High Street 2.0 - Understanding the Next Generation Retail High Street  

Pointing Fingers Will Damage Your Credibility

I was recently involved in a customer service experience that reminded me just how badly a company can damage its brand by trying to pass the blame on to others. Here's the example...

On Monday I was offered a phone upgrade from O2 and accepted it. The operator I spoke to confirmed the contract agreement and the delivery dates and addresses. She told me exactly when and where the phone would arrive: Two days later to my home address. I consequently ensured I'd be working from home to receive the item.

By afternoon on Wednesday nothing had arrived, so I called the telecoms firm to check up on it because the tracking system on their website showed the delivery as "complete". After explaining that "complete" simply meant that the phone was now in DHL's hands - no really! - the guy then followed it up and came back to tell me that the phone had in fact been delivered the day before to another address altogether and no one was there to collect it. The operator I spoke to had for some reason written the wrong address on the form to DHL.

Blame Shift #1 - Me
The guy then tried to suggest that I must have given them the wrong address, and it was therefore not the fault of his delivery department that the phone hadn't turned up. No matter that few people are quite so stupid as to give their home address wrong. After a few raises in tone of voice, we agreed that it was best to move and set-up the re-delivery.

Blame Shift #2 - DHL's process
Apparently once the courier found that no one was available at the address given, he returned the item to the depot for dispatch back to O2. The sensible thing would've been to call my phone number and check before turning back round. This is a telecoms company after all and they have my number. The return cycle meant that they would not be able to deliver the phone for at least 24hrs.

Blame Shift #3 - The Rules
Having established that I could no longer get the phone that day even though there was still most of the afternoon to go, the operator insisted that it could only be sent to the address on file i.e. my home address. This was regardless of the fact that I would not be there, as I was due to be in the office the next day. The fact that they had just sent the phone to an address not on file, didn't seem to hold merit. That was the rule, and the guy refused to budge on this point, so I had to get a manager.

Blame Shift #4 - The Operator
The manager immediately blamed the operator for being obstructive and agreed to deliver it to the office as per my request, but insisted that since they had to follow DHL's rules, there was nothing that could be done to get to me any quicker than 24hrs. This is regardless of the fact that DHL was their choice of courier, for some reason they believe that the customer will understand the need for the company's cost savings and should make allowances for how the delivery is done.

Anyway, the next afternoon there was still no phone so I called up again

Blame Shift #5 - The Manager
The lady I spoke to informed me that in fact the delay cycle for DHL was 2 days and not 24hrs, and the manager should never have agreed to having it delivered the next day. She then told me that since the item was with DHL I should call them myself. Note that at this point DHL is now being treated as a fully functioning third party, almost as though the customer was responsible for arranging them to make the delivery.

So I called DHL who told me they still had the wrong address on file and had received no further instructions from the O2. I duly went back to O2 and tried again.

Blame Shift #6 - The Automated System
The new person I spoke to investigated and blamed the system. It turns out that the reason the instruction never went through was that the manager who noted my new address made a mistake with the postcode and the system thus didn't recognise it. This failure did not of course trigger any workflow to phone me and correct the problem. Again, remember this is a telecoms company who should really be using the medium they're selling. They waited for me to figure out that there was another issue, and call them back. After fixing this particular error she regretted to inform me that the earliest I could now get my phone was midway through next week.

Blame Shift #7 - Easter
My phone can't be delivered because it's the Easter weekend, so DHL now won't get the updated instructions until Saturday and then won't deliver til at least Tuesday. This means that a next day delivery agreement will not be fulfilled for at least a week. There is no good reason for this. Considering that we live a 24/7 life, and couriers work 7 days a week, the obvious logic is penny pinching on O2's part.

The cheek of the whole thing is that O2 started charging me for the new contract the day I agreed the upgrade (Monday). A full week before I'm actually likely to get the phone. By this point I was so frustrated with the quality of service that I seriously considered cancelling the entire contract and switching companies, which meant that the customer service person had to bribe me by giving me the next month free just to keep my business. The worst bit though is that I had to ask for it. You would think an appeasement would be the first thing offered to an irate customer.

