Without Walls

“All the world’s a stage, And all the men and women merely players…” – Shakespeare

For mobile shoppers, the world is a showroom without walls and their devices merely players.

Advances in mobile computing and augmented reality are liquifying the shoreline between physical and virtual reality, casting new shadows of enlightenment in the cave of Plato — like information, transactions and brand communication.

There was a time, when the department store was the epicenter of all things sales. For instance, when the Transformers Constructicons (6 construction cars that transformed individually and merged into one massive robot) came out, kids had to dig deep in retail crates with other miscellaneous toys to get all the parts.  And if unlucky they bounced from store to store until all the parts were found and purchased.  Otherwise the painful alternative: kids would have to confront derision from friends for their transformer robot missing an arm, a leg or worse, a head.

Today, big-box retailers like Best Buy are showrooms for Amazon, and marketers are trapped under the Omni-channel wheel.  Customers browse aisles with their fingers walking on glass interfaces, not their feet.  Mobile is a concierge to numerous channels — websites, stores, kiosks, call centers, social media, game consoles, and TV. According to a 2014 study by Deloitte Digital, digital interactions will influence 50 cents of every dollar spent in retail stores.  Merchants must adopt a one-click, one stop shopping mindset that seamlessly integrates all these disparate channels.

However, one line continues to calcify against the trends of mobile shopping and Omni-channel surfing: it is the line of channel conflict, where new revenue streams threaten to cannibalize existing revenue sources at the same business.  While digital is a more cost effective way to manage supply chain, directly engage consumers, fatten margin and generate instant cash, it can undermine other lines of business.

Digital is the one horizontal that enables cost savings across all channels, but the economics of retail does not always agree with it.  Merchandisers are measured by how many products can be sold per hour, same store sales, and four wall contribution. High fixed costs of retail have to be spread over large customer traffic.  If Digital takes traffic from retail stores, the return on capital invested is low.  In many ways digital cannot take away from retail otherwise money is lost.  Without a positive return on capital retailers are wasting money.  Thus retailers have to lower fixed expenses to their lowest level while managing the growth of variable expenses to increase profits.

The truth is that even although Digital can cannibalize retail sales, once a customer is in your store they are yours to lose.  No excuses.  And the line of channel conflict between physical and digital, if leveraged properly can cause positive tension.  Yes smartphones have torn the four walls of retail stores down, providing price comparison and shopping assistance to fickle customers.  But a company’s sites and apps should work in harmony with the human touch of a sales clerk to provide the perfect sensory, omni-channel experience. With the proliferation of device to device connections over the next 5 years, more channels will open up for conversations with brands, not less.  If your brand is strong and stands for something, customers will flock to it.  No business worth its salt will want to put up walls to block customers from doing that.