P2PIQ: From when you first began writing “Resurrecting Retail,” what aspect of retail business do you think has changed the most? And what do you think will be the biggest shift we’ll see in retail for 2022?
This hasn’t come as good news for companies like Amazon, Alibaba and other large marketplaces, which prior to the pandemic seemed to possess an insurmountable advantage. Therefore, we’re now going to see these companies enter a new phase of their own development, which will involve a range of new categories, services and technologies aimed at reclaiming competitive distance. Already Amazon is making big bets in verticals like education, transportation, fintech [financial technology] and healthcare. I believe they’re just at the cusp of a completely new competitive evolution.
P2PIQ: What’s one of the most surprising takeaways you unearthed while working on “Resurrecting Retail”?
Stephens: That the vast majority of businesses have very little sense of clarity when it comes to their purpose to consumers. What’s worse is that most don’t even realize it until they’re challenged to articulate precisely what their unique value is. And this is crucial, because without a crystal-clear sense of what the brand represents or the value it provides, myriad other tactical decisions become nearly impossible to make in an effective way. How can you determine what sort of customer experience to build if you’re not even sure what specific value your brand aims to deliver? How can you make cogent technology investments if you’re not certain what kind of experience you’re attempting to design? How can you even hire the right people if you’re not clear on the experience you want them to animate? Without purpose, nothing else matters.
Brands that do possess a clear and unified internal sense of brand purpose and value to their customers consistently outperform their competition, are more efficient with their capital, and have infinitely more loyal customers and employees. When we work with brands to develop strategy, purpose is always the starting point. In my view, the purpose is the new positioning in the post-pandemic era.
P2PIQ: Since the onset of the pandemic, how would you describe the essence of why we shop has evolved? What does this mean for commerce marketers?
Stephens: Given that we are still in the midst of this crisis, it remains difficult to triangulate consumer behavior with certainty. To varying degrees, consumers are still grappling with some very powerful and primal emotions that are underpinning their behaviors. Fear, disconnection, boredom and thoughts around mortality and legacy are all weighing on how consumers are shopping and what they’re shopping for. For example, at the outset of the crisis we saw panic buying as consumers worked to gain a sense of security and safety. We’ve seen remarkable spending on products that offer distraction from the pandemic — musical instruments, gardening supplies, digital entertainment, etc. We’ve seen enhanced luxury spending as consumers seek to regain a sense of self-esteem and value. And, of course, we’ve seen major movement in the real estate market, as people sort out the kind of lives they want to lead and where they want to lead them from.
The economic picture is similarly cloudy at the moment. Stimulus spending, wage subsidies and restraints on things like travel and hospitality, as well as significant inflationary pressure, are making it difficult to get a clear sense of the consumer’s financial wellbeing.
When we truly begin emerging from the pandemic, we’ll quickly get a much clearer sense of lasting behavioral changes left by the pandemic.
P2PIQ: What’s your No. 1 piece of advice to brands as they try to keep pace with the evolving consumer landscape and engage with shoppers across the path to purchase?
Stephens: There are only two kinds of businesses today: those that become the cognitive default in their category and those that become the emotional default. Amazon, for example, is clearly a cognitive default. That’s why 70% to 80% of us begin product searches there. We don’t love Amazon — they’re just remarkably easy and convenient to shop and that’s precisely the sort of consumption machine that Amazon set out to build. Most businesses can’t compete with that — nor should they aspire to.
The other category of businesses are emotional defaults. Brands such as Nike, Dyson and Patagonia are great examples of businesses that dominate by creating a very different kind of value. Patagonia, for example, is a cultural flag bearer for the environment or what I call an “Activist” brand. Nike trades on deep human and social themes, making them a “Storyteller.” Dyson treats its products like finely crafted art, making them an “Engineer” brand. Each has created an emotionally connected place in their customers’ hearts. In “Resurrecting Retail,” I offer 10 different archetypes like these — each offering a different purpose and value to consumers.
The moral of the story is, if you’re not either the cognitive default or the emotional default in your category, your brand is not going to survive the post-pandemic future of retail. It’s that simple.
P2PIQ: What would you highlight as a key mistake brands and retailers might be making as they adjust their strategies for the continued shifts in shopper behavior?
Stephens: Perhaps the biggest mistake I’m seeing play out right now is sort of an all-in approach to spending on digital marketing and e-commerce. It’s a natural response, given the massive flow of online spending right now, but it would be a huge mistake to forget about the value of physical retail — not so much as a means of product distribution, but rather as a powerful means of customer acquisition. The cost of digital advertising has seen a 10x increase in cost since 2016, and yet studies confirm that the majority of spending on digital marketing produces ads that go largely unnoticed by consumers. Physical stores, however, offer a true means of measuring consumer impressions, engaging shoppers in a proper brand experience and galvanizing a meaningful relationship with them. In other words, physical stores are becoming a more powerful and cost-effective media channel. The next step is to begin effectively measuring it as a media channel in monetary terms, which some of our clients are already working at doing.
P2PIQ: Looking to the future now, what short-term trends in retail do you see taking hold long-term?
Stephens: Generally speaking, I believe what we are seeing is retail (both offline and online) moving from being largely centralized and search-driven to becoming more dispersed and entertainment-driven. Whether it’s livestreaming, social commerce or virtual stores, we’re going to find that retail becomes more ambient and woven into more day-to-day experiences. Even online shopping will become less about going to a website and entering a search term and more about shopping from within content and entertainment experiences. This is the new frontier of retail.
