We live in a fast-forward era. The increasing pace of change is a huge challenge for business in general, and the retail sector in particular. I single out the retail sector in particular because I have noticed it to be extremely conservative. This is why most retailers have a hard time changing their ways, let alone keeping up with the current velocity of change.
This conservatism is deeply rooted in the industry. Many retail companies are generations old, founded and elevated to greatness by creative pioneers. They are family businesses, in which the second and third generations were instructed to preserve and pass it on to the next generation. As long as all stays the same this isn’t a problem, but in a time in which change is so substantial, conservatism is destructive. In addition, most retailers sell products that are marketed by the manufacturer that makes them. So, historically speaking, a retailer’s marketing was provided by third parties, and up to today it remains something that does not come naturally to them.
The reaction you see, is that many retailers tend to revert to a marketing tool that they can control: price. But price alone is ultimately a dead end. When you look at companies that dare to be different and rewrite the rules–the challenger brands–it is never really about price. The truly brilliant challengers create a new category in which a lower price is often the result of a fundamentally different process. They have a drive to change the rules of the game within the category and often operate from a clear ‘why’ perspective, making them many times more successful.
Creativity
My conviction is that retailers who have creativity anchored within their organization are more successful than retailers who keep it outside the organization. This is the main explanation for the success of many newcomers like Ace & Tate, but it also applies to the established formulas. Take the Dutch companies Blokker and HEMA, for example. When comparing these two companies, it’s interesting to see what they do differently. The Sarah Jessica Parker-campaign shows that Blokker is looking for creativity in their advertising, but it’s disconnected from the brand’s own identity. This means a lack of relevance and significance for Blokker, which is why the campaign misses the target consumer completely.
HEMA was in the same boat; Consumers had lost the HEMA feeling a little bit. Last summer we suggested that they sell T-shirts in the Amsterdam stores during Europride, one with ‘sausage – heart – sausage’ and one with ‘tompouce – heart – tompouce’. In any organization with a lack of creativity at management level, such an idea would have been killed. Working with a company like HEMA, in which creativity is anchored in the top, makes work more authentic, relevant and impactful.
The sentiment around HEMA has flipped since that summer: HEMA is back. In my opinion, that has everything to do with the fact that HEMA’s impact is relevant, and it is not just a matter of standing out for the sake of standing out. My conviction is that retailers need to take creativity in-house, the higher up within the organization, the better.
Innovation
As a company in this ever-changing world, it’s not just about distinguishing yourself. You also have to stay on top of change–otherwise you’re out.
Everyone has to continuously reinvent themselves. Where creativity has everything to do with being different, innovation is about actually changing of the system: this is where many retailers go wrong. If you try to make changes within an existing system, the existing system will counteract the process and prevent change from happening–consciously or unconsciously. As a result, the best innovative ideas are often ignored and eventually forgotten about.
Retailers that have in-house creatives are more successful than retailers that keep creativity outside the organization, but when it comes to innovation, this is just the opposite. Innovative ideas that are developed outside the organization until they are actually implementable, are much more likely to succeed.
I recently came across a prediction about the Fortune 500 list of 2030. The prediction is that 75% of the companies on that list, will be ones we haven’t heard of today. Is that threatening to the retail sector? Or is it a huge opportunity? I think the latter.