Retail restructuring: why retail does not need sellers

As global trends show, the development of digital technologies affects not only the e-commerce industry, which is well known to the team of our company. The sphere of classical retail is also inevitably transformed, where the work of salespeople is gradually turning into a relic of the past. Below we publish a translation of the material, illustrating the gradual evolution of retail trade on the example of the US market.

This week I was planning to write a completely different article. But then I stumbled upon one of the old stories of the Newsweek publication, published on February 26, 1995. It was about the dullness and hopelessness of the future of the Internet .

The author of the article - an astronomer, professor, writer and hacker catcher Clifford Stoll - issued a whole tirade about his disregard for technology, which, he said, never had a future - the Internet.

That is, this person was truly convinced that the Internet is one big dead end.

“Commerce and business will replace the mailing list to the network? What nonsense, he wrote. - And they still promise us the opportunity to instantly make purchases: I showed the goods and clicked. Shops will lose their relevance. Yes, even if we had any reliable way to send money via the Internet, which, by the way, no, the network would still not be able to replace the mandatory element of capitalism - the sales staff. ”

Jeff Bezos, who launched Amazon six months after the release of this article, probably burst out laughing while he was reading.

“Has all of our computer experts lost their sense of common sense? - continued Stoll. “No online database will replace a daily newspaper, just as a CD-ROM cannot replace a competent teacher, and a computer network will seriously affect how the government works.”

And about the latter, he, apparently, turned out to be right.

By this time, Stoll had already made a reputation in the online world, having caught Marcus Hess - the guy who successfully hacked several military and industrial computers in the 80s and sold the secret intelligence service of the KGB thus obtained for a fabulous sum of 54 thousand dollars. Therefore, it cannot be said that Stoll “didn’t fumble” in the technologies of his time or was an inveterate Luddite. On the contrary, he was one of those people whose activities were in close contact with the early version of the Internet at a time when working with him was still hard work.

Later, however, Stoll received notoriety for sharp criticism of innovation, which made possible the onset of the information age and transformed almost all aspects of human life throughout the world.

No people, just bits and bytes.

Stoll actively advocated that the Internet has no future, because it lacked an element of human interaction. What is this world, where instead of meeting with our friends over a cup of coffee, we will communicate with them via the Internet, he asked.

What he clearly overlooked is one of the fundamental reasons why the commercial Internet has become one of the most significant innovations in people's lives.

The inability to directly interact with people on the Internet did not prevent the merchants from engaging in commercial activities, and consumers were served by them.

In fact, access to the Internet has expanded their capabilities and created a more favorable environment for the exchange of values ​​between people and companies since it led to the elimination of dependence on human interaction.

The Internet has also changed our attitude towards how this interaction should be, and how we can make it more valuable if it nevertheless carries the good old form of personal communication.

Let's look at the situation with retailers - one of the fundamental elements of capitalism according to Stoll.

Previously, in the so-called good old days of retail, sellers were the only source of information that consumers could turn to before they made a purchase. Of course, there was advertising in newspapers and magazines, but before John Selfridge revolutionized the planning of department stores, putting the goods on public display, consumers had to ask the clerk behind the counter to bring the right thing. Sellers showed these items, told about their features and functions and urged people to buy them.

This position, the essence of which was to persuade people to buy, remained the main job of sales assistants throughout the 90s. I remember how I combined work in one of the largest department stores with school. Then my training was not in accepting money or working with a cash register, but in studying 20 different ways of tying a scarf so that I could sell a whole bunch of them. This I took up, and Baltimore as a result had never seen so many fashionable women dressed in this simple accessory;)

The 2000s were near, and the accents began to shift a little.

In the first place was the building of a long-term and humane relationship. There are tools and tactics designed to help bring consumers back to stores for repeat purchases. Loyalty programs began to appear everywhere. Sending emails, postcards via slow mail and phone calls from motivated sellers should have reminded consumers to come back and buy. A variation on this topic — daily sales and last minute sales — gave them the opportunity to try a product or service that was not on the visitor’s shopping list, but offered a good discount, and thus encouraged him to spontaneously visit the store and shop there. And all this was done in the hope of turning more visitors into regular buyers.

However, given that online sales then occupied only a microscopic part of total retail sales, bringing customers to the store was the main element of the business. Further, retail stores, with the help of sales assistants, sought to establish, retain and develop the relationship between the store and the consumer.

Rewind today

In the digital, mobile and online world, consumers have access to absolutely all the necessary information about what they want to buy.

The idea of ​​going to the store to find out about a particular product, having communicated live with the sales assistant, followed by a visit to another store to compare prices was a thing of the past. Vendors today have been replaced with product reviews, recommendations based on purchase history and “editors” who supervise sections and catalogs in order to orient visitors to online storefronts based on trends and what they want to sell. And all this happens even before the consumer is in the store, if, of course, he will generally need to go there.

Consumers feel confident in making this or that purchase, as they have the opportunity to rely on their own research, and not on eloquent presentations of sales assistants or a limited assortment of a single store.

For some purchases, such as cars, the ability to get information online before buying seriously changed consumer consumer experience, saving clients from the tricks of sellers (“Let's see what my manager will say to that ...”) and replacing them with a transparent price-performance ratio which makes communication between the consumer and the dealer more direct and honest.

Therefore, when such a much more informed buyer enters the store today, his idea of ​​“human interaction” is very different from what it was before, and the experience of choosing and buying goods online significantly increases the level of service quality they expect.

Informed buyer today wants to get an effective deal. That is, for example, to come for a specific coffee maker model, because the store’s website says that it sells the goods of this brand at its recommended price, and ask them to immediately pack it. The focus has shifted from the sales consultant working in the sale mode to the operating efficiency mode, so that the consumer leaves the store with the very same coffee maker for which he went there.

Service, not sales - new point of contact in the field of retail sales

Now this is almost the only way for retailers to maintain relevance and competitiveness altogether.

The composition of labor in retail is changing. The decrease in attendance at physical stores leads to the fact that they refuse staff to the right and left. Shops now began to rely more on part-time or even piece-work employees to “close” a particular vacancy. The fall in sales leads to the fact that even training of employees to sales becomes unprofitable, since most of them will not linger in their position long enough to win the salesman-consultant award of the year or develop more or less permanent relationships with their customers.

However, being invested in the hands of anyone, including consumers, tools and technologies, can make the shopping process efficient, while at the same time reducing risks and even transforming the traditional retail sales model. Promotion of retail products is no longer dependent on the talent and genius of sales assistants. Instead, retailers can invest in tools and technologies that provide real-time information about products, offers, and even people who have entered through the main entrance, and all visitors and employees in the store can use this data.

In short, this is a service that supports sales and allows you to get excellent customer experience and motivates consumers to buy.

Providing these tools and technologies to consumers only accelerates changes occurring in retail.

Starbucks example

Consumers no longer feel a particular desire to wait in line to meet their eyes with a familiar barista and get soy latte with an additional “shot” in his performance. Instead, they would rather open a digital application and place an order in advance. Their mutual relations are no longer built according to the “institution + barista” scheme, but according to the “institution + table of orders” scheme. At the same time, the application plays the role of an effective digital intermediary, providing a more effective satisfaction of the visitor's needs. Most importantly, by “human interaction” is meant the work of a person whom the buyer may not even see, but at the same time ensuring the correctness and timeliness of the order.

Quality customer service entails an increase in sales.

Macy's Example

Last summer, Macy's and IBM, a large US network of department stores, entered into a partnership agreement to provide consumers with an electronic intermediary in the person of IBM IBM Watson to help them search for and select products within stores. The task of Watson, who is currently working in pilot mode, is to change the role of sales assistants from sales to customer service, who are ready to buy something. If Watson passes the test, he will be able to make the sales and service process at Macy's more democratic: each vendor with an IBM-based application can provide expert assistance to the consumer in the store.

Thus, the company hopes that quality customer service leads to an increase in sales.

More examples: J. Crew and Neiman Marcus

Both store chains provide sales staff with digital tools that increase the likelihood that a visitor will exit the store as a buyer. In the case of J. Crew, this tool is available on a generic iPad, which the vendor can use to place an order for a missing but available product online. In the case of Neiman Marcus, each sales assistant receives a branded iPhone for similar purposes. In both situations, payments and delivery are tied to an online account.

And again we have an example of how a high level of customer service entails an increase in sales.

Now back to Stoll. I think, in that rush of harsh criticism of the Internet 21 years ago, he also wanted to draw attention to the fact that interacting with live sales staff means having an intermediary who could be trusted and who would act in the best interests of the consumer. The arbitrariness of the Internet, Stoll believed, could not replace an intelligent seller who was able to provide information about a product that was ready for purchase to a consumer.

However, what he failed to foresee is the further development of the Internet, which has led to the network becoming a trusted consumer digital intermediary - independent, transparent and devoid of the desire for the sale of goods characteristic of sales assistants. The Internet has provided consumers with access to this type of human relationship, which they trust most of all - feedback from those who have already bought this or that product and are happy to share their experience of using it.

Born in the network, companies such as Amazon had to think through such mechanisms even before they opened their virtual doors. They had to win the trust of customers in a completely different way - based on the promise to consumers of the best price, and, over time, through the provision of free two-day delivery services. Instead of hiring sellers, they encouraged the publication of reviews and recommendations. An effective mix of low prices, free delivery, reviews and recommendations that strengthen the buyer's confidence in the right choice, has become the driving force behind their growth. Today, their experiments with physical stores serve primarily to expand the influence of online intermediaries — applications and ecosystems, such as Alex, delivering products selected by consumers through a technologically advanced online storefront,

Take, for example, last week's news that Amazon is building a grocery store on the outskirts of Seattle, whose main purpose will be to fulfill orders placed online. This is just another confirmation of the company's focus on online interaction. Buyers will be able to choose between the delivery of products to their car or the opportunity to pick them up at the store at pre-arranged time intervals.

Retailers today are faced with the realization that these changes are real. Nevertheless, they still oppose another manifestation of this reality, which lies in the fact that the once most valuable asset - sales staff - is probably no longer able to provide those competitive advantages that he could have boasted earlier, in a new world where solutions Purchases are accepted before the consumer’s foot enters the store.

So I'm glad I ran into Stoll's article. He, of course, made wrong conclusions, and later still admitted that he was wrong, but it turned out to be very useful for me, because it inspired me to reflect on what the Internet did right and how it manages to transform modern commerce.

And of course, it allowed us to draw some conclusions about the lessons that the Internet prepares for all of us as we think through the next steps in the atmosphere of subtle, but very profound changes in consumer behavior.