Author: Doug Stephens

What: A second reading of Doug Stephens’ book from 2017 with a critical mindset

Why it is important:  One must admit that his approach and conclusions proved many times right.

Doug Stephens is a consultant specialized in retail. He founded Retail Prophet, after having spent 20 years in the industry, including the leadership of NY store chain Janovic. He is a keynote speaker, TV and radio contributor on the future of commerce in addition to being a writer. His publications include : The retail revival (2013), Reengineering retail (2017 – second reading at IADS), Resurrecting retail (2021).

Introduction: is retail dead?

Doug Stephens starts by dissociating 2 types of retail activities: Commodity goods and “Experience economy”. These terms are widespread and commonly used. However, for him, they are missing a point, which is why he provocatively quotes Marc Andreesen, founder of Netscape, who famously said “software eats retail”.

Amazon represents half of Walmart’s turnover, and was founded in 1999 (Walmart in 1964). For Stephens, it is software which radically changed retail, thanks to the rise of e-commerce and new usages (e-commerce represented a market of 1,5 trillion dollars in 2015), leading to the appearance of giants such as Amazon and Alibaba. They clearly came to eat retailers’ cake, and, to make things worse, these new players do not limit themselves to retail: they encompass every domain of activity related to customers’ interactions, to the extent of Amazon becoming a competitor even for UPS and Fedex.

What can retailers do? They have traditionally relied on advertising to promote their activities. However, the multiplication of devices on which customers can stay informed and keep connected, media became abundant, and attention scarce. In other words: gone are the days when it was worth paying or buying advertising spaces to show products. Doug Stephens mentions the example of Woolworth which invested significant budgets to reach a total of 700,000 Facebook likes over a period when it welcomed at the same time a total of 21 million customers in its stores, ridiculing the social media strategy.

Media is the store

For Doug Stephens, the answer to this now-impossible advertising equation is to change the paradigm and consider that the media is the store: there should no longer be any friction or divide between the message about the product, and the ability of customer to buy the said product. Doug Stephens illustrates his thoughts by mentioning several examples: Amazon’s dash button, and the possibility to buy / replenish via a device, Virtual stores, VR, 3D printing and chatbots. All these initiatives contribute to enable customers to shop, without having to come to a physical store. So, coming back to the introduction, does this mean that retail as we know it is dead?

Store is media

In a very sensationalist way, Doug Stephens reminds us that shopping is physiological activity that answers to human needs. This is the reason why even DNVBs and e-commerce companies (Amazon, Warby Parker, Everlane) end up opening physical stores: to answer this need.

However, despite being a necessary activity, retail as a whole became dull, with boring experiences provided by retailers obsessed by sales by square feet metrics, instead of thinking about what the customer really wants. As a consequence, retailers end up playing in the same field than Amazon, i.e. they sell products, and do not see that the purpose of a store is not any more to do so. Doug Stephens illustrates this transition from a product-centric to a customer-centric approach with a few examples: emphasizing co-creation of products by retrieving customers’ data and opinion, or immersive experiences.

As a whole, Stephens advocates to replace the sales per square feet KPI by the Net Promoter Score, more adapted for him to the new world. After all, the store should be seen as a part of the brand content (this is what Apple does, leading it to welcome 1 million shoppers a day in 2015).

Stephens does not resist to push (and to illustrate) strong catchphrases: “no more omnichannels but more moments”, “less inventory, more inventiveness”. All in all, what he sees is the death of the wholesale model, which is not adapted anymore to the new customers’ journeys and the need to rethink the industry’s business model (he mentions as an example Story in NY, which since then was closed).

Stephens also makes a whole list of technologies which are here to support the fact that retail is becoming “show business”: facial recognition, beacon tech, emotional tracking, technological fitting rooms, interactive signage, superior membership and subscription programs, mobile engagement, RFID, clienteling, video analytics.

This business model shift leads to 2 consequences:

• A change of role for sales assistants, becoming brand specialists if they want to escape automation of their previous positions,
• A change of paradigm, from a world where the retailer was the customer of the brand, to a world where the brand is the client of the retailer.

Going further

Doug Stephens makes a comparison between the pre-digital and post-digital world, to see what changed:

• From a world where alternative product options could be difficult to be found, to a world where customers have an infinite choice,
• From a world where mediocre retailers could survive, to a world where new competitors are not even coming from the industry, and are disrupting the chain value,
• From a world where you are identified by what you sell, to a world where you are identified by how you sell.

In order to survive, Doug Stephens advises retailers to fuel innovation at any costs, challenge existing scripts and look to achieve a x10 rather than a +10%. How to make that possible:

• By thinking in network, not in empire, to stay agile, flexible (über or markeplaces models)
• By benchmarking laterally rather than comparing to the market
• By engineering everything and controlling the customer’s experience.

Post Covid-19, the book is still very much relevant, and if one could regret the sensationalist tone of voice and few examples that do not exist anymore today, there are still many points or illustrations that are valid to keep in mind for the fast-approaching post Covid world.

Buy it on Amazon here