Branded Retail: Living at the Intersection of Technology and Culture

By: Greg Klingaman, Global Head of Retail & Strategic Partnerships, Diageo

Greg Klingaman, Global Head of Retail & Strategic Partnerships, Diageo

Greg Klingaman is a retail executive with over 15 years of experience in leading multiple brands such as Tommy Hilfiger, The Home Depot and more toward profitable growth, and operational excellence. Presently, the Global Head of Retail and Strategic Partnerships, Reserve Brands, Diageo, Klingaman is responsible for establishing and developing a direct-to-consumer organisation on a global scale, and to further build the Reserve retail brand portfolio.

To look to the future of retail and the role of technology, it is important to understand who holds the power in consumer decision-making and how we got to where we are today. In the mid-1900s, consumers had limited choice, and a brand’s route to market was restricted. Department stores were king. In the second half of the last century, the focus for brands was to grow and expand distribution while relying heavily on advertising, to create demand and desire. Branded manufacturers, and later, branded retailers, held the power. Starting in the 2000s and especially in recent years, the rise of eCommerce and marketplace retailers—from Amazon and eBay to off-price superstores—has shifted power to the consumer. We, as consumers, now live in a world of virtually endless choice and almost perfect price transparency. In today’s noisy and time-stressed world, consumers are looking more than ever to brands to give them a point of view, tell them what’s cool, and help them take decisions. But consumers also face almost endless barrage of marketing messages, and time is now the ultimate luxury item. So, how will branded retailers get them to give us their time?

"A brand is only as good as its reputation, but risk aversion for fear of the unknown shouldn’t foster a more conservative and incremental approach to retail technology deployment"

Anyone reading this knows that retail is an industry going through a transcendent period of disruption, an environment which is pushing many traditional retailers down two possible paths. Path A involves embracing risk-taking, experimentation and transformational, consumer-centric thinking—basically a start-up mindset. Path B involves cutting costs, unfortunately often in those areas like staffing, store design, and experiences that matter most to customers, and doubling down on comfort zones. I don’t have to tell you which approach is winning. With most retail sales still occurring in physical stores, upstart and digitally-native branded retailers are filling the void left by legacy retailers who can’t or won’t adapt to change. Technology plays both a tangible and symbolic role here. Upstart, risk-taking retailers are unburdened by legacy systems and outmoded infrastructure, which gives them agility and strategic advantage.

What if you’re a wholesale brand that mostly sells its products through distributors, partners, and multi-brand retailers? I happen to work in the alcohol industry where our brand teams are just starting to understand the importance of engaging consumers directly. Think GDPR is scary? Watch the look of utter terror on the face of some internal departments when you pitch the idea of going direct-to-consumer with your leading alcohol brand. Their risk-averse attitude can make you feel like these departments exist solely to prevent the very thing you are trying to do.

When your technology focus is on production, supply chain, and brand development, like ours is, it is understandable that IT is afraid of new consumer data privacy rules and fearful of the slightest misstep having the potential to go viral. At the same time, capturing data throughout all steps of the consumer journey is essential to understanding consumer behavior and delivering personalized experiences. In order to stay relevant, brands need to go beyond marketing communications into surprising consumers with unexpected experiences and showing up in the culture. A brand is only as good as its reputation, but risk aversion for fear of the unknown shouldn’t foster a more conservative and incremental approach to retail technology deployment. Why take risks when bad things might happen? It surely feels so much safer to stick with what you know. My response: what is the risk to our brand reputation and future growth if consumers no longer find us interesting?

A conservative mindset also underestimates the important role of technology in empowering (and retaining) staff, engaging (and retaining) consumers, creating simplification, and reinforcing brand messaging. The technology you put in front of staff and consumers says a lot about your brand. Why isn’t every retailer’s in-store technology roadmap about replicating the Apple store model? This has become what today’s shoppers expect.

All brands want to appear fresh, dynamic, culturally relevant, and talk-able/sharable. However, many don’t understand that even when it comes to retail technology choices, appearances matter. So, when conservative IT departments insist on sticking with or rolling out legacy POS systems running on oversized terminals that require store servers, what message does that send? Like product design, technology should also be consumer-centric. So, all technology decisions should start with empowering staff and delighting customers, not with checking corporate governance boxes. The key to success is to operate as a multifunctional team, sharing the overall vision and the innovative direction among all team members and agreeing to take decisions with the consumer at the heart. Embrace agile working, test & learn. No decision is forever. Just make sure you can adjust along the way so you can stay aligned with the changing customer needs.

As many before me have said, we retailers need to give people compelling reasons to come to stores. As we spend more time beholden to our devices, human interaction is now more important than ever and is still the primary reason why people go to stores. Investing in in-store technology is investing in the success of our employees, and there's a strong statistical link between employee morale and customer satisfaction. So, ditch the fear of the unknown and stop letting governance and compliance dictate technology choices. Your customers and staff will thank you for it.