Retail Tech Decade In Review: 2017

In 2017, Artificial Intelligence hit retail hard – it was the first year that it moved from fringe “future of technology” on retailers’ radar to mainstream consciousness. A few reasons why it hit the mainstream this year: Amazon’s Alexa rose to fame and fortune off of a few wild news stories, like a case where Alexa allegedly called the cops in response to domestic violence happening in a home (it didn’t, but still, somehow the police were notified to come), and the infamous doll house purchase, where a six-year-old accidentally purchased a doll house and a tin of butter cookies. That was bad enough, but a San Diego news station, in playing the story, accidentally caused hundreds of in-home Alexas attempt to do the same thing.

Amazon was heavy on people’s minds in 2017, not just because of Alexa, but because of acquiring Whole Foods and launching Amazon Go.

This year was also the year that Microsoft’s Tay, an AI-driven chatbot, went from bubbly teenager to foul-mouthed Nazi racist in less than 24 hours. And customer service in general was on people’s minds, after the infamous United passenger removal incident, and McDonald’s took on Rick and Morty – and lost, with a poorly executed promotion of Szechuan Sauce.

My commentary from the year reflected all of this context, along with continued drumming around the future of the store and what retailers need to do to keep stores relevant. In chronological order…

1.    

Do you really believe that incremental investments in in-store technology, or even, heaven forbid, employee training is going to be enough to make stores as relevant to the shopping process as they were in 2001?

Ouch. The point of this comment: the changes coming to stores are far more than anything incremental can fix. But it did start opening up a debate that continues today: this may be very true of the flagship experience, but can main street stores effectively adapt to the changes we’ve seen in shopping behaviors? Is there a high-engagement model that can be implemented in main street stores?

2.    

For the retailers struggling to compete against Amazon, they need to think a lot more about what kind of personality and trust people are projecting on to services like Alexa. Increasingly, they may find they are not competing against some wacky bald guy and an internet behemoth. They are competing against Alexa, my kids’ favorite disembodied voice, who will always tell them jokes and find them the best songs to listen to.

Amazon was high on people’s minds in 2017 – even more so than usual – thanks in part to Alexa hitting the big time in consumer adoption.

3.    

What are stores for? Most people will quickly answer “to sell stuff”. And that was true, when that was the only place where you could buy stuff. But now I can get cases of Diet Coke delivered to my front porch for practically free. I don’t need a store to buy stuff. And apparently a lot of Millennials have decided the same thing.

4.    

Who owns the in-store experience? The most natural answer would be “store operations”, but every retailer who is being honest with themselves will pause at that point. Because while store operations may be responsible for making sure that the store is staffed and product is on shelves, and the bathrooms are clean, etc. etc., there are few companies where the store operations team is actually responsible for “a customer experience”. The conflict is right there in the name of the team – they’re there to keep stores operational, not to deliver fantastic customer service.

I’ve long held that stores need more than store operations. And with that, a special emphasis on sales as a discipline instead of something that “just happens” and a special emphasis on marketing at the local level to drive traffic.

5.    

The whole value of chain stores is that a chain, with all of its stores together, is more powerful than a bunch of independent stores. So why is your first instinct to measure the store as if it was a standalone business? That defies why it is part of a chain to begin with.

6.    

It doesn’t matter what Alexa can really do. It only matters what people THINK it can do. Which means retailers aren’t just fighting an enormous amount of capability in the voice arena, which expands every day. They’re fighting a growing mythology around those capabilities too. Good luck with that.

7.    

Even if you aren’t creating your own content in an editorial sense, brands and retailers have an obligation to tell customers why they are offering the things they offer for sale. That “why” involves more than just why these products. It also means why not those other products. If you can’t explain to customers why you’re different, then the only thing you have available to compete on is price. Maybe availability. That’s a tough market that leaves it up to the consumer to just shop until they find the price they’re looking for – and in that kind of power scenario, the retailer definitely loses.

There is a continuing debate over what role retail should play in content. Content-first brands like Glossier have definitely proven that a content-led approach to consumers works. The question of whether that can apply to a retailer like Macy’s or Target is still open.

8.    

You can’t out-Amazon Amazon. But whether you have your own brands or a bunch of national brands, you can out-curate them. And when you do that, you naturally create vitally important content – an explanation of why you made the choices you did – that helps become the foundation of differentiation and a way to create engagement with shoppers.

9.    

More than 50% of traffic to a retailer’s website likely comes from mobile devices these days, with very few exceptions. So when talking about user experience around something like Click & Collect, you pretty much can’t talk about it without at least considering the role of mobile.

There are still so many experiences that retailers think of as desktop-driven or desktop first. Millennials and the generations behind them just do not think that way.

10. 

It doesn’t matter if AI drives proven value, if people fear either outright for their jobs, as in, “This solution is going to replace me”, or if people fear long-term obsolescence, as in, “This solution is going to know more about our customers than I do – I’ve lost touch.” As soon as people fear for their jobs, you can bet there will be a backlash against the technology – an internal revolt that pushes back against an executive sponsor who can’t really defend the technology because they don’t know how it works any better than the people using it.

Ah, the first pushback against AI, which up until this point had been focused more on customer experience in ways that were not threatening. But while some people may have been talking about AI long before 2017, it wasn’t until this year that retail started hearing the message that AI was going to change the world – well beyond the likes of Alexa.