Customer Experience Is Misunderstood, Says Retail Futurist Doug Stephens

Customer Experience Is Misunderstood, Says Retail Futurist Doug Stephens

by Stephanie Overby

Posted on 07-27-2017

Doug Stephens wants to clear something up right away: Good futurists don’t actually predict the future. Rather, they try to “intimately understand what is happening now, the interconnectivity of those things, the degree to which there is a combinational effect among them, and how ultimately that manifests in society,” said Stephens, retail futurist and author of “Reengineering Retail: The Future of Selling in a Post-Digital World.”  

That approach can prove more valuable to corporate decision-making than traditional strategic planning, particularly at a time of rapid and profound change. But it requires more creativity—something in short supply in the C-suite, Stephens said. talked to Stephens about the challenges of future casting, the trends reshaping retail, and how brands can prepare for the probable future. Are corporate leaders good at future planning?

Stephens: Human beings have a tendency to get creative when we hit a point of inflection: It’s only the moment before the boat careens into an iceberg that we get creative with our navigation. There are profound examples of tremendously bright people who fail to see the writing on the wall. Blockbuster CEO John Antioco passed up the opportunity to buy Netflix because he said it was nothing but a niche player. Walgreen’s CEO Stefano Pessina recently said that Amazon won’t go near the pharmacy business because it’s too complicated. Why is it difficult to imagine seismic shifts in the way we do things?

Stephens: In order to project what could happen, you have to think in a nonlinear way, and human beings have a tendency to think in a linear way. Only very creative people think divergently. When you measure human creativity when we’re very young, 98% of us are capable of highly divergent thinking. By the time we’re 25, only 2% are capable of thinking in a nonlinear or divergent way.

Most C-level executives don’t get to where they are by challenging the status quo or disrupting. Typically you achieve success by playing well in the sandbox. The characteristics it takes to anticipate the things that could happen are the characteristics most organizations beat out of employees. Eventually you wind up with C-level leaders who find it difficult to imagine things beyond their boundaries. Your books have documented the massive demographic, economic, and technological shifts that have turned the retail industry on its head. How do you describe what has taken place?

Stephens: People think that what’s happening today manifested in the last decade. But really we’re witnessing the end of circumstances that began in the post-war era—a historical explosion of population, uncharted growth in the economy, and retail being developed at a pace never seen before. At one point, there was 46 square feet of retail space for every man, woman, and child in America.

We’re now seeing the recoil. Baby Boomers are well over 50 years old. They’re buying less stuff. Generation X is much smaller; there is no way they can spend at Baby Boomer levels. And Millennials or Generation Y have very different consumer sensibilities. At the same time, we’re seeing the impact of technology. Why buy something at a store when [you can] have it delivered on [your] doorstep in two days? Where are these trends likely to take the industry?

Stephens: The online shopping world is going to change substantially. What we have today is e-commerce 1.0; it’s not much more than digital catalog shopping.

There are technologies on the near horizon that could revolutionize retail, like the internet of things. Connected homes and cars and products and packaging will be smart and look after our consumption. When my cereal box starts ordering more cereal, that completely changes the game for grocery retailers, for brands, and for consumers.

Virtual, augmented, and mixed reality could impact what we define as an online store. Soon, you could walk into a virtual kitchen where Jamie Oliver is cooking and shop within that experience.

It’s becoming clear we don’t need stores for product distribution anymore. But we will need stores to learn about brands, try new things, and have fun. The physical store will become a form of experiential media whose purpose is to sell not products but the idea of a brand. What should brands do to compete in the new marketplace?

Stephens: The first step is to understand that value has polarized. Consumers are shopping at extremes of value, looking for propositions that are either tremendously accessible and affordable or those that are deep, memorable, and worth paying much more for.

Brands need to reimagine the customer experience that consumers have. Look at what Uber has done in transportation, Airbnb has done in hospitality, Warby Parker has done in eyewear. Each came into the market questioning the status quo. It’s time for incumbents to do that—to think like an outsider and break the model. They can’t afford to think incrementally anymore. They have to think exponentially. What brands are good at this?

Stephens: Sephora has done a tremendous job creating a very shoppable online platform. They celebrate their physical stores as hubs of activity, learning, and personalization. They created a sticky mobile app with fantastic functionality. They’re evolving.

Lowe’s is exploring technologies like machine learning and augmented reality to improve the customer experience and decrease customer friction.

LVMH [the parent company of Louis Vuitton] is creating a multibrand e-commerce site that will offer its own products alongside its other brands from outside the house. That’s a huge leap forward for a legacy brand. What do companies get wrong about the customer experience?

Stephens: Steve Jobs once said that people think design is about the way something looks, but it’s actually about the way it works. I think customer experience is similarly misunderstood. We’ve been talking about customer experience for a decade. Yet how many jaw-dropping customer experiences are we having in retail? Not many. We think of customer experience as an aesthetic thing, but it’s actually about the mechanics of the experience.

I’m a big fan of customer journey mapping. Before you build a new mobile app or buy a new PoS system, look for opportunities to create a better experience. The retail industry looked at people lining up at cash registers for 100 years and said, “We’re OK with that.” Then one day Jeff Bezos says he’s going to create a store [Amazon Go] where you walk in and walk out with your purchases—no cash registers, no waiting. You contend that creativity is the final competitive advantage. What does that mean for digital leaders?

Stephens: Creativity is where brands will live or die. We have a tendency to think innovation means coming up with ways to do what we do today better. It’s not. Innovation means coming up with entirely new ways of doing things. That requires extraordinary creativity. Companies like to say innovation is everyone’s job. But not everyone is good at it. We don’t say accounting is everyone’s job or legal is everyone’s job. You have to hire for creativity, measure it, nurture it, and reward it. If leaders want true creativity, they need to support it with courage. Is there a way to increase creativity?

Stephens: Absolutely. Creativity is a muscle. You can instigate a creative culture. You can identify people with a propensity for creativity and nurture it. You can allow people to work across functions and give people more stimuli. Companies will hold an offsite meeting for innovation and then put people in an antiseptic meeting room in a hotel. Leaders should give their people the opportunity to go to art galleries, see theater, hear music. They should allow people to create on their own time instead of turning it into some three-hour exercise. You can rehabilitate some of the damage society does to our natural creative resources. Can digital leaders adopt some of the approaches used by futurists?

Stephens: It may sound self-serving, but it is valuable to work with credible futurists in the same way that it’s helpful when you have a personal problem to work with a credible therapist. CMOs spend a tremendous amount of time looking at what’s going on now that needs their attention or resources. But instead of “What now?” a futurist can ask “What if?” or “Why not?” A futurist can also provide insight into the interconnectedness of trends in other areas that might have an application in your industry, drawing parallels from music, art, entertainment, and politics.

[Business] leaders don’t have the luxury of time they had to respond to things even 10 years ago. One of the most popular approaches was to be a fast follower—let someone else pioneer it and follow on their heels. But with the rate of change happening today and the degree to which digital technology can enable a company to become a household name in weeks or months, being a fast follower doesn’t work anymore.

Topics: Retail, Experience Cloud, Trends & Research, Insights Inspiration, Digital Transformation, Creative Cloud, Creativity, CMO by Adobe