Futurist Doug Stephens on why the physical shopping experience matters
In a world where almost anything is available with the click of a button, grocers can offer what many digital players can’t: a unique and exciting in-store experience.
We recently spoke with Doug Stephens, a retail industry futurist and founder and president of Retail Prophet, a Toronto-based retail consultancy, about the impacts of digital on the grocery industry and how grocers can leverage technology to enhance the in-store experience.
This interview has been edited for length and clarity.
You’ve been quoted as saying, “the store is media and media is the store.” Could you explain what you mean by that?
If we go back 30 years, brands would buy media and they would use that media to drive consumers to their store. Today, every form of media consumers have contact with – our smart TV, our smartphones, social networks, videos – is “the store.”
Not only can I buy without going to a physical store, but I can also buy more intelligently. I can watch videos; I can read reviews. I’m getting more information [online] than I am standing at a shelf with 14 kinds of hot sauce without any information apart from what’s on the label. So, I would argue that media has become the store. The evidence of that is when the average consumer needs anything, they’re not defaulting to the local store. They’re going online and, increasingly, they’re going to Amazon. Then, the question is, what is the point of a physical store?
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The store is an opportunity for the brand to animate its values, to animate its culture and, ultimately, to animate its value to the consumer. What’s the difference between shopping at Loblaws versus Metro? Am I feeling a difference in brand values? Is there a difference to the architecture of the experience? These are lost opportunities for these stores to use their locations as the most powerful form of media they have.
Amazon has set the expectation that consumers can buy anything, anywhere, any time and at a reasonable price. Can grocers meet those expectations?
Amazon ran an unprofitable business for about two decades to build the intelligence, the technology, the infrastructure, the logistics supremacy it has today. They’re at the point now, if you order something at 9 p.m. on Wednesday you can have it Thursday morning. How can grocers compete with that? I suspect most cannot. The better alternative is to capture a different aspect of the consumer’s loyalty and capture it more deeply. And what I’m always amazed at, is the lack of customer experience in most grocery stores. Essentially, we’ve “retail-ized” a warehouse. We’re not offering any sense of community. We’re not offering any level of entertainment. We’re not offering any level of expertise in the store. If you want to know how to make beef bourguignon, good luck. You’re better sitting at home watching videos than going to your local grocery store. So, there’s opportunity if grocers are willing to break the paradigm and ask, could a grocery store be a place where people go for fun?
Why do you think they're not delivering on that customer service piece?
We have three [major grocery chains] that are relatively comfortable. They don't feel the need to radicalize the experience in their stores because of that comfort level. And when they say, we're going to install self-checkouts and we're going to take the labour that was behind the checkout and move it into the aisles, and that's going to be a new level of customer experience – it's not happening. Now, on the one hand, you could argue that's just good business sense. Why would you invest millions or billions in customer experience if you don't have to? My answer to that is because these three grocery chains are leaving the door open to someone else coming along and saying, "I am going to turn the grocery industry on its head. I'm going to offer a completely different experience." In the same way that if we go back to 1994, pre-Amazon, most retailers were complacent when it came to the internet. The internet? Who cares? No big deal. And Amazon radicalized customer experience using the internet while they slept.
READ: How embracing artificial intelligence can elevate the shopper experience
What in-store technology would help from a customer service perspective?
Going back 20 years, I was showing audiences early experiments in AI by companies like Microsoft that were building bots that could work conversationally with consumers. So, shoppers could ask for cooking advice. I expect to see more deployments on store floors that will allow consumers to interact with AI in a conversational way. What we must get beyond, I guess, is the social discomfort of doing that. Having a conversation with a machine in a crowded environment may feel strange, but that’s the next frontier of customer experience – delivering in-the-moment knowledge to consumers.
Aside from sales, is there a metric that grocers should be using to measure the success of a store?
In the grocery industry, especially, we want to process as many transactions as we can. If we process more transactions than the other guy, we win. And on one level, I can see why people might think that, but more and more of the business leaders that we are speaking to and more of the research we're looking at suggests the longer a consumer stays in your store, the better.
Retailers oftentimes launch into these customer experience initiatives only to pull back, because they're expecting the moment they unveil the experience they're going to have higher register rates. It doesn't always work that way. Just as when you see a compelling ad on TV, you don't always just run and buy the product but the compelling ad that you saw works on your mind, and you may recall that brand later. I think the goal is to get the consumer to spend as much time with your brand as possible. And that doesn't mean just looking over your promotional flyer that gets stuffed into your mailbox. It means going and spending time [in store].
What are the biggest challenges grocers face today?
Competition and trying to find one's positioning in this sea of choice. I see four areas where brands can carve out that emotional space in a consumer's life. The first is along the lines of a cultural influence. So, if a brand in the grocery category is committed entirely to environmental protection, sustainable food production, fair trade and fair wages for employees along the supply and value chain, that is a very viable position. You may not carve out a huge slice of the market, but what you will do is carve out a very committed and loyal slice.
The second quadrant is entertainment value. Here, in food, I think of an Eataly or along those lines where I'm going to go and have a one-of-a-kind experience with the brand. And they don't make any attempt to shine on convenience or price – it's all about being unique, different and being entertaining.
READ: Eataly readies second Toronto location, announces plans for third
The third category is specialty, where it's about the knowledge and the focus and curation of products and the ability to go and get culinary advice or cooking advice. A lot of specialty grocers would fit into that category or going to the local butcher, for example. And then finally, design is the last quadrant where brands can shine. And that is simply by either offering entirely different and unique kinds of products, or by offering an experience that is designed to be wholly unique and differentiated.
Can traditional grocers deliver on all four quadrants?
The answer, based on my research, is no. And to be very honest with you, I think that's where most conventional grocers find themselves today. They're sort of caught between these two realities. So, on the one hand, do we want to compete on price every day with the likes of a Walmart who has this sort of singular focus on operational efficiency and supply chain efficiency and low cost? Probably not. Do we want to go into a convenience battle with the Amazons of the world? Probably not. These aren't wars the conventional grocer can win, but being a little bit of everything doesn't help you very much. And that's the problem I see, which is sort of endemic across retail, is that most retailers are trying to represent some level of value, some level of service, some level of in-store experience, perhaps a little sprinkling of convenience and decent promotional pricing. All that put together isn't enough to break through the amount of competition that we see in the market …if you want to dominate in any area, you have to make that [area] your singular focus.
Selfridges’ founder Harry Selfridge said, “Excite the mind and the hand will reach for the pocket.” How could this play out in grocery retail?
The question retailers should ask is, how can we get the customer who comes in quick to grab something for dinner to walk out with 30% more? And that is a product of creating excitement, enticement, theatre in the store. Even simple little things like tastings; let people taste something they haven’t tasted before. That is woefully lacking in the grocery industry. Watching a quick seminar on how to cook something, or quick meal ideas, again, a lost opportunity to build that sense of affiliation.
This article first appeared in Canadian Grocer’s February 2024 issue.
