Thoughts on entrepreneurship, startups, and tech.


Retail Tech Doesn't Understand Retail

Walk into any small retail store, and while pretending to be interested in something, observe the ballet of other customers and the activities of the shopkeeper and employees. What generally comes to my mind when describing this situation to someone is the memory I have of my son's preschool teacher. She was admirably calm at juggling fifteen or so permanent urgencies while appearing to be doing only one thing at a time. This illusion of composure made most parents believe that she was not taking enough care of "their" child, was totally detached from imminent dangers, and was realistically useless as a teacher. Small retail owners are no different, and although we all have images of shop employees not looking up from their Instagram accounts when we walk in, today's economy is no playground and the majority of stores today have their arms full of urgencies and daily obligations. So how is it that RetailTech startups/companies don't grasp this reality?

Success isn't always about greatness. It's about consistency.

I recently discovered a new boutique wine store near where I live. Run by two brothers, they designed it from the ground up to stand out from the traditional stores based on a novel approach and using a very minimalist layout, noble materials and some of the latest tech. They had also put a lot of effort into design, marketing collateral and branding. When we got talking about customer insight, the older brother explained to me that they "knew they had to make the leap to digital" because that was the way forward, and they invested heavily in it, and not only with money. While I was there, three other people came in, and after the two brothers briefly talked with all of them, two left without purchasing and the third, a proud connaisseur, bought several high priced bottles and left with a very nicely put together packaging. I then asked them a few questions. How many people came in each day? Who was the man who purchased the case of pricey bottles? Why the other two left without purchasing? I was met with embarrassed grins and feeling slightly guilty; the elder brother invited me over to their shiny new POS system and their connected iPad. What he nervously showed me was a nightmare, even for someone like me whose livelihood is in tech. Their fancy platform did more than just handle checkout (albeit very sleekly with lot's of color and elaborate effects), it managed the stock, catalog and even price tags but whoever designed it (UI/UX) never worked in a small shop. It was a mess. Shop owners have neither the time nor the patience to input heaps of data, on multiple screens made even more forbidding by a non-linear process. But something startled me even more. There was nothing about customer marketing or insight. They couldn't answer my questions nor did the technology offer any viable method for capturing customer information to elucidate them either. But customers are the primary goal. This is how small shops prevail, by developing a loyal local following and this hasn't changed for thousands of years. Once again, RetailTech startups/companies are disrupting incumbent POS solutions (with technology stoked cash registers, sensors, and touchpads, etc) but are doing so with all the wrong ingredients in the areas they're transgressing. Freshly minted university students (with little/no background in retail except the odd summer job stint), pumped excited by piles of VC money (that push them to introduce increasingly complex and scalable technology - see below), which only drives them farther from the reality of independent retailers (short term and durable profitability).

Empathy begins with understanding life from another person's perspective.

There's ample talk these day's in RetailTech about everything from AR, and Blockchain to Ai and Cryptocurrencies which is understandable when you're spiked with investment funds and craving for growth, but these subjects are overwhelming (to say the least) for every entrepreneur who is not part of a major chain (i.e., independents represent >30% of total retail and have for more than two decades). The truth is, fancy revenue graphs, payment method analysis and tops & flops are nice to have, but understanding the habits and needs of customers are still the pillars of getting more people through their doors.

But there are a few services that help answer these questions without overdoing it.

Dôr is one of my favorites. It's stupidly simple yet exceptionally powerful (why every store doesn't have one beats me), and I am amazed at how many retailers I talk to that have no clue about their foot traffic and opportunity conversions. There is ton's of talk about how a single Mailchimp list multiplies small business capabilities, Paul Jarvis is the reference in this area, and not only I believe he's right on this point, but I'm a big fan. Getting customer data on that list is made easy by a wide variety of readily accessible apps and services. One that captures my heart is Typeform because there's so much you can do with it and importantly, is behaves fabulously on every device. Going a step further, creating a rewards program has never been easier than today, Smile is an enjoyable way to increase customer retention, build loyalty, and reduce your dependence on ads & promotions. Want to know if your customers are happy, Delighted is simply delightful, it's straight to the point features make it inevitable. And small business needs a web presence, and yet an estimated 47% still do not have a website. My hands-down preference is Squarespace, a one-stop shop to get online, robust features and the most beautiful designs available all wrapped into an extremely easy to manage package. Add to this Google My Business so you can stand out and bring customers in and even the most non-geek can quickly harness the power of the internet. The beauty of these tools is that they're each bite-sized components (i.e., you can get your arms around them) and can use each one as a standalone and even bundle a few together. Later on, whether or not you need to tie them into a fancy POS system or opt for an integrated solution like Tulip or Signpost, is entirely up to you.

But the basics still prevail. Knowing your customers and creating unique experiences for each of them. My wine store needs to capture, progressively, small bits of information to map out their clientele. They need to tell their story and see if this resonates with them. And they need their first satisfied customers to act as ambassadors. That's a lot to ask of a brand-new store owner or even someone who's been in the business for a while. At the same time, if I were a RetailTech company, I'd see that as a long term relationship, just as the shop owner sees his following. This is why RetailTech doesn't understand retail. They want to sell big complex suites of technology that lock in stores for lengthy contracts of recurring revenue and as a result, entirely miss the point. Local retail answers small needs spread over time and the more RetailTech companies help them nurture these relationships, step-by-step, the more they can gain in return.