Digital Transformation

The Survival of Big Retail

Written by
Sebastian Jespersen

Retail as an industry is under immense pressure, as Amazon continues to disrupt the entire market space and redefine the end-to-end customer experience. Well-known retail institutions are experiencing aggressive competition from ‘born digital’ Amazon. Unable to compete with its efficient operating model, we are subsequently seeing casualties, as is the case with Sears, Toys 'R' us, Brookstone among others. A barrier for these well-known brands to revolutionize themselves into a competitive and relevant retail destination is the lack of a meaningful customer experience strategy.

Try to answer this fundamental question: how often do you leave a large retail store more positively entangled with the brand than when you entered? My guess is not often, if at all. Personally, I had an experience after visiting a Home Depot store that inspired me to write this post.

After checking out my items at the register, this interaction occurred between the cashier and myself:

Cashier: “Would you like to apply for our Home Depot credit card?”

Me: “I’m not sure.... why should I sign up for one?

Cashier: “Err...”(Not really sure)

Me: “How about this: if you have one, then I’ll apply for one.”

Cashier: “I would love one but am afraid I don’t. My salary doesn’t qualify me, so I can’t get one.”

Both: Long talk about company values and salary levels

On my way out of the store, I reflected on how this is a common example of the retailer missing an opportunity to create better customer experience. They incentivize their customer-facing employees to upsell items such as credit cards (and some train the employees more than others on how to sell the benefits), but do little to educate them on how to build a long lasting relationship with the customer, starting by reinforcing the customer’s recent purchase decision.

My conversation at Home Depot tells me that the training and instructions my cashier had received were to upsell me a retail-branded credit card simply because I was at point of check-out, rather than encouraging me to continue my brand journey on homedepot.com (and not to answer a survey).

Our Digital Lives

A core challenge for big retail is that the contact points are not connected and mutually enforced. As with most consumers, my inspiration / decision journey starts on Google.com with a search or on Amazon in the case of a branded or product specific search – and I am not alone, as a recent study by econsultancy reported that 45% of consumers go on Amazon when looking for a specific product, and 93% turn to search engines to start any online journey.  

Would I go to a Home Depot store to buy the needed tools and materials to change a window – yes, likely. Would I go to homedepot.com to buy a screwdriver – most likely not.

Assessing homedepot.com, I would predict that a majority of the traffic is landing on the secondary pages, and I also think that (relative to the total traffic on the entire homedepot.com site) few visitors conduct their search from homedepot.com’s homepage, whether it be using search function or using the menu structure. That is a problem, as Home Depot has to pay Google for traffic, and (if true) this is a sign of a price-driven transactional relationship – and you don’t want to compete on price with Amazon /online competition.  

This lack of commitment or digital brand awareness is a key missed opportunity, as retailers such as Home Depot should be able to understand my intent in home improvement better than Google or Amazon, given their specialty expertise in the products. From their access to behavioral data from other consumers like me, they could use these insights to connect this intent and behavior with the next parts of my decision journey.

Home Depot’s digital eco-system has a lack of individualization too, exemplified by a generic looking Homedepot.com and marketing automation programs that spam my inbox with irrelevant non-personalized offers. Lastly there is no alignment with my purchasing history. Most communication is about trying to sell me something, instead of reinforcing the relationship or the decisions of purchases that I have made.

Understanding a brand’s potential for Share of Life™ with their audience begins with a look through the lens of Commitment, Reinforcement, Empowerment, Excitement and Development – or C.R.E.E.D. as we call it at Vertic. A quick summary of this is below:

Comparing Home Depot with Amazon based on the C.R.E.E.D. Share of Life model:

Analyzing how Home Depot compares to Amazon - an industry leader and Share of Life mindset adopter.

Click for larger picture

Share of Life vs. Share of Passion

Amazon’s brand has dramatically evolved into a mega-brand that can provide an endless array of choices covering all possible needs across multiple consumer industries. Amazon focuses on the holistic ‘lifestyle’ needs of their customers, not only when they need to make a purchase, but also the hours where expanding the brand experience becomes more enjoyable and intimate, non-transactional and supporting consumer entertainment.

Unlike Home Depot, Amazon positions itself to go beyond being a ‘need’ to becoming a destination and moves itself into the most irresistible retail destination in the world; creating dramatically relevant, meaningful, value-adding experiences that adds to the moments of a customer’s time and make it better than before they even began their retail experience. Amazon has moved itself from being a brand-to-customer experience into a brand-with-customer relationship.

Zero Degrees of Separation

For a retailer to compete with Amazon, they would need to create a Share of Life™ strategy and tap into the potential of a customer’s share of passion in order to compete. Yet, whether it’s Home Depot or any well-known traditional retailer, if they try to beat Amazon on traditional digital tactics they will inevitably lose. Amazon masters how to leverage consumer insights of their customers’ needs and making that the center in all they do, and that is the anchor point in enabling them to insert themselves into nearly all aspects of a customer’s (digital) life. We call that Zero degrees of Separation.

Consider that there is more than just one way to boost Share of Life™ with your customers. Creating an inseparable brand-with-customer relationship can take place both horizontally across multiple industries (like Amazon) but also vertically (like Nike and within their category of health and fitness). The difference lies in whether entanglement with a customer’s interaction happens across various aspects of their daily life or isolated into limited, specific needs.

Retail brands such as Home Depot will never win competing on Amazon’s premise, a sophisticated digital infrastructure. What they should be doing is playing their competitive card, which Amazon does not have – their employees and many stores.

By using the employee-with-customer experience as a key catalyst towards brand entanglement, a Share of Life™ can build a cascading effect including driving brand benefits for Home Depot and the customers that follow it. Without change, digital platforms will continue to reign over the current retail landscape. When employee efforts are the starting and reinforcing point for brand-with-customer relationship momentum, it will subsequently lead into being the driving force behind a revamp of the brand to encourage customers to come back for more – not because they need to, but because they want to.

Big Retail - It's up to you

First step: assess if you can gain a Share of Life or a share of passion with your customers. Understanding this will allow the retailer to build a relevant strategy.

Second step: define your C.R.E.E.D. following the above model, it will help you assess where you stand and what you need to do next.

Third step: invest in your employees and physical locations – if they are important then develop, motivate and pay them accordingly. Transform the physical locations into experiences that will positively will entangle your customers. This will excite customers and drive the employees’ natural tendency to reinforce the decisions that they have made.

At the end of the day – people connect with people… and will be looking for meaningful in-store experiences.

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Sebastian Jespersen

CEO

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