the hunt and the uncovering of treasures affects us on multiple levels. • The physical stores (your DPH showrooms) will continue to be important destinations and will create more online sales. This should be a win-win for you. • Most importantly, physical locations offer the ability to stage shopper experiences. Retail isn’t dead. It’s merely shedding its skin. As we continue to move into the digital age, the entire concept of retail will continue to transform before our eyes. The drudgery of daily shopping trips for commodity goods will be almost entirely managed for us by networks of sensors and AI. The staid and static physical stores (unfortunately some like yours) that customers visit today will die off and make room for: • Dynamic and remarkable shopping spaces of the future. • Places we will go to learn, see, touch and play like never before. • Experiences will be the most valuable offering of the next couple decades. This is the future of retail and your showrooms and it’s going to be so bright you’ll need sunglasses! Good selling! Hank Darlington, owner of Darlington Consulting, is a 2004 NKBA Hall of Fame inductee. He can be reached at 916/852-6855 or darlingtonconsulting@ gmail.com.
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