Bestselling author and retail futurist Doug Stephens says there’s a very much “back to reality, nose to the grindstone, pragmatism” environment right now among retailers.
“While they’re trying to repair some of the damage maybe that we’ve done by the pandemic they’re now kind of battening down the hatches for the possibility and the probability of recession,” said the Fortune 100 Business Advisor, Founder and President of Retail Prophet and author of Resurrecting Retail: The Future of Business in a Post-Pandemic World.
“There’s just this real sense of tightening things down, controlling costs, trying to get a handle on supply chain and ultimately trying to brace themselves for what could be a fairly rough ride through the first half of the year if things unfold the way we think they will.
“A lot of the fanciful stuff. I think there’s a sense of disillusionment about the metaverse and how that played out. I think it’s really about just investing in the tools that will help them make it through another day.”
Stephens said the “rough ride” will be the result of a “cornucopia” of problems. He doesn’t believe the retail industry is out of the woods yet in terms of supply chain. Retailers are still wrestling with issues in that respect and it’s anybody’s guess right now what will happen in China as it’s dropped its zero COVID policy.
“Everyone’s on pins and needles to see if we wind up in a very similar situation to last year with factory closures and problems at docks and ports around the world,” he said.
“There’s also a very clear, especially in Canada, pullback on consumer spending. The fourth quarter (of 2022) wasn’t what a lot of retailers anticipated – 83 per cent of consumers in Canada right now as we speak according to a new survey from Pollara believe that we are in a recession whether we are or not and technically we’re not. And the vast majority of Canadians do not feel that their financial situations are going to improve. They feel overburdened by debt and inflation particularly as it applies to food which is hammering their behaviours pretty hard. So I think retailers are trying to brace for that.
“And I think through the pandemic there was just this broadening and expansion of merchants carrying all kinds of new products. The advent of third-party marketplaces that has allowed brands like Loblaw to expand their range of products.”
Stephens said there is a sense on the part of retailers that everybody is crawling into everybody else’s categories and there really is no such thing anymore as product exclusivity. And that makes for a pretty tough environment.
Taking aside the value discount retailers and the luxury end of the scale, the “amorphous blob” of retail in the middle their value is really nebulous to consumers, he said.
“Is the value in the products that they sell? Is it in the service that they say they give? Is it in their pricing or promotion or is it in a convenience aspect? Oftentimes it’s a big question mark,” explained Stephens.
“And I think the battle cry for retailers has to be to clarify that once and for all. To really decide who are we? What is the unique selling proposition that we offer to consumers? Because given the crowding in the market, given the saturation of product and the availability of product and convenience, it’s going to be really important for retailers to determine who is it that we are, who is the customer we’re selling to and what sort of radical level of value can we drive for them?
“If we don’t, we’re just going to be overlooked. There are too many options and there are too many other brands out there that do have that clear sense of value. I may not love shopping on Amazon but I sure as hell know why I go to Amazon and spend. I don’t remember the last time I was disappointed. I get what I asked for. I think it’s time for brands like the Bay, for example, to finally draw a line in the sand and say hey who are we and what do we do and who do we do it for?”
Stephens said the number one problem that afflicts most retailers today is they’re in the business of distributing a product. He was recently reading an article about Reitman’s. “Here’s a perfect example”, he said. “There are consumers out there for whom Reitman’s means something and holds some value. But for the average person looking on, you’re asking the questions: Is Reitman’s offering products nobody else sells? No. Are they offering a better pricing structure than anyone else? No. Is it a service proposition? No. Is it a customer experience proposition?”
“What is it? So Reitman’s is a perfect example of a brand that really needs to sit down and say okay look, if we’re going to dominate in some aspect of the value proposition, what’s it going to be? Because as long as we’re sort of languishing in the middle we’re just a bullseye for Amazon and everybody else to go after. To my mind that’s the biggest problem and it’s also the hardest one to solve because you don’t buy a solution off the shelf for that. It takes a lot of introspection and work.”