Michael Zakkour: “We are in the midst of a retail renaissance, not an apocalypse”
Today we speak with Michael Zakkour, VP of Digital Commerce and New Retail at Tompkins International and co-author of the book New Retail: Born in China, Going Global: How China’s Tech Giants are Changing Global Commerce.
Michael, do you think the offline retail disappear?
No. Never. In fact, physical retail spaces are, in a sense, more important than ever. One of the core principle of The New Retail is the reinvention of physical environments. In a sense, Stores are not the right word for physical environments anymore. The New Retail is the complete integration of online, offline, technology, media and logistics. In this environment there are as many stores´ openings as there are closings. Physical environments will still account for 75% of transaction in the short term. Smart, fun, digital, connected, experience driven physical habitats will thrive and the old, boring, middle of the road, analog store will continue to disappear.
What are, in your opinion, its pros and cons in front of the online retail?
We need to first establish the difference between eCommerce and digital commerce. eCommerce or online retail is now, or should be for most brands and retailers, one of many habitats where consumers can buy, experience the brand, be entertained… Digital commerce is that every part of the make-move-sell-buy-deliver flow is, or should be digital.
The truth is that most online retail is not profitable. The cost of consumer aquisition is high, the cost of fulfillment is high (you can be fast and expensive or slow and cheap and slow is a non-starter) and the cost of paid media and social is high. Also, Amazon owns a 50% share of all online transactions. That is why taking a Unicommerce model on is important. This is the blending and viewpoint that a brand has one single channel, that providing consumers with a buy anywhere, anytime, anyway option is crucial to providing them with convenience. And it’s crucial for brands and retailers to spread cost and upside across several habitats. The idea is not to measure eCommerce as a stand-alone P&L or to measure a KPI of sales per square foot in a store. Use online for trandsaction, but also use it to drive traffic to your stores, or to your products at 3rd party retailers.
Providing consumers with a buy anywhere, anytime, anyway option is crucial to providing them with convenience
What is the biggest problem or weakness that the offline retail has to face?
I see three big problems that the brands and retailers who run physical stores are having.
- So very many of them have not changed how the store looks, feels, operates, in five, ten, fifteen years. As I am constantly exploring stores, I am still amazed that so many big chains look just as they did before eCommerce, digital commerce and New Retail.
- Many offline retailers are measuring performance in the ways they did five, ten, fifteen years ago.
- Many have created this race to the bottom mentality over the last decade, depending almost entirely on deep discounting and promotions to draw traffic. That, combined with a cratering of mall traffic, is a toxic blend.
In this context, what role does technology play in retail?
It is the basis for successful retail operations and the foundation for growth and relevance for retailers. Mobile commerce, digital commerce, social commerce, Apps, virtual reality, augmented reality, QR codes, drones, delivery robots, automated distribution centers, data science for customization… It’s hard to think of a single operation and experience in retail that is not being driven by technology today. The companies that employ technology in the fastest and smartest way, will be the big winners going forward.
It’s hard to think of a single operation and experience in retail that is not being driven by technology today
What does it take for a store to work? Can you give us a magic formula?
There is no one formula or one size fits all approach, but in general, it requires two things.
- Be great at the traditional four pillars of retail: price, experience, selection and convenience.
- Layer on the new four pillars of retail: employ technology in store, be interactive, be, social, provide social space and experiences, be connected to the online/digital world, provide services as well a products, etc.
How can we, as retailers, achieve customer loyalty?
Consumers have one overriding demand today and that is “Spoil me or I will find a brand or retailer who will”. The way to spoil them is by delivering what I call The Four Cs’
- Centricity – You must make it ALL about them
- Convenience
- Customization
- Contribution to make them part of the brand, to involve them in experiences and to allow them to tell you what they want. Listen first, talk back later.
Consumers have one overriding demand today: “Spoil me or I will find a brand or retailer who will”
How do you see the future of retail?
We are in the midst of a retail renaissance, not the retail apocalypse you see in the headlines. The are more things to buy, in more places, in more ways, than ever before. The integration of online and offline powered by digital and technology is now emerging a a gem change for the way we not only buy and sell things, but the way we live our lives. Retail is as old as the first civilization and I’m excited for its future.
Great, Michael! Thanks a lot 🙂
