Data has changed the structure in which many companies, like Sears, and organizations operate in. Sears failed for many reasons, but key among them is their ability to communicate with their customers and understand their motivations. A few companies are collecting greater and more detailed data than ever before. This concentration can provide many benefits to consumers but it also presents challenges for competitors and potential disadvantages for consumers long-term.
Sears has not been the only retailer that has had difficulty competing in an increasingly digital world. Radioshack, Toy R US, J.C.Penney’s and many others have failed to keep up with the changing retail marketplace. Sears may or may not survive. In the long run, it is unlikely to be able to adapt to consumer wants. Customers expect more from companies and brands. Failing to understand one’s customer is inexcusable in today’s environment, but utilizing data in a meaningful way is not always clear for businesses.
Amazon can appeal to “in the moment consumption” and use its data to drive customer interest and purchases. A brick and mortar retailer, like Sears, has more difficulty in identifying the customer journey because of the in-store challenges. Not that technology cannot overcome these difficulties, but it does require integration. Customers expect more and increasingly want personalization. Some successful retailers have been able to blend online and offline experiences; understanding who their customers are and what they want.
Sears successfully navigated the changing retail atmosphere over much of its history. Sears was a retail innovator that threatened small town businesses through its mail order catalog, it’s migration to suburban malls and its expansion of services. It’s somewhat ironic that the year after Sears ended its mail order catalog, 1993, Amazon was founded. This example also illustrates the structural difficulty for businesses to adopt technological innovation.
Sears did not leverage their customer data to deliver on customer needs and wants. Assurant Solutions, with their customer service call centers, and the Gap, with their shared responsibility of creative direction, understood how to use data to better service their customers.
Part of Amazon’s success is not that it is just convenient, but that it delivers an exceptional experience that is personalized to the individual. Bonobos began as an online retailer, but pioneered a zero-inventory store approach with their Guide Shops. These are stores that focus on providing an experience, which is what customers are looking for, and blending the online and offline. Research has shown that customers that are able to interact with a brand online and offline are more likely to consider a wider range of products. These types of stores and interactions can lead to great customer satisfaction.
The advantage that Bonobos’s Guide Shops have over a traditional retailer like Sears, is that when a customer comes in they can learn about their offline behaviors and pair it with the data they have from online. Warby Parker, online glasses retailer, is another business that employs this showroom model effectively. Many businesses are increasingly seeing the value of showroom stores; Nordstrom, Amazon.
I think that we can see retailers moving to these smaller format stores where they can leverage data from online users to create experiences. Amazon can curate stores based on the people that live in a particular area. Bonobos can show a customer items they might like based on their purchase history and start an offline dialogue with that customer in their Guide Shops.
Predicting Consumer Tastes with Big Data at Gap, Harvard Business School, March 2018.
Mayer-Schönberger, V., & Ramge, T. (2018, Sep). A big choice for big tech: Share data or suffer the consequences. Foreign Affairs, 97, 48-54. Retrieved from https://search-proquest-com.libproxy.temple.edu/docview/2094369965?accountid=14270
Bell, D. R., Gallino, S., & Moreno, A. (2018). The store is dead – long live the store.MIT Sloan Management Review, 59(3), 59-66. Retrieved from https://search-proquest-com.libproxy.temple.edu/docview/2023991706?accountid=14270