Since Amazon’s purchase of Whole Foods, a deal that sent shockwaves across the retail world, the question that every brick-and-mortar retailer faces is how they propose to stem the tide of ‘follow-suit’ competition that will now inevitably engulf their market.
There is no doubt that digital is the most potent force shaping our world today. Yet many organisations are not ready to capitalise on the opportunities offered by technology and digital – opportunities for greater performance, for enhanced productivity, even for transformation of business models. Technology is being blamed for the decline of many retailers, who have either lost touch with their customers, were unable to adapt to this new reality or were not sufficiently focused on ‘future proofing’ their business. In short, those retailers simply did not embrace the opportunity to turn their ‘consumers’ into ‘customers.’ Technology and data analytics are enabling organizations to re-establish a personal connection to their customers – a more intimate relationship that existed in the past, but has been lost with scale and a focus on product at the expense of experience. In many ways, we are ‘going back to the future!’
Digitization is affecting industries and organizations unevenly across the globe. In these initial stages, the companies leading the pack are those who were ‘born digital’. But more impressive are the small set of incumbent companies that are in the process of actively transforming themselves into digital leaders.
These are organisations that are aware of how to leverage their traditional strengths to complement their new digital capabilities – an awareness rooted in a well-informed understanding of customer behaviours, wants and needs.
Thinking back on the initial challenge…how does a bricks-and-mortar company ensure it rides the digital wave rather than drown underneath it? By recognising, and embracing, the symbiotic relationship between the online and offline dimensions. Physical stores will always exist, but I am convinced that what makes a store a store will continue to evolve, becoming a fundamentally different retail experience in the not-so-distant future. Stores will serve a higher purpose – one that connects customer to the product through experience. Stores will become ‘Showrooms’ and shopping centres will become ‘Experience Centres.’
Against conventional wisdom, in 2017 there were more store openings than closures in the US, according to a report by IHL Group. Winning in this new omni-channel world means that physical stores will need to be truly differentiated and adopt the notion of ‘retail as theatre’, a source of entertainment and a distinctive customer experience. This strategy can only be successfully executed if grounded in a deep understanding of customer needs, wants and behaviours.
Just as the last Industrial Revolution saw workers shift from factories to service industries, leading not to mass unemployment but rather to the creation of new types of work, I see the Digital Revolution following a similar pattern in the next decade. Advances in technology,
machine learning and AI will create new jobs, opportunities for talent to grow and for new ways of working to emerge, integrating seamlessly people with systems.
So how is Majid Al Futtaim, the organisation I have the privilege to lead, preparing itself to win? By focusing on embedding data and analytics in our daily decision making; by adding a digital dimension to our brick-and-mortar business; by ensuring our people have the necessary skills to make the most of the technology and digital tools available to them; and by reinventing our stores and experiences to ensure we harness the new opportunities the future holds to deliver great moments for everyone, everyday.