The upshot of all this is that O2 have had to pay additional delivery costs to DHL, have lost revenue from me, and now have a global reputation drop through my sharing of this story.

The added delivery costs, the financial loss, and the brand damage could all have been averted with a simple phone call to me when the delivery guy turned up to the wrong address. As it turns out the error put him just 20 doors down and could've walked up the street to deliver it to me. Even if the processes and mistakes were inevitable, the brand damage to O2 could easily have been avoided by taking responsibility for the trouble, and recognising that as a customer I have an agreement with O2 alone, and not the rest of their supply chain.

For any business there is absolutely no justification for messing your customers about, or expecting them to pay for poor process and management. If you mess up, don't point fingers. Suck it up and focus on rebuilding your customer's trust. You'll save money, keep your sale, and maybe your customer will even put in a good word for your brand.

Industry, Online, Consumer and Mobile Trends in Retail 2009

With the standard flurry of predictions at the start of every year, it's always hard to pick out the value from the vast swathes of text that fill up the multitude of published articles. To make it easier I've distilled out some pointers towards what I believe are the key trends you should be keeping an eye on for 2009.

General Retail Industry Trends

1. The credit crunch will continue to get worse
2. The e-channel is still growing fast
3. Experience is everything – Compelling cross-channel experiences are driving product sales and loyalty
4. Outsourcing is maturing
5. Customer-centricity is driving business transformation
6. Business innovation is being driven by creativity and design
7. Disruptive innovations are lowering barriers to entry
8. Buyer niches are changing (gender, age, generations 'Y' and ‘Z’)
9. Trial before purchase is becoming expected"
10. Social credentials are defining brands (eco, green, CSR & PSR)

Online and Ecommerce Trends

1. User participation e.g. reviews and ratings is taken for granted
2. RSS syndication and sharing capabilities have become the norm
3. Price comparison is a de-facto expectation
4. Businesses are increasing their spend on digital advertising
5. Businesses are leveraging social media and networking for strategic marketing
6. Revenue sharing advertising and affiliation models are becoming the norm
7. Virtual payments are taking off e.g. Paypal Secure Card, Google Checkout
8. Branded prepaid payment cards are becoming more common e.g. Payoneer
9. Local and Hyper-local social networks are gaining traction e.g. Ning
10. Virtual worlds are expanding
11. Internet TV and Video streaming are becoming mainstream
12. Make it yourself media has exploded – collaboration, pictures, blogs, music, video, games

Consumer Trends

1. Customers are becoming more demanding as web2.0 is giving them a voice
2. Customers are expecting convenience and collaboration
3. Group buying is taking off - Crowdstorm, Yub.com
4. Social Shopping is becoming popular - Kaboodle, Wists, ThisNext
5. Crowd-sourcing is becoming normal in both decision making and purchasing behaviour (starting with reviews)
6. Social Media online is exploding
7. Premium products and services still sell well
8. Green is becoming iconic and a brand differentiator
9. Personal Social Responsibility is beginning to supplement Corporate Social Responsibility
10. Peer to peer selling of second hand items is increasing

Mobile Trends

1. Mobile notifications are becoming standard
2. Mobile payments are becoming viable
3. Mobile marketing is still under-utilised
4. Mobile games are gaining popularity
5. Location and Bluetooth based mobile social networks are increasing
6. Downloadable and Developer applications are becoming popular
7. Open source platforms are being released

[Trends originally posted by me on my work blog]

Could The Retail Industry Save Itself Using Game Theory?

In my previous post on whether the Christmas Sales have destroyed hopes of a retail recovery, I discussed how retailers have exhibited classic non-cooperative behaviour. By focusing only on individual interest and survival, their collective actions have likely damaged their entire industry's market size. By encouraging people to spend their liquidity faster through low prices in over-competitive price wars, people now facing redundancies will run out of spending ability much quicker, and retailers give themselves no time to be able to adapt to reducing market sizes and changing consumer need.

Retailer actions thus suggest a basic lack of understanding of collective strategic options. Even just a basic group recognition of Game Theory might have helped. Game theory attempts to model behavior in strategic situations, where players interact and make decisions to maximise their returns based on each others choices - arguably leading to optimal behaviour for all. The classic example is the 'Prisoner's Dilemma' which involves two participants who can either benefit together or suffer together. However this is a zero sum game and rational behaviour in this model is self-interest, so consequently the optimal solution is never chosen.

In a normal situation the retail space would probably be modelled as a non-zero sum game. One firm's success does not necessarily mean losses for everyone else, because that success may increase the general size of the market to mean success for all players. However in the current economic climate, it looks more like there is a finite and decreasing amount of money that people have to spend, and therefore a limited resource available to all players, bringing the situation closer to a zero sum game.

For retailers, what Game Theory therefore suggests is that the players can either try and maximise their own gain, in which case some will come out well while others do badly, involving high risk for everyone; or they can all cooperate strategically to all do a little less well but significantly minimise each player's risk of severe failure.

What retailers should have done, is considered working together to keep prices sensible, and thus manage both the market and their ability to stay alive long enough to change with the environment. On balance, all companies who aren't over-leveraged, would benefit and be better off as a group.

Trying to gain maximum benefit for themselves however, probably means that many will end up with little or no benefit at all as their behaviour helps ensure the market collapses. Unfortunately we must accept that historical competitive and non-collaborative behaviour means that there's very little realistic chance of retailers co-operating like this even now, so we should probably start preparing for further insolvencies and more job losses.

Have the Christmas Sales Destroyed Hopes of a Retail Recovery?

It is finally January and the industry is slowly recovering from the Christmas frenzy. The smoke is clearing to leave retailers facing the start realities of 2009, and the January slowdown is giving businesses time to reflect on the follies of collective price-slashing hysteria.

Personally, I have a feeling that the unprecedented reductions in the 2008 Christmas sales are going to accelerate the bankruptcy of most retailers, rather than saving them. I believe this for two reasons.

1. Slashing prices might mean that stock continued to be shifted even under the heavy shadow of the credit crunch, but there were no margins to be made, and consequently most retailers suffered heavy losses. When the next quarterly rent comes round, many of these retailers are now going to have even fewer funds to cover their payments. With the banks still not lending, we should expect an explosion in businesses going into administration.


2. The crazy prices encouraged people to throw their money at all sorts of products they didn't need, and will thus have significantly reduced consumer liquidity. In early December, the credit crunch was only just beginning to effect people outside the financial industry. After a few years of boom time, with life carrying as usual for most people, the buying figures show a distinct lack of prudence on consumer behalf. As the above businesses go under, many more 'common' people are going to lose their jobs. When they do, any spending buffers they might have had will have disappeared with their Christmas extravaganzas. For the retailers that survive the next quarterly rents, this means that their sales are going to drop even worse than they could normally have expected. This in turn could see many of the early survivors go down too.

Long and short of it is that by indulging in short termist price wars, retailers have simply dug their own graves.

Is The Future Of Business Going To Be Telepathic Technology?

Let's kick off 2009 with a bit of exciting futurism! Here's an interesting talk on advances in cyborg technology and what it might mean for business.

Is the future of business going to be telepathic technology? Will people be able to pay for stuff simply by connecting electrodes? Are we going to need computer screens or will we shift to 3D or sensory electronic shopping? What will it mean for web or ecommerce design? Will it mean the end of the mobile phone if we can simply receive signals internally? Have a listen and see what Kevin Warwick thinks...

Facilitating Innovation Through Knowledge

A key element in the success of organisations is their ability to capture, manage and share knowledge, learning and best practice amongst the workforce. However knowledge is often confused with information, and thus organisations typically address the issue by implementing mechanisms for collating documented information and making it available for people to access. (See my earlier post on Developing Knowledge Sharing Communities for Business)

What this usually results in is some form of electronic library available through intranet or shared folder access, but little or no attempt to encourage discussion and evolution of that information for wider organisational use. People are left with the responsibility of connecting disparate bits of information into appliable knowledge. The amount of effort needed to do this is often prohibitive and the result is that people typically ignore the majority of information available to them and organisations are unable to leverage the pools of knowledge they hold.

Studies show that innovation arises at the confluence of knowledge from different fields, so in economic downturns like this, surfacing and sharing knowledge could be a crucial factor in survival.

In light of that, here's a quick look at the different avenues that people use to find and engage with information.