Retail is like Uber vs the taxi business - it does not need a rethink or a revolution; it just needs to be good
Before Uber, regulation had made the taxi business into a gross and weird monopoly. They gave the consumer a terrible product and had no motivation to make it better, because nobody could put them out of business. That monopoly and terrible product still exists where Uber is banned.
So what is it that made Uber successful? It's easy to think that Uber was revolutionary, but I find that hard to justify. The cars - in many cases with the same drivers - take people from A to B. The infrastructure is the same. The product is fundamentally the same - just better.
If you ask an industry leader why retail is failing, be prepared instead for a long list of excuses. Expensive real estate. Too little choice. Too much choice. No loyalty. No footfall. The "discounters". Millennials. Amazon. "The Internet".
No, retail is failing because it's terrible. There has been little (if any) regulation to protect retail, and that's been bad news, because it has had every incentive and necessity to improve, yet still has not.
Regulation is a fun aside for me because many free market fans believe in absolutely no regulation. They think that no regulation is essential to the free market (see true "survival of the fittest"). But no regulation is what creates evil monopolies (see Microsoft antitrust). Regulated monopolies are much better because they have got there by being simply and purely the best (see Google search).
The good news is that retail thought leadership has acknowledged that you can't fix a broken bone with a plaster. Those Instagram walls are a weak incentive and also sort of embarrassing. "Click and collect" is a feature, not a saviour. There is some recognition they have to do something bigger.
The less good news is that industry leaders still contrast retail and digital, and see growth only in digital. They are therefore aggressively closing their stores. Some stores are unsustainable, but again, not usually because they are fundamentally unsustainable, but because they are terrible.
If they close all of their retail stores, they will be a weak, digital commodity, squeezed by Amazon and squashed by Google, with nothing to make them better or different than any other digital commodity. As a retail brand, they are not an aggregator; they are inherently a slave to the aggregators. Closing stores is a mistake. I want to write a bit more here because it's so important. There is growth in digital. Property is expensive. Closing stores really does seem like a no brainer. But stores give them one amazing asset (in the literal sense too) - uniqueness and an escape from Amazon. They are their competitive advantage, and they must stop closing them.
How do they "fix" retail then, if they can't close stores and might still be a digital commodity? The title of this blog post tells us the what - "make it good" - but not the how.
But there's a clue to the how in the title too. I have said that retail does not need a rethink or a revolution. What it does need is however a redefinition, away from something purely physical (creating the phrase "retail vs digital") and instead towards an encompassing definition with regards to consumer goals. This is an example of Jobs to be Done and both of us should read more about that, because I don't pretend to have all the answers.
In 2020, let's redefine retail to mean the goal of happy customers buying more things. Websites and physical space will just be implementation details. "Retail" will describe the why and the what, instead of the how and the where.
With this new definition, making retail good becomes easier because we can start with the consumer goal and work backwards, instead of tweaking an implementation detail and seeing what happens.
The homework exercise for the reader is to ask: what does a good "buying a t-shirt" experience look like without mentioning implementation details? The words you'll find in my answer are "personalisation", "service", "convenience" and "identity". They can be implemented digitally, physically, both or in some other way.
Retail will be great in 2020 if we think about it as a consumer goal, rather than defined by the possibilities of websites and physical space. In the free market we make money by being differentiated and defensible, and retail can beat the aggregators by being great and unique.