You probably still think retail is a logistics business, don’t you?

This article was originally published January 27th, 2020

There’s a clue in this photo as to why Toys R Us failed in the modern era. They didn’t fail because they were boring to shop, that was a symptom not a cause. Do you see the clue?

By all accounts, Charles P. Lazarus was a good man, the one video interview extant shows a decent, honest, thoughtful leader. The toy truck is the reveal, it’s in many photographs of Lazarus in his offices; Toys R Us’s founder was a logistics man. Toys R Us stores were all about putting the maximum amount of stock in front of the maximum number of customers.

A fine ambition in traditional retail where customer’s options were limited to physical store or no store at all. We’re now in the era of friction versus reward, of convenience versus gain and all of it is engagement, there needs to be an engaging reason for customers to want to bother to visit your store.

Toys R Us was boring because it was a logistics business, not a customer business. That’s the significant challenge which is undermining modern retail confidence. NRF was a reminder that US retailers have always considered retailing to be 90% a logistics challenge and, of course, especially in a country so large, it is.

Retailing will be all about the numbers. With operating margins as thin as meanly sliced pastrami, we have to be focused on making sure that at least some meat is preserved in the rye sandwich. NEW YORK NRF METAPHOR BABEEE.

There appears to be a paradox in this retail certainty then; retail is a logistics problem but solving that logistics problem no longer ensures success. But if retail is instead a customer problem, does solving that, creating fun stores full of theatre and reward ensure success? No. And there’s the rub, there’s where the first transformation step usually fails; there is often an assumption that investing everything in fun, creating romper store experiences is the key for bricks and mortar, while online can mop up the convenience play with low-friction experiences.

That’s frustratingly and obviously not right. Engagement is the key no matter the channel. Understanding why customers might want to engage with your store is the most important job for modern retail leaders.

How to harness the human, that unique preserve of the bricks and mortar store is the task at hand, but how to boost the human without stuffing up the numbers. That’s the challenge, and it’s why retail needs a new generation of customer analytics — tools that can put a value on the human.

When Warby Parker and Apple flood their stores with associates it is not for a party, it is primarily to sell spectacles, computers and phones. Experience and theatre is a product of this, not a function. Those mass gatherings of associates do however facilitate the creation of engaging moments, it’s humans on humans, just as it always has been. With the right analytics, every retailer can uncover the optimum balance.

Consider this; in an era of streaming television, theatres shouldn’t exist, let alone cinemas but as we celebrate a hundred years of TV in this decade, live theatre is in rude good health. Why? Because it’s an exchange between human beings and that exchange has always had a value beyond artificial easy alternatives. In London’s West End, the current average for premium theatre seats is £117.52 per ticket. A whole year of HD Netflix is just ten quid less, yet the West End is thriving.

Understanding such human, customer, value choices is absolutely the modern bricks and mortar retailer’s biggest opportunity.