Country / Language

Innovators and Disruptors: Emerging Trends within the Retail Industry


Innovators and Disruptors was the theme of CohnReznick’s recent Retail and Consumer Products Dinner. Moderated by Robin Lewis, founder and CEO of The Robin Report and author of The New Rules of Retail, the lively discussion focused on strategies for overcoming the race to the bottom in a challenging economy that is experiencing 90%-off markdowns and new tech-driven business models. 
 
Richard Schurig, CohnReznick Partner and Retail and Consumer Products Industry Practice Leader, welcomed the audience, and Stephen Wyss, CohnReznick Partner and leader of the Firm’s Retail and Consumer Products Industry Practice in New York, introduced the panelists of the evening and commenced the discussion. The panelists included Debbie Hauss, Editor-in-Chief of Retail TouchPoints; Michael Kollender, Co-Head of Consumer Investment Banking at Stifel Financial Corp.; Yehuda Shmidman, CEO of Sequential Brands Group; and Keith Denham, Managing Principal and National Director of CohnReznick Advisory. 
 
The State of the Retail Industry
Schurig provided an assessment of where the markets stand, noting that initial market reaction to the presidential election has generally been positive for retailers and consumers. According to Lewis, in terms of disruptors within the industry, the retail environment is over-stored (46 square retail footage per capita), over-stuffed (think of your closet), and over-website-ed (5 billion and growing). The second disruption is the smartphone. As smartphones provide consumers with total access to the world of goods and services, consumers are now the new POS (point of sale). Lewis quipped, “If over-capacity is the driver empowering the consumer, the smartphone is the ignitor-in-chief.”  
 
What Matters to the Consumer? Experiences and Brands are Key
The panelists agreed that today's consumer is less concerned about the “stuff” and more concerned about the experience. An excellent product is merely table stakes, and if your product isn’t excellent, social media will shame you instantly. To establish brand loyalty, a connection must be cultivated. Hauss queried, “What is important to your consumers? Is it social responsibility, local involvement, sustainability? Find that and you establish a relationship beyond the stuff and create loyalty. Experiences will get them to the store.”
 
According to Shmidman, branding is the integral factor that creates the experience. Consumers still seek brands they relate to, but what has changed is their shopping behavior. Successful brands look different today. Kollender cited the winners of the past, with north of $500 million as a benchmark. “Today, we see significantly smaller brands establishing relevancy, and they are transacting at substantial multiples because they are targeted to the new economy. Retailers distinguish themselves with brands. Brands are a critical price defense, an existential defense, and more importantly, an offensive strategy of giving the consumer what they want – brands that provide experiences.”
 
In thinking about the in-store experience, knowledgeable store associates are key to cross-selling and up-selling as well as create a positive brand experience. Denham remarked, “Store labor is not the sexiest topic, but is extremely germane to a retailer’s success. Unfortunately, troubled retailers often cut store hours instead of other restructuring decisions which undermines the power of the instore experience and a cycle of doom manifests itself. Costco is a great example of a retailer using analytics including volume, social and other data to make real-time decisions on labor several hours in advance.”   
 
Denial Doesn’t Work – Innovation Does
Many CEOs and boards may miss the disruptors that are capturing their customers’ share of mind and share of wallet. Kollender elaborated, “They aren’t thinking about the new economy and new economy competition. We speak to CEOs that see ecommerce commanding 10% of retail, versus my expectation of up to 50% over the next 20 or so years. The smaller consumer growth companies are financed at higher multiples, like tech companies, because they are growing like tech, operating like tech, and being analyzed like tech companies. As long as there is a heavy supply of capital, and barriers to starting a new business remain low, we will continue to see new consumer-focused startups. We don’t believe it is a bubble.”    
 
Creating a Starbucks-like experience is paramount, at least to Bridgestone and Firestone, according to Hauss. These 100+ year old brands are using predictive analytics and big data to anticipate the consumer’s auto service needs. “This is how commodity brands can sustain themselves,” Hauss commented. “In many cases, businesses need to use innovation to disrupt their business model to be sustainable.”  
 
The panel also discussed how personalization has replaced omnichannel as the new buzzword. Hauss commented, “One of the keys to personalization is mapping the customer journey. We know when they are in the store, on their PCs, or phones. The missing link is what we call ‘digital out of home’: the shopper on the street. Retailers haven't effectively addressed this yet. Retailers can innovate by digitally touching their shopper when they are on the street. One way is to use beacon technology that will trigger when a consumer walks by a sign, triggering a personalized, relevant offer to that shopper.”
 
In conclusion, Denham reminded the panel and the audience, “Practice innovation not for the sake of innovation. Modest innovations – tweaks to a coat hanger – won’t work. Surprise your customer with a great experience, iteratively and continually, that creates a sustainable business.”
 
Contact 
To discuss these and other issues important to your business, please contact Stephen Wyss, Partner, at 646-625-5758 or stephen.wyss@cohnreznick.com
 
Search Our People

Search Our People

Look ahead. Gain insight. Imagine more. Is your business ready to break through?

View our new TV commercial..

Industry Outlooks

Industry Outlooks

Gain insight into what is ahead for the Commercial Real Estate, Technology and Middle Market Private Equity industries.

READ MORE

Learn about our upcoming events.

READ MORE

Working With Us

Working With Us

What makes CohnReznick different from others in our profession? And what should our clients come to expect when working with us? The answer is The CohnReznick Advantage. Contact us to learn how we can out the CohnReznick Advantage to work for your business.


People

The value of an organization is determined by the skills and qualities of its leaders. With more than 280 partners serving clients nationwide, CohnReznick is renowned for the diverse experiences, knowledge and backgrounds of its leadership.

Learn More

Services

We align our services in three segments: Accounting and Assurance, Tax, and Advisory. This approach allows us to provide holistic solutions to complex business problems and to seize upon opportunities requiring an integrated approach.

Learn More

Industries

Accounting and tax issues different significantly based on an organization's industry. We provide clients with expertise in nearly two dozen industries – we know the opportunities, the obstacles, the competitive landscape.

Learn more

Insights

CohnReznick professionals are thought leaders in their industries. Clients benefit from relevant and timely economic, legislative and industry insights that can keep them a step ahead of competition.

Learn More

Global Reach

Our involvement in the Nexia International network of firms enables us assist our clients wherever they do business-providing local expertise and connections wherever they needed. Nexia is comprised of 20,000 professionals operating in over 100 countries.

Learn